The Drive to Privatise

The Government plan to privatise bus routes and its remaining stake in Aer Lingus is just the latest episode in the ongoing neoliberal agenda driven by the interests of a corporate elite both here and internationally.

Socialist Worker 380

The Drive to Privatise

Owen McCormack, SIPTU and Dublin Bus driver

The Government plan to privatise bus routes and its remaining stake in Aer Lingus is just the latest episode in the ongoing neoliberal agenda driven by the interests of a corporate elite both here and internationally.

Despite claims that privatisations are about efficiencies, better services and value for customers, the repeated experience of past privatisations is that workers’pay and conditions are decimated, jobs are shredded or contracted out to non-union subsidiaries while actual services do not improve.

Only an elite connected to multinational corporations has benefited and the current privatisations will be no different to past experiences. Privatisation has been the chief neoliberal policy across the globe that has shifted massive wealth and resources to these tiny elites at the expense of most of humanity.

The real aim is not economic efficiency but to deepen the neoliberal agenda started in the 1980s by Thatcher and Regan. Neoliberalism wants to force states to privatise all services and ensure multinational corporations can boost their control and profits in every sphere of the economy.

It aims is to commodify and marketise all services from health and education to water and transport. This agenda attacks the very idea of democratically elected governments using the state to provide vital public goods such as housing .They argue that only the market and private companies should provide these services as the public sector is inefficient and full of well-paid unionised workers.

The Class Agenda

Behind the rhetoric of efficiency and competition lies a very clear class agenda. Attacks on the public sector and early privatisations in Britain for example were about undermining unionised workplaces and the potential power of organised labour. They were also seen as a quick fix for a crisis of falling profitability in the global system in the late 1970s. State assets were sold off cheaply to private operators and windfall profits were generated in newly privatised industries that remained monopolies, but were now private ones operating for profit.

Since the 1980s, the ruling class has used institutions like the World Trade Organisation and the International Monetary Fund to police and enforce new global trade and financial rules that insure both more “open markets” (i.e.  the privatisation of previously nationalised industries) and that Governments comply with “competition” rules.  The purposed TTIP agreement is yet another episode in the deepening of neoliberal rules aimed at enforcing a corporate agenda in all spheres of social and economic life..

Because of disastrous past experiences and widespread opposition, new forms of privatisation such as tendering competitions and Private Public Partnerships (PPPs) are increasingly pushed instead of outright privatisation; but the end goal remains the same; enrich the few, attack workers’ rights and bring the free market into every part of the economy.

Ireland’s record of privatisation as well as international experience exposes the myths and realities of privatisation.

Buses;

The Government plan to privatise 10% of Dublin Bus and Bus Eireann routes. The National Transport Agency (NTA) wants to organise tendering competitions for these routes, i.e. private companies bid for the state subsidy to operate the route. The NTA wants ALL services to face similar competitions in the future. Only larger private companies can tender, and most of these have connections with multinational transport companies such as First Bus and Arriva.

The winners will get buses directly from the state company. The aim is to get lower paid workers in the private sector to drive down the wages and conditions of the unionised public sector by forcing competition for routes; the lowest bidder will inevitably win and labour costs are always the single biggest variable cost in providing transport.

Similar policies in London decimated drivers’ wages and conditions, while bizarrely the actual subsidy paid for public transport had to rise to satisfy profit demands of these private companies. Not a single extra bus or service will be provided by this policy.

The NTA justifies its policy by citing a report from Ernst and Young, one of the various “expert” consultancy firms that are paid to produce reports that always say privatisation is better regardless of any conflicting evidence.

Aer Lingus.

Despite so called guarantees from new owners IAG workers in Aer Lingus face more attacks on jobs, pensions and conditions in the years ahead having already made huge sacrifices supposedly to rescue their company. The company made €72 million in profits last year , has over one billion in cash reserves and 24 Heathrow landing slots that are estimated to be worth 30 million each.

Guarantees from IAG on a registered employment agreement are meaningless; similar agreements were smashed by court rulings when hoteliers and others took legal cases against them to avoid having to pay their workers a basic decent wage. IAG will have no interests in Ireland’s “connectivity” its only interests will be profits for shareholders and directors

Aer Lingus’s Board of Directors pushed the deal claiming it had a “compelling  economic  logic”;  the deal will see the twelve board members and executives   personally pocket about €30 million  between them.

Bord Gais.

Privatised last year, the Government and Labour minister Pat Rabbit sold it to British giant Centrica and two other firms. The deal allowed Centrica to defer part of its payment, making it dependent on how much profit it actually earns in the first few years. It was estimated that the state lost €350 million on the sale of Whitegate power plant in Cork as part of the deal. It also sold wind farms belonging to Bord Gais, worth over €950 million to Brookefield Renewable energy for just €495 million . The Government tried to claim the Troika made them sell off the company, but privatising the state’s energy companies was always Fine Gael policy.

Irish Sugar/Greencore, privatised in 1991, set the standard for corruption when its directors pocketed over £10 million by fraudulently buying shares in a subsidiary and then reselling the company back to themselves at an inflated price. Then they closed down all sugar processing factories and instead bought up profitable food companies abroad in pizza and sandwich making. By 2006 the last sugar processing factory in Ireland was closed with the loss of 300 jobs.

Telecom Eireann / Eircom; Privatised in 1996, it was used by the Fianna Fail Government and minister Mary O’Rourke to push the idea of a “shareholding democracy”: we could all be capitalist now, not just a small elite. Thousands of ordinary workers were encouraged to borrow money and buy shares. Many did, but within two years the share price collapsed and small investors lost. The company would be repeatedly sold from one vulture capitalist outfit to another, each time making  huge profits as they loaded the company with new debts while also failing to adequately invest in the country’s IT infrastructure.

Private Public Partnerships have been used to build public housing, roads, motorways, schools and even the Dublin Convention centre. The schemes mean taxpayers end up spending vastly more for each asset than if the state simply funded it directly. Private operators and investors are guaranteed profits and take no risk in their investments. The reliance on private sector involvement mean  that if profits are in doubt the schemes can collapse, thus the redevelopment of public housing schemes in Inchicore, and North Dublin were abandoned when a private builder (Bernard McNamara) pulled out of developments during the crash.

Third World Privatisations; The IMF and World Bank forced third world countries to privatise large sections of their economies in return for bail outs under structural adjustment programmes throughout the 1980s and 1990s in a process similar toIreland’s bail out. This  saw widespread corruption and the devastation of vital social services for already weak states; user fees were introduced for basic services like water, education and health.

Multinational corporations, often from the original European coloniser, moved in and got state assets at bargain prices while corrupt local elites and politicians became partners in the privatised industries. Military and political elites in many parts of Africa from Nigerian generals to the family members of dictators like Dos Santos in Angola now head up privatised companies and amass fortunes despite widespread poverty for most of their populations. Water privatisation in South Africa saw French MNC Suez  introduce user fees and water metering that cut off over 10 million poor people’s supplies. A subsequent cholera outbreak killed hundreds and affected over 80,000 people.

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