Friday, February 08, 2013

Zoe Williams on outsourcing

Today's must read: the guardian's Zoe Williams on the outsourcing of public services. Its written about the UK (where outsourcing has advanced further than anywhere else), but with National pursuing a similar agenda, its relevant here:

[Outsourcing] is all based on the principle that the public sector is inherently inefficient. Hand it over to private companies and they will swoop in with their efficiency, their economies of scale, their incentives and their competitiveness, winnowing it down into a dart of perfectly targeted public spending.

In practice, when they say efficiency, that generally means lower wages. When they say economies of scale, that generally means constructing the contracts in such a way as to leave only the largest companies eligible to bid for them. When they say incentives, look closely and you will mainly see perverse incentives. And when they say competition, what you're actually left with is four or five – sometimes only three – companies, who barely compete with one another at all but instead operate as an unelected oligarchy.

And when you're talking about government services that rely on personal interactions with people - e.g. employment assistance, probation monitoring, or old-aged care - it means doing them worse, while charging a premium, and with less democratic control and even less oversight. But it gets even better:
What happens when these firms, with their inexorable expansionist logic, bite off more than they can chew? We pay anyway. We paid G4S; we will pay it again when its prisons catch fire. We will pay A4e when it finds no jobs, we will pay Serco when its probation services fail. We will pay because even when they're not delivered by the public sector, these are still public services, and the ones that aren't too big to fail are too important. What any government creates with massive-scale outsourcing is not "new efficiency", it is a shadow state; we can't pin it down any more than we can vote it out. All we can do is watch.

And we're seeing this here in New Zealand with Novopay. the government can't just stand back and let the teachers go unpaid (otherwise parents will find themselves minding their own kids). So, we pay Talent2 to run a payroll system, then we pay Datacom to run a backup and pay schools extra to cover the mistakes. So much for "efficiencies of scale"...