Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

Archive for May 4th, 2008

Straws in the wind

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Two stories which may not. on the surface, seem to have much to do with us.

New Zealand has decided to buy back its railway and its ferries. It seems that sometimes privatisation is not the solution to every problem, and the movement back to public ownership is happening elsewhere too. Both Railtrack and Metronet in Britain are now back under public ownership, as is the Croydon Tramlink. Some places had to learn some very hard lessons – and we should take note. For the BC government mandates P3s for large projects. This approach almost makes it certain that we will be paying more for worse public services, since we seem to be incapable of framing contracts in a way that ensures that non-financial but still important concerns are taken into account.

The other lurch back to reasonableness is in Quebec which had been following a policy of insisting that its buses be built locally. With predictably bad results. So now they are going to allow open and fair bidding.

I am not actually against privatisation. I am against dogmatism in the face of hard evidence. If something is clearly not working as intended then you should stop doing it and try to work out why. It is not true that “government is the problem”. The private sector is concerned with making profits – and sometimes loses sight of the need to balance other concerns against that. That is why most industries require some degree of regulation – of only because left to their own devices, profit making enterprises behave very badly indeed. When I started learning economics, the example was of children being employed in coal mines. Sadly we now have plenty of more modern examples of the outrageous lengths entrepreneurs will go to make a quick buck. And the life and health of their customers, employees and even shareholders is of no concern at all.

If you set out the terms of the contract clearly, and ensure an open and fair bidding process contracting out can work well. Sadly, in many cases the only reason to contract out has been to reduce employees wages. But of course the spin doctors say it is about innovation and new methods, and the much greater efficiency of modern management methods. And most of that turned out to be hogwash.

Written by Stephen Rees

May 4, 2008 at 9:14 pm