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 its 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 of the followers of Friedrich von Hayek and Ludwig von Mises.
It is doubtful that such a radical step would, in any case, save the government very 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. The money saved by shutting down the welfare state would be offset by the amount spent defending whatever replaced it from the vengeance 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 services which, hitherto, had 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 a “service” that the state (minus the profit) has, quite rightly, accepted responsibility 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 perfectly capable of providing? In essence, the answer is: because in mature capitalist economies like New Zealand’s there’s bugger-all new profit-making opportunities available to the private sector. Hence the growing interest in “social investment”, a new kind of venture which promises to pay the private shareholder a handsome dividend without the necessity of making massive capital outlays on plant and machinery – all of which is supplied by the hapless 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.