Sunday 17 May 2015

A Gangster's Charter: Bill English's "Social Investment" Budget.

A Gangster's Charter: Just think about everything that lay behind Tony Soprano’s cynical description of himself as a “waste management consultant”, and you’ll have a pretty good grip on what Bill English's 2015 Budget is all about.
NEXT THURSDAY, 21 May, is Budget Day. No, don’t yawn, because if the veteran political journalist, Richard Harmon, is right, then “next week will be a defining moment in the third term of this government and a critical point in its campaign to retain power in 2017.”
That “defining moment” will mark the commencement of the next great campaign in Neoliberalism’s thirty years war against collectivism and the public sphere.
Some will call it privatisation but that’s not really what this next phase is all about. If John Key and Bill English really wanted to privatise the provision of social welfare they would simply shut down the Ministry of Social Development, close all the Work and Income offices, and sell off every one of the country’s 60,000 State Houses to the highest bidder. The public schools and hospitals would suffer a similar fate.
No doubt most of the Decile 10 schools would be snapped-up at a good price. The big public hospitals in the main centres would, similarly, attract plenty of interest. But all those Decile 1 schools? Who would want to pour good money into them? And provincial hospitals? Not much scope for profit there.
No, what Bill English is planning is something very different from a straightforward reversion to the “night-watchmen state” so beloved by the followers of Friedrich von Hayek and Ludwig von Mises.
In any case, it’s doubtful that such a radical step would save the government all that much in the way of expenditure. Casting adrift the poor on such a massive scale would necessitate huge increases in Vote Defence, Vote Police, Vote Courts and Vote Corrections. Much of the money saved by shutting down the welfare state would end up being spent defending whatever replaced it from the ravages of tens-of-thousands of desperate citizens with nothing left to lose.
The “Better Public Services Programme” that Bill English launches on Thursday (almost certainly under a new and catchier name) won’t be about relinquishing all state responsibility for the poor, the sick and the young, it will be about funding private entities to provide the services which, hitherto, have been provided by public servants.
In English’s own words to the Institute of Public Administration on 19 February 2015: “Testing for spending effectiveness will be core to this process. If we can’t measure effectiveness, it won’t be funded through social investment. We’ll be systematically reprioritising funding to providers that get results.”
To anyone who’s been following the commissioning of the new privately-run prison at Wiri, south of Auckland, all this talk of “social investment” and “providers” will sound very familiar. The taxpayers have spent millions on the construction of the Wiri facility, and the Government has just announced the laying-off of close to 200 prison officers from around the country in order to supply it with a core of highly-trained staff, but the actual running of the prison has been contracted-out to the multinational firm, Serco. For the next quarter-of-a-century a private entity will be permitted to extract a substantial profit for the provision of “services” for which the state has, quite rightly, accepted responsibility (without seeking a profit) for the past 200 years.
How has it come to this? Why is the National Government preparing to pay (with our money!) the private sector for taking over the provision of services the public sector is still perfectly capable of providing? In essence, the answer is: because in mature capitalist economies like New Zealand there’s bugger-all new profit-making opportunities available to the private sector. Hence its growing interest in “social investment”, a new kind of venture which promises to pay the private shareholder a handsome dividend without the necessity of massive capital outlays for plant and machinery – all of which is supplied up-front by the generous taxpayer.
This isn’t capitalism in any accepted sense of the word. It is, however, instantly recognisable to any enterprising gangster as an officially sanctioned opportunity for skimming-off-the-top.
A public body contracts a private institution to supply a much needed social service. The latter offers a price – which includes a hefty chunk of cash for its trouble – and then proceeds to utilise every possible means of cutting corners and short-changing its “customers” so that it can (in the unlikely event of being asked) present the public with a passable facsimile of the service it undertook to provide.
Just think about everything that lay behind Tony Soprano’s cynical description of himself as a “waste management consultant”, and you’ll have a pretty good grip on what Bill English and his government’s “defining moment” is all about.
This essay was originally posted on The Daily Blog of Saturday, 16 May 2015.


Anonymous said...

Yup sounds about right.

Anonymous said...

Chris, don't you think that the original neo liberal economic agenda failed to deliver for its proponents? There are no returns in terms of dividends on real production, there are no real bank interest rate returns. There is only asset price inflation as seen in the "bull run" of Wall St to record highs, as seen by real estate bubbles.

My contention is that the neo lib model was always known by its proponents to be a failure in delivering "growth" BUT that was not and never was the intention. The intent is to transfer ownership of all assets to an increasingly tiny portion of the population worldwide. This is our societies equivalent of rapacious hordes of Huns at the gates.

Guerilla Surgeon said...

I don't think that the neoliberal agenda is quite so cynical as to want to over – concentrate wealth. I think that some of them truly believe that it will create wealth for everyone. Maybe they're just useful idiots, but I think many of them are sincere. What amazes me is when they look at the results, that they can't recognise it doesn't work. Even economists are now beginning to recognise it doesn't work, and they according to research I was reading lately are more sociopathic than most :-). The thing is, that it works well for those who make the rules. Although that's beginning to crumble in the US as the middle class is hollowed out. Expect that to be happening here relatively soon.

