Privatisation … was yesterday’s joke

Australian governments have not yet understood that privatisation was yesterday’s strategy to abrogate their legitimate responsibilities. Today it has no place in a return to a viable sustainable and balanced mix of public and private activity. Privatisation was part of the swing to market-based allocations and a blurring of public interest with private profit. The two rarely go together if ever. While the NSW Government is still trying to push the sale of the electricity generators, the other major privatisation push is to extend the private ownership and operation of our prison system. There is no way that we should ever give monetary incentives to imprison people. Here is what happens …

In recent days, the NSW government has been accused of taking “influence money” because a Labor MP Paul McLeay accepted money from the GEO Group, which is the company that runs the Junee prison, NSW’s first (and still only) private prison. McLeay was chairman of a parliamentary committee that was conducting an inquiry into GEO’s $26 million contract. I make no claims about timing or causality. GEO is a large US company and is manouevering to be given the contract to the next two prisons the (stupid) NSW government is planning to abandon to market forces – Cessnock and Parklea.

Some have argued that it is wrong for a company to give donations to the party that is awarding them public contracts. Seems like a circular flow – public funds to underwrite private profit come back, in part, to keep the party in power.

But overall, GEO’s record as prison managers in the US is appalling. They have been paid millions of dollars by the US government to run prisons across the country but at the same time have become embroiled in many scandals relating to mismanagement. Recently it has been in the news because there have been major riots at one of its prisons (Reeves County in West Texas) which has cost the public more than $US1 million to repair the damage caused. It has been argued that the riots were caused by GEO failing to provide adequate medical care at the facility with several inmate dying unnecessarily (see, for example this account. Immigrant advocacy groups have been particularly vocal about GEO.

In October 2007, the Geo Group’s Coke County youth detention facility in Texas was closed down by authorities and the contract cancelled because of so-called mismanagement. Conditions at the facility were described as being squalid. A US Senate Criminal Justice Committee investigating the scandal severely criticised the GEO Group at the time for lobbying key public officials to change the decision by public officials in Texas. The Chairman of that Committee was quoted in the Dallas Morning News (October 3, 2007) as saying

I’m saying the corporation should back off. They’ve run a very poor facility that probably violates the youths’ civil rights … Kids were stepping in their own faeces. The sheets were such that a cat or dog wouldn’t sleep on them.

Interestingly the Texas Ethics Commission (a state agency) which gathers data on prison company lobbying, shows that the GEO Group ramped up their spending on lobbying public officials in Texas by a factor of ten in 2007 during the scandal. The Ethics Commission data also reveals that public lobbying by private prison operators has become a growth industry over the last several years.

There are countless other cases against the GEO Group in the US (see for example).

I read a nice article in the March 3, 2009 edition of the Guardian newspaper by George Monbiot which further highlighted why prison privatisation is a stupid strategy for governments to adopt.

The headline was “The US and British governments have created a private prison industry which preys on human lives.” It recounts that:

Last week two judges in Pennsylvania were convicted of jailing some 2000 children in exchange for bribes from private prison companies.

Apparently the two judges were sending children to jail for trivial misdemeanours at the same time they were being paid $2.6 million “by companies belonging to the Mid Atlantic Youth Services Corp for helping to fill its jails

So once against privatisation usurps public purpose completely.

In private prison systems, all the incentives are there to continually push the number of inmates up. The lobbyists are continually trying to influence the relevant legislators to ensure the judicial system feeds the private prisons owned by their paymasters. Monbiot writes that

The corrupt judges were paid by the private prisons not only to increase the number of child convicts but also to shut down a competing prison
run by the public sector. Taking bribes to bang up kids might be novel; shutting public facilities to help private companies happens – on both
sides of the water … [in the UK and the US] … – all the time.

There are Wall Street Journal reports that suggest that “as a result of lobbying by the operators, private jails in Mississippi and California are being paid for non-existent prisoners … The prison corporations have been guaranteed a certain number of inmates. If the courts fail to produce enough convicts, they get their money anyway.

