The current approach to municipal services in the Halifax Regional Municipality relies heavily on the private sphere. Contracting out, subcontracting and outsourcing are all forms of privatizing services that do not align with the fundamental principles of the most effective, efficient, equitable, responsive, sustainable, and inclusive provision of services. Public provision of services is superior to for-profit contracted-out services for at least five key reasons:
Improved quality of services;
Equitable access for users and decent working conditions for providers;
Accountability to community members;
Ability to respond quickly to emergencies, and;
More efficient, with no profit-maximizing behaviour.
With an October election looming, it’s a key moment to improve the quality of public services in the Halifax region. It’s time for the municipal government to return to providing those public services directly, rather than contracting them out—here’s why.
Ensuring Cost-Effectiveness.
Privatized services cost more than publicly provided services. There is mounting evidence that governments save substantial money—anywhere from four per cent to 62 per cent—when they return services to being publicly managed.
There are five main reasons why privatized services generally cost more:
Corporations must generate profits and pay dividends to their shareholders and parent companies
With privatization comes extra complexity and costs, including substantial fees to consultants and lawyers who design the contracts
Public authorities lose control over service costs, as private operators tend to outsource some of the work to other companies, which often comes at a high price
Private operators lack a long-term vision regarding financial management
Public bodies typically pay lower interest rates than private entities, making their borrowing costs lower than private companies
Improving the Quality and Responsiveness of Services
Publicly managed services are best trusted to uphold the public interest, improving quality and responsiveness. These services will likely be increasingly needed as we face mounting climate and public health emergencies. For these services to be most effective and responsive, they must be sufficiently funded and under public control. Publicly managed services are better able to comply with regulation changes, with a view of upholding the public interest in mitigating the emergencies in the first place.
Privatization also poses unnecessary risks to the public interest. There are many examples internationally of private service providers going bankrupt, leaving municipalities in a lurch without critical services. This happened recently in Norway in 2017. Though initially left scrambling when one of the nation’s largest waste collection services went under, in the end 100 municipalities brought waste collection back in-house, lowering user fees and providing better pay and working conditions for their workers.
Privatization has also been found to exacerbate racial injustice. A recent report found that privatization came “at the direct expense of Black, Indigenous and racialized workers who work in contracted-out services, or who depend on these services.” Once services were privatized, these workers experienced worsening working conditions, including lower pay and benefits, and racial discrimination and harassment, all of which also negatively affected the quality of the services they were able to provide. Conversely, bringing work back in-house could help advance racial justice and improve working conditions.
Promoting Democratic, Equitable, and Sustainable Services
Publicly provided services are more democratic, allowing for more explicit promotion of socially and economically just and environmentally sustainable services. It is easier for community members to hold publicly managed services to account for meeting environmental or other social or economic objectives overseen by elected officials—and to provide more meaningful input into these services. Municipalities should consider deprivatizing services and commit to protecting essential public services from being captured by private for-profit interests in the first place.
We must move away from an approach that uses public money to guarantee the profits of private entities that promise to absorb risks when, in reality, they too often introduce different ones, like bankruptcy. In contrast, municipal finances are more effectively, efficiently, and equitably used for publicly managed and provided services. This results in:
Lower costs: The municipality does not have to pay for contract tendering and monitoring or the companies’ higher expenses, including financing at higher interest rates and profits, which might support lowering fees for service users;
More accountability and democratic control: The public has more input into how the service is provided, allowing more swift and less costly changes as needed without being locked into contracts with no flexibility;
Less risk: Services provided by a private company that can declare bankruptcy or engage in practices that compromise the services;
Better quality, decent jobs, and equitable access to services: Public services are of higher quality and can be designed to support decent work and well-being and ensure universal access. Alternatively, the lowest bidders seeking to maximize profits can result in a patchwork of poorer-quality services and working conditions.
Recommendations:
If outsourced currently, bring contracted-out services back to publicly managed, including snow, waste removal and waste processing, grass mowing and landscape services, and custodial services.
No publicly managed work currently performed by municipal staff shall be subcontracted, transferred, leased, or otherwise outsourced.
Recognize water and sanitation as human rights, phase out the sale of bottled water in municipal facilities and at municipal events, expand public water access, protect publicly owned and operated water and wastewater services, and provide more public fountains and washrooms that are also accessible and gender neutral.
