EDITORIAL - Privatisation not always feasible

 

Who will pay? 
 
That question was asked earlier this week by the Minister of Finance and Economic Affairs, Christopher Sinckler, in response to the continued calls for several government entities such as the Sanitation Service Authority (SSA), the School  Meals Department, the Transport Board and the Barbados Water Authority (BWA) to be privatised.
 
Over the past few years and more so in recent months, Minister Sinckler has been reacting to the talk of privatisation, indicating each time that any efforts by Government to sell off State enterprises had to be focused on commercial entities, rather than those which offered social services. But even in that respect, the profitability potential of some of those commercial entities is negligible and their debts high, and so it would not make sense to pursue such ventures either.
 
Again this week the Minister was at pains to stress these points, contending that if Government decided to privatise social service entities, it was likely to negatively impact the delivery of those services to the public. He carefully and articulately laid out his argument, explaining that changing the management of some of the agencies would not solve the problem, as there would still be the question of who would pay. And he is right!
 
Too often we jump on bandwagons without stopping to properly think through the situation – looking at the advantages and disadvantages of a particular idea. The issue of privatisation is one such matter. 
 
The fact is Barbadians relish and are proud of their way of life, we boast, for example, of having free education and free health care (at the point of delivery), but then complain about the taxes imposed on us to maintain that lifestyle. But these things are only free to the end user, so we have to pay indirectly to access them.
 
So that if steps are taken to privatise the BWA or the SSA, then the cost of water and waste management will rise. At present we pay for the former at rates which are said to be marginal, compared to the cost of actually running the entity; and in the latter case we are currently not paying at all for the daily collection of garbage, which means that the entity is probably operating at a loss. These are the realities that Government must continue to ring home to those who continually call for such entities to be put into the hands of the private sector.
 
While Government does seem willing to sell some state enterprises – such as Barbados National Oil Company – for Government to take a similar position as it relates to entities which meet the social wants and needs of the public, we feel would be a step in the wrong direction.  
 
We feel that this would in fact cost the country more in the long run, as Government would probably be forced to provide the private sector buyers with subsidies to keep those agencies afloat and in financial reach of the wider population; especially those who can least afford it. That could result in even higher taxes. The other possibility is that the middle class may be further reduced as these persons find it difficult to meet their expenses, having to pay high costs for things now considered “free”, which would in turn place greater burden on the State to provide for those who fall within the lower income bracket.

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