Privatisation

ardmacha

After some interaction the the NDLS, an complete shower of jokers, the limitations of privatisation Irish style are obvious.

The limits of many public services are obvious, but my previous interaction with the driving licence service was not especially problematic. If a public service is inadequate then this become a matter of public debate and you can in principle complain to someone about it or talk to your local politician.

But with these outsourced services there is no recourse. They have a monopoly and can treat the customer with complete contempt without any possibility of the customer avoiding them in future.

We seem to now have the worse of both worlds. The direct delivery of public services, often sloppily done, has now been replaced by sloppy outsourcing agreements which do not put any obligation on the service provider to actually provide any particular level of service. Privatisation of such things has merit, but only if there are clear service levels required and clear penalties for not meeting these. Better still if the penalties accrue to the member of the public not given the service rather than just going back to the government, for instance the requirement for the toll gates to open if the queue gets too long.

Is there any hope in this country?

Sheldons Brain

Varadkar is one of those that espouse privatisation. But when he had a privatisation in his own department and a chance to set principles for a successful privatisation that might provide a template for the future, NDLS shows that he hadn't the competence to do this. I suppose the only saving grace is that he didn't remain a doctor, at least the present mess probably won't kill anyone.

benway

ardmacha wrote: »

We seem to now have the worse of both worlds. The direct delivery of public services, often sloppily done, has now been replaced by sloppy outsourcing agreements which do not put any obligation on the service provider to actually provide any particular level of service. Privatisation of such things has merit, but only if there are clear service levels required and clear penalties for not meeting these. Better still if the penalties accrue to the member of the public not given the service rather than just going back to the government, for instance the requirement for the toll gates to open if the queue gets too long.

What ever makes people assume that private sector provision will self-evidently be less sloppy than public?

I've seen more sloth, waste, apathy, ineptitude, corruption and general inefficiency in private enterprises than I ever have in the public sector.

The assumption that private and for profit = better is just another heirloom of a failed ideology from where I'm seeing it.

bluefinger

The trick is that the government care not a jot for service provision. Outsourcing is a money saving exercise. Little to do with so called efficiency.

dublinman1990

bluefinger wrote: »

The trick is that the government care not a jot for service provision. Outsourcing is a money saving exercise. Little to do with so called efficiency.

Another thing is that where will the PS employees go, who provided that service, after it's outsourced to a private company?

I would think that the PS employees would left to stay and rot in the PS doing nothing or go unemployed. A reduction in staff numbers would generally mean that it's a reduction on the PS workload for the Government.

I agree that outsourcing is good in theory of reallocating workloads but bad in terms of reducing actual efficiency in the PS.

markpb

There are good and bad examples of privatization. Without knowing all of them and the detail of each one, it's impossible to make a call on whether they're a good idea or not.

Luas by Veoilia is well run while NCPS by SGS (I think?) is not. M50CL seems to be well run, but it's hard to tell. Lloyds did the track maintenance for Irish Rail for a while (possibly still do?) and with the exception of the Malahide viaduct which was firmly in Irish Rails remit, the track certainly seems functional.

Of course, who's to say that any effort but either public or private sector to setup a completely new system of driving license issuing would go well?

ardmacha

bluefinger wrote:

The trick is that the government care not a jot for service provision

This is the point, whatever the exact detail of the service provision on the ground, it is ultimately controlled by venal politicians who do not give a damn about service to the public, as long as they get elected.

markpb wrote: »

Of course, who's to say that any effort but either public or private sector to setup a completely new system of driving license issuing would go well?

This suggests that it is a bit of a lottery, which should not be the case. The number of driving licences is known, their expiry dates, the number typically lost, the number of new drivers arriving each year etc. It should be possible to plan a system on this basis with a proper and transparent booking system and minimal turnaround times for documents. While the storms of February might have demolished a centre and this would be an unknown, there should be clear procedures for dealing with foreseeable events like powercuts, system downtime etc. Just telling the customer to clear off, without apology or compensation, is not a proper response to these things.

