Stephen Rees's blog

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

Posts Tagged ‘privatization

Privatizing Canada’s Ports

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The federal Liberals seem to be turning out to be neoliberals – not that much different to the Harper Conservatives Canadians so soundly dismissed. The fact that privatisation has generally failed to deliver on its promises – except for enriching a few exceedingly wealthy men – is always ignored by the ideologues of the right. And that is who the C D Howe Institute are. It annoys me that the CBC runs the headline “New report says privatizing Canada’s ports could generate significant revenue” as though it came from an authoritative source, as opposed to yet more conservative propaganda. As usual the only thing that gets discussed is how much money is supposed flow – as though that will somehow benefit us.

What is ignored is that ports in Canada though supposedly under the authority of the federal government are in fact a law unto themselves, and have performed very poorly in terms of their impact on the environment and local communities. It is very significant that south of the border, no local community has permitted the expansion of coal exports through their ports. They have also successfully held back expansion  of LNG and methanol simply by insisting on adequate safety provisions. Things are different here. We still have a provincial government gungho for LNG and a port only too willing to expand thermal coal exports. Somehow Canadians do not deserve anything like the protections that US west coast communities enjoy. Privatising the port will only make matters worse. We are already losing the battle to protect the tiny percentage of land in BC capable of growing vegetables, being airily assured that we can continue to import all we need as though climate change and water shortage is not already damaging California’s ability to farm as it once did.

It was recently revealed that the Fraser Institute has long been funded by the Koch Brothers – something hotly denied up to now. C D Howe is just such another “think tank” set up not to promote objective policy research but rather to proselytize the Hayek philosophy, quite uncritically. Such studies always seem to be able to discount anything that does not produce profits for corporations. Considerations for ecosystems, or climate, or even equality are dismissed as irrelevant.

Written by Stephen Rees

June 20, 2017 at 3:13 pm

The Great Train Robbery

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South West trains at Waterloo 2008_0704

I have often used British Rail on this blog as an example of what can go wrong when governments decide to privatize a pubic corporation.  It has long been a shibboleth that the public sector is necessarily inefficient, and that private enterprise, subject to market forces, will always produce a better outcome. The real question – often never asked – is “better for whom?”

Last week the Trades Union Congress published a report of independent researchers on the performance of railways in Britain since privatization. Unsurprisingly the researchers conclude that not only has public support for railways increased, but that the public has not been well served. Shareholders, and other “stakeholders” have done well, at public expense, but the supposed benefits have not been achieved. This has long been the view of objective observers. The TUC, of course, includes railway workers among its members. It is important to note the TUC recognized that “this final report would inevitably diverge from the Unions’ position when it came to analysis and recommendations.”

Two other points I want to make up front, which stand in stark contrast to the way things are done here. First there are indeed independent, publicly funded researchers able to conduct such studies. That used to be the case in Canada too. Our present government seems determined to put a stop to that, both by cutting funds for essential data collection (such as the long form census) and secondly ensuring that any publicly funded body is put under close surveillance to ensure that it toes the party line.

The TUC issued a trenchant press release – but they also made the entire research report available free on line.  That also seems to be exceptional here. Though I do want to acknowledge the great improvement we have seen in Translink’s data provision recently.

The BC Liberals will continue to promote their own version of selling off public assets at fire sale prices, and ensuring that private corporations and their shareholders continue to profit while public services are reduced. We can expect to see a continuation of promotion of the P3 as the key to all that is worthwhile, and all kinds of manipulation to ensure that the private companies do well even when the case for a P3 cannot be supported – as with (just to pick two from many) the Port Mann Bridge or BC Place. I confidently expect that there will be yet more contracting out of public services, to ensure that workers get lower pay, “customers” get less service but shareholders and executives see increasing rewards without any risk at all. Fees and charges of all kinds will continue to be imposed on those whose real incomes are declining – all the while telling us how lucky we are to be in a free enterprise economy with “the lowest taxes”. There will be no mention at all – as is also the case with the TUC – of the damage to the environment.

POSTSCRIPT and, of course, it’s not just our problem “The almost comical level of fraud and bribery …”

The Great Train Robbery looks at many of the key objectives behind the decision of John Major’s government to privatise the railways in 1994. The report questions whether any of these have been achieved:

  • Cost effectiveness – train operating companies are entirely reliant upon public subsidies to run services. The top five recipients alone received almost £3bn in taxpayer support between 2007 and 2011. This allowed them to make operating profits of £504m – over 90 per cent (£466m) of which was paid to shareholders.
  • Extra investment – the report shows how the average age of trains has risen since rail privatisation, from 16 years in 1996 to 18 years old today. Just £1.9bn was spent on rolling stock between 2008 and 2012, compared to £3.2bn between 1989 and 1993 (the four years before privatisation.)
  • Over 90 per cent of new investment in recent years has been financed by Network Rail (the taxpayer funded body responsible for rail infrastructure), and comes mainly from taxpayer funding or government-underwritten borrowing, says the report.
  • Significant upgrades to infrastructure, such as the development of the West Coast Mainline, have been paid for by Network Rail.
  • Passenger comfort – the report says while there has been a 60 per cent increase in passengers since 1994/95, there has only been a 3 per cent increase in new carriages, resulting in serious overcrowding on many routes.
  • Innovation – even where there has been private sector investment in new technology, such as Virgin’s tilting trains, it has been underwritten by the state through subsidies to train operating companies and guarantees to rolling stock leasing companies.
  • Added value – The Great Train Robbery shows how train operating companies paid Network Rail just £1.59bn in track access charges in 2012, compared to £3.18bn paid to its predecessor Railtrack in 1994. This represents an ‘indirect subsidy’ from taxpayers as train companies are getting track access on the cheap. It also means that the full extent of taxpayer subsidy is far greater than is often reported.
  • Investment in infrastructure has largely been funded through borrowing by Network Rail which now has debts of over £30bn, and is spending more on repaying this debt than on railway maintenance, says the report.
  • Competitive fares – the UK has the most expensive rail fares in Europe. Long distance, day return and season tickets are all around twice the price of similar tickets in France, Germany, Italy and Spain, which have publicly-run rail systems. Average train fares in the UK increased at three times the rate of average wages between 2008 and 2012.
  • More passengers – the report dismisses claims that privatisation has helped increase the number of people travelling on the railways.It says that passenger growth has mostly been down to rising GDP and changes in employment patterns rather than because of privatisation.

Written by Stephen Rees

June 11, 2013 at 8:27 am