The Wall Street Journal (November 18, 2008) reports that

The Federal Bureau of Prisons and several state governments have sent thousands of inmates in recent months to prisons and detention centers run by Corrections Corp. of America, Geo Group Inc. and other private operators, as a crackdown on illegal immigration, a lengthening of mandatory sentences for certain crimes and other factors have overcrowded many government facilities. Prison-policy experts expect inmate populations in 10 states to have increased by 25% or more between 2006 and 2011, according to a report by the nonprofit Pew Charitable Trusts.

Monbiot provides some evidence that private prison lobbyists are hard at work in the UK. He says:

Unlike civilised nations, the UK has no register of lobbyists; we are not even entitled to know which lobbyists ministers have met … But there are some clues. The former home secretary, John Reid, previously in charge of prison provision, has become a consultant to the private prison operator G4S … The government is intending to commission a series of massive Titan jails under PFI. Most experts on prisons expect them to be disastrous, taking inmates further away from their families (which reduces the chances of rehabilitation) and creating vast warrens in which all the social diseases of imprisonment will fester. Only two groups want them built: ministers and the prison companies: they offer excellent opportunities to rack up profits. And the very nature of PFI, which commits the government to paying for services for 25 or thirty years whether or not they are still required creates a major incentive to ensure that prison numbers don’t fall. The beast must be fed.

So it is highly likely that in NSW we are becoming entrapped by the same lobbying process which creates an incentive to imprison increasing numbers of people so that the private operators can make more money. If it doesn’t make enough money, the private operator will walk away and all the risk is dumped back on the public sector – well to be more accurate, the risk is never transferred … only huge volumes of public money are transferred to “buy” sub-standard services in return.

These privatisations and outsourcings and whatever else they have been called are one of the dirty jokes that the neo-liberal era visited on all of us in the name of economic efficiency and responsible government. I use the word “joke” because the beneficiaries of all this public largesse must have been laughing all the way to the bank as the stupid public officials (governments etc) fell prey to their lobbying and joyfully handed over the keys to the public purse. Overall, these events were an integral aspect of the way governments abrogated their true responsibilities to pursue and safeguard public purpose. Governments should never have become agents of private profit. The fact they have become such agents goes a long way to explaining why this huge global economic and social crisis is now upon us.

The prison system should always be run as a matter of public purpose free from any private profit-seeking. If the government (or anyone else) is worried about the level of spending (or more importantly, the quantity of real resources) that is being devoted to maintaining the prison system then there are things that the government can do to minimise it:

  • First, ensure that there is full employment. The relevant research clearly shows the link between entrenched joblessness and rising crime rates. The first responsibility of government is to ensure there is income security for all of the population and this requires that it ensures there are jobs available for all at all times.
  • Second, high quality public provision of early childhood education and primary schooling is required. The research again shows that most of the problem relating to criminal propensities begins in the early years. At present the OECD has ranked our early childhood performance in Australia as being sub-standard. The neo-liberal years saw governments abandon there responsibilities in this crucial area. That needs to be reversed.
  • Third, enlightened policies with respect to severing the link between drug dependence and crime. Drug addicts need to receive medical support and not be processed by the criminal system. Once again this is the a public responsibility and we fail badly at present.

The relevant research suggests there are other things the public sector needs to do to reduce crime rates and I won’t go into them here. The important point is that this is an area of public purpose which should never get caught up in profit-seeking. The basis of Public-Private Partnerships (PPPs), which has been a significant neo-liberal strategy to reduce the involvement of government in matters of public purpose and instead turn “public service” into profit maximisation, is thus flawed.

In future blogs I will write about why the experiment with PPPs in this country have failed and should not be considered a valid form of public policy. I will show that in PPPs, public purpose disappears and governments become underwriters of private profit. I will write about how trade union superannuation funds have become compromised by the participation in PPPs and the conflict of interest that it presents the union movement. I will argue that risk is never transferred to the private sector. The only things transferred are public oversight in the infrastructure planning process and the delivery of public services; huge volumes of public funds; and, ultimately, the overriding public purpose of interest becomes usurped by the unquenchable pursuit of private profit. Not a good look at all.

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    One Response to Privatisation … was yesterday’s joke

    1. The Conservative says:

      While I may not share your overall pessimism about privitisation, I do believe that governments should be utmost careful that basic state facilities like prisons do not become private pools of corruption.

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