In addition to the present CAG, there should a Customer Auditor who examines whether public services have made some provision for the customer, as distinct from their own self serving convenience and ensures that any outsourcing contracts etc contain proper service levels.

Tony EH

Certain things should never be privatised.

Governments love it though, because it subtracts their responsibility and transfers it to a body that doesn't care about public opinion.

Government can rise and fall on how well they handle essential public services and care about the the votes that that handling yields or gives. That's why they are usually so eager to offload it.

Private concerns don't give a shit. The bottom line is their only concern.

The current privatisation of waste handling in this country should be a shining light to how awful privatisation can be. I won't even mention Railtrack in the UK.

For Reals

It's the idea that taking the burden off the tax payer and letting some private company take over is best.
If the concern can't make money, why would anyone buy it? If it is making money, why sell it?
As posted above, we lose public accountability for sometimes essential services and are usually left with a private monopoly calling their own shots.
We should never privatise essential utilities and if we sell off anything the public should in the least have options of other parties to deal with, if you want a true capitalist set up, if that being the argument for.

Iwasfrozen

For Reals wrote: »

It's the idea that taking the burden off the tax payer and letting some private company take over is best.
If the concern can't make money, why would anyone buy it? If it is making money, why sell it?
As posted above, we lose public accountability for sometimes essential services and are usually left with a private monopoly calling their own shots.
We should never privatise essential utilities and if we sell off anything the public should in the least have options of other parties to deal with, if you want a true capitalist set up, if that being the argument for.

It's not as simple as that, the same state run company may be running at a loss due to bureaucratic inefficiency but a private company that can pay it's workers less, make them work longer hours and cut waste in the system may be able to turn it into a profitable company.

Tony EH

Iwasfrozen wrote: »

It's not as simple as that, the same state run company may be running at a loss due to bureaucratic inefficiency but a private company that can pay it's workers less, make them work longer hours and cut waste in the system may be able to turn it into a profitable company.

Since when was that ever a good solution to poor management?

It's certainly not a argument for privatisation, that's for sure.

Iwasfrozen

Tony EH wrote: »

Since when was that ever a good solution to poor management?

It's certainly not a argument for privatisation, that's for sure.

When did I say it was a solution to poor management?

And of course it's a good thing, workers working more hours for less money means cheaper service for customers and the new owners may actually make a profit out of a company that was losing taxpayer's money prior to privatization.

Tony EH

Iwasfrozen wrote: »

It's not as simple as that, the same state run company may be running at a loss due to bureaucratic inefficiency but a private company that can pay it's workers less, make them work longer hours and cut waste in the system may be able to turn it into a profitable company.

Iwasfrozen

Tony EH wrote: »

ardmacha

Iwasfrozen wrote: »

When did I say it was a solution to poor management?

And of course it's a good thing, workers working more hours for less money means cheaper service for customers and the new owners may actually make a profit out of a company that was losing taxpayer's money prior to privatization.

Badly paid badly motivated staff in a ramshackle system will never provide decent customer service. Adequately paid people working in an efficient system will be both good value and will provide good customer service.

Scofflaw

Iwasfrozen wrote: »

When did I say it was a solution to poor management?

And of course it's a good thing, workers working more hours for less money means cheaper service for customers and the new owners may actually make a profit out of a company that was losing taxpayer's money prior to privatization.

One problem there is that those people now "working more hours for less money" are also citizens and taxpayers.

cordially,
Scofflaw

For Reals

Iwasfrozen wrote: »

When did I say it was a solution to poor management?

And of course it's a good thing, workers working more hours for less money means cheaper service for customers and the new owners may actually make a profit out of a company that was losing taxpayer's money prior to privatization.