Brewerstroupe said...

"Why is the National Government preparing to pay (with our money!) the private sector for taking over the provision of services the public sector is still perfectly capable of providing?"

I have never understood why this tacit confession of incompetence is never made more of by Labour.
The proponents of privatisation are proclaiming that they are deficient in management skills
Isn't this in direct contradiction to representations made on the hustings?

The notion that putting the delivery of social services into the hands of for-profit concerns will somehow cut costs is a belief akin to necromancy. The idea that a Minister incapable of managing a department directly under his control can somehow control an enterprise dedicated to profiting from his incompetence is sheer lunacy.
Evidence of this fallacy is all around us yet it will be a difficult one to defeat since so much of the Education apparatus has already been given over to true believers.

Charles E said...

Do you have a KiwiSaver account? I expect you do.
Even the Greens have them and want babies to have them paid for by the workers.
What do you think they are invested in? Things that make profits. Hopeless otherwise of course.
Things that make profits make everything in this world work, and can be taxed to pay for costs like government, police, military and schools for the lower income population. The wealthy could pay for schools too and more would with a small tax break which the govt could set low and still profit from.
A cow would not eat grass if it did not make a profit from doing so. Things other than stones, that do not profit and grow do what? They die. Or they are paid for by taxes or donations which come from what? Profits. Wages are profits too.

So I expect that English just wants less taxpayer money siphoned from profits by workers & investors, going into locking up the crims, AND done so with a profit you can put some of your pension fund in. May not work, but if it does, and results in less reoffending, which is part of its aim, all win. So worth a go.
Nothing to do with some grand plot to enrich the 1%. That lot know they must keep our economies going well for at least 90 of the other 99% or they will no longer make their profits any longer since the economy is actually quite finely balanced between profit & loss.
As some other scribe wrote, to paraphrase: Profits = happiness. Losses equal misery and its a fine line between the two.

Anonymous said...

While a private entity might cut corners to make more of a profit a government one may act as though the public's pockets are bottomless - I like to see some tension between the two.
I like to have both a government and a private provider keeping each other honest, both in terms of cost and the quality of service. Public servants (I'm one) don't have a monopoly on the best ways to provide public services.

Davo Stevens said...

@ Charles:

Two main comments on your comments.

Firstly, the wealthy (your words) have already have sizable tax cuts and our economy is still stagnant. So your comment is ridiculous.

Secondly, Wages are NOT profits but are in fact a production cost. Materials, overheads, rent and wages are all part of the cost of producing goods/services. Profits are the result after all those costs are deducted.

Robert M said...

Well, its a debate whether the state or private enterprise is more efficient. A classic example is NZ rail which 15 years in Wisconsin and Toll ownership may well have saved the taxpayer 3 billion.If much of the railway was rundown and only fit for closure, that was the point much of the rail system wasnt justified and Fay Richwhite ran it according to strict accountancy practice and law, if new investment isnt economical, run the asset full bore until the asset is used up.
I actually thing you have English wrong. Bill is a soppy believer in social intervention, he beleives charities and private bodies will intervene more effectivley to control people and destroy all freedom

Guerilla Surgeon said...

Be interesting to have a look at where these private sector savings are made. Particularly after I've seen people made redundant by the public service coming back and charging $800 an hour to do the work they normally did for a salary.

Robert M said...

Ruth Richardson and the Liberal Howard Governmnet in Australia both ran a minimal welfare state, and it was not necessarily a more unfair model and certainly less expensive than the high degree of intervention and support favoured by Clark and English.
I would favour closing the Social Medicine and Psychiatry department at Otago, citizen would be happier if you could just buy your own alcohol or drugs at the drug store in the dose and type you want. Just call them 4% black or 6% white in plain packaging.
Didnt Fay Richwhite Rail and Toll save us 3 billion and havent rail been a dismal failure in the storms this year in Wellington.
My mother refused to see her Wisconsin Central shares until the end as a point of principle. To her rail was the Cook Straight Ferry was the railways and the Fay Richwhite fast ferries were revolutionary if totally ignored by every left wing newspaper columnists.

Robert M said...

Fay Richwhite ran a fast ferry , called the Lynx during most of their ten years ownership of the Railways and it cut the Wellington to Picton transit time to about an 1 hour and a half. It was a vast improvement, but nobody mentions that, today, on privatisation or rail issues. To clarify, my mother refused to sell her Tranz Rail shares, until they were transfered to Toll, despite repeated advice, by me that they were rapidly becoming worthless, because she thought the Cook Straight Ferries, were great, that the Ferries were the Railways and she would remain staunch to the end.

Brewerstroupe said...

Howard Zinn (August 24, 1922 – January 27, 2010) was an American historian, author, playwright, and social activist. He was a political science professor at Boston University for 24 years and taught history at Spelman College for 7 years. Zinn wrote more than 20 books, including his best-selling and influential A People's History of the United States.[2] He wrote extensively about the civil rights and anti-war movements, and labor history of the United States. His memoir, You Can't Be Neutral on a Moving Train, was also the title of a 2004 documentary about Zinn's life and work
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