Privatization: A Risky Business
Since the 1980s, governments from the local to national level have experimented with privatizing public services and assets. The trend has been spurred by the belief that the private sector can achieve efficiencies and cost savings for government budgets. Unfortunately, numerous examples demonstrate that these supposed benefits of privatization are merely myths. Privatization has often moved forward without adequate public deliberation or oversight. Poorly conceived and constructed contracts have resulted in cost increases, as well as diminished service quality, and have failed to protect against corruption, profiteering, and loss of the accountability and openness required of government processes.
Privatization involves turning over previously governmental functions to private entities. It takes two basic forms:
• The government receives money for the purchase or long-term lease of revenue-producing infrastructure, facilities or other assets.
• The government pays a contractor to provide public services.
Many complex variations have evolved, including various forms of public-private partnerships, known as P3s.
Concerned with the loss of democratic accountability and control, many groups and communities are reconsidering privatization. They are working with lawmakers to provide protections against contracts that are against the public interest by promoting fair and responsible contracting standards, and requiring full public deliberation of decisions to sell or lease public assets.
What's at Stake?
Without proper protections, putting public services and assets in private hands can result in lost accountability and transparency, increased costs for government and taxpayers, ,and degraded quality.
Other common risks of privatization include: corruption, reduced access, reduced labor standards, lost public capacity for core functions, environmental harm, and human and civil rights violations.
Full consideration of all these potential impacts is essential to protect the public interest.