From the point of view of the private owner, great yeah. They always pass these saving on to the customer
I can't look at the country like that. We did with the bailouts and we got a few pats on the back from the EU for being good little boys and girls, but was it worth it? You can't run a country like a business without treating the public like employees. We at least employ or are on level with the government, although I'll grant it never feels like it. Of course we need make profits in areas to compensate for a decent standard of living in others. That's the way it works. Once you start singling out areas you'll soon be left with nothing except a government with nothing to govern except the collection of taxes for nobody remembers what as everything is privatised.
A profit based private concern will not supply a bus route, broadband, water, electricity or anything else if it isn't making money. The government or state run agencies are more inclined to be made do so, be it by parish pump politics or whatever. Profit or not, the state would be obliged to draw funding from elsewhere to ensure the citizens are served. A private concern is not obliged.

The Garda don't make a profit, I await Rob O'Cop with great glee.

I've never seen any advantage from privatization, (see London water, higher prices/bad service/leaks). Yes, some money changes hands, but I don't recall my cheque or a lowering of my taxes that week.

Iwasfrozen

ardmacha wrote: »

Badly paid badly motivated staff in a ramshackle system will never provide decent customer service. Adequately paid people working in an efficient system will be both good value and will provide good customer service.

You're making a lot of assumptions there. First you assume the staff will be poorly motivated this need not be the case. People are motivated by more than money.

Then you assume the system will be ramshackle. I would say the opposite is actually true. Companies who purchase state assets are looking to enter a new industry. Investment in the company usually follows.

Valmont

benway wrote: »

The assumption that private and for profit = better is just another heirloom of a failed ideology from where I'm seeing it.

It's not an assumption, it's a fact. The profit motive and the possibility of losing one's customers is a greater push for better service than any number of regulations, guidelines, or promises, which is all a state monopoly (outsourced or not) can provide.

In my business experience I have seen the wastefulness and ineptitude of the state equaled on multiple occasions by private companies. The key difference is that those companies went out of business in fairly short order and someone more capable fulfilled the needs of their customers.

Tony EH

Iwasfrozen wrote: »

People are motivated by more than money.

True.

But, I'll tell what what people are universally NOT motivated by...

Iwasfrozen wrote: »

When did I say it was a solution to poor management?

And of course it's a good thing, workers working more hours for less money means cheaper service for customers and the new owners may actually make a profit out of a company that was losing taxpayer's money prior to privatization.

Iwasfrozen

Scofflaw wrote: »

One problem there is that those people now "working more hours for less money" are also citizens and taxpayers.

cordially,
Scofflaw

Granted we receive less from the workers income but the benefits of getting an unprofitable state company off government books and collecting taxes on any profit a private owner collects more than makes up for this.

Iwasfrozen

Tony EH wrote: »

True.

But, I'll tell what what people are universally NOT motivated by...

Too bad,

Tony EH

Oh dear...

benway

Iwasfrozen wrote: »

bureaucratic inefficiency but a private company that can pay it's workers less, make them work longer hours and cut waste in the system may be able to turn it into a profitable company.

Luas pretax profit down 25% ... "due to increased administrative costs"

Seems to be an article of faith in some quarters that Bureaucratic Inefficiency™ is unique to the public sector. Much as some would have us believe that the private sector consists entirely of Heroic Entrepreneurs™, spend a month working for, say, a bank, financial services company, a multinational or other private organisation with more than a handful of employees and the truth will become apparent - they are bureaucracies just the same as the public sector.

As others have pointed out, another difficulty with your argument is that it rests on the deeply questionable assumption that Fatcat Public Servants Are Overpaid™ and even accepting that deeply questionable assumption, the further assumption that cutting pay and increasing hours = efficiency.

I have asked many, many times at various corners of the internet for some kind of evidence of the Superiority of Private Sector Efficiency™ over Public Sector Inefficiency™, and I've always come up empty handed.

ardmacha

Iwasfrozen wrote: »

Then you assume the system will be ramshackle. I would say the opposite is actually true. Companies who purchase state assets are looking to enter a new industry. Investment in the company usually follows.

I started this thread about NDLS. Recent personal experience suggests that the people on the ground there are fine, but those who design their processes are not. But people quickly become demotivated delivering dysfunctional processes and having to defend the indefensible. There is no incentive for such an organisation to invest because they have a monopoly and have exactly the same business however they treat their customers.

Iwasfrozen

For Reals wrote: »

From the point of view of the private owner, great yeah. They always pass these saving on to the customer
I can't look at the country like that. We did with the bailouts and we got a few pats on the back from the EU for being good little boys and girls, but was it worth it? You can't run a country like a business without treating the public like employees. We at least employ or are on level with the government, although I'll grant it never feels like it. Of course we need make profits in areas to compensate for a decent standard of living in others. That's the way it works. Once you start singling out areas you'll soon be left with nothing except a government with nothing to govern except the collection of taxes for nobody remembers what as everything is privatised.
A profit based private concern will not supply a bus route, broadband, water, electricity or anything else if it isn't making money. The government or state run agencies are more inclined to be made do so, be it by parish pump politics or whatever. Profit or not, the state would be obliged to draw funding from elsewhere to ensure the citizens are served. A private concern is not obliged.

The Garda don't make a profit, I await Rob O'Cop with great glee.

I've never seen any advantage from privatization, (see London water, higher prices/bad service/leaks). Yes, some money changes hands, but I don't recall my cheque or a lowering of my taxes that week.

Privatised utility companies will service rural areas, either by government mandate as we have now or by allowing prices to rise to represent the additional cost of servicing people in these areas.

benway

Valmont wrote: »

It's not an assumption, it's a fact. The profit motive and the possibility of losing one's customers is a greater push for better service than any number of regulations, guidelines, or promises, which is all a state monopoly (outsourced or not) can provide.

I'm familiar with the theory. I await any kind of persuasive empirical proof.

Tbh, my first hand experience of working in private bureaucratic morasses didn't reveal the slightest jot of evidence for "better service" being the key consideration viz a viz the "profit motive", but rather lowering costs. Which in turn led to less efficient service and in turn led to staff having to deal with unhappy customers day in day out.

Although, fwiw, while one of the examples I'm thinking of is undoubtedly struggling, albeit probably more for the reason that it was overly dependent on the property market to start with than its organisational shambles, the other main example I'm thinking of is still doing just fine.

Scofflaw

benway wrote: »

I'm familiar with the theory. I await any kind of persuasive empirical proof.

Tbh, my first hand experience of working for bureaucratic morasses in the private sector didn't show the slightest jot of evidence for "better service" being the key consideration viz a viz the "profit motive", but lowering costs. Which in turn led to less efficient service and having to unhappy customers.

Although, fwiw, while one of the examples I'm thinking of is undoubtedly struggling, albeit more so probably for the reason that it was overly dependent on the property market to start with, the other main example I'm thinking of is still doing just fine.

There is empirical work on the subject - see, for example: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.201.3522&rep=rep1&type=pdf

The thing about privatisation is that it works best where the market is large, open and competitive, whereas some examples of privatisation are from markets which are small, closed and monopolistic. That latter will tend to be the case in Ireland, and is particularly true of privatising a naturally monopolistic service. There is only one driving licence, there isn't really a competitive market in driving licences, so a privatised company is actually in the position of a monopoly provider under State licence, which is not historically a position that provokes great efficiency. In theory the company is always at risk of losing the contract to supply the services, but inertia often prevails.

cordially,
Scofflaw

benway

Scofflaw wrote: »

There is empirical work on the subject - see, for example: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.201.3522&rep=rep1&type=pdf

There's a first time for everything - will pop that one in my in-tray, thanking you.

To be fair, I have read quite a few papers on the topic to date off my own bat, but I'm not finding the empirical evidence that I've seen particularly persuasive.

The problem is that "microeconomic efficiency" or "productive efficiency" gains don't much seem to correlate with efficiency in the ordinary sense of the word, as I've seen it. Granted, this is purely anecdotal, but I've never seen an example of "more with less" or even "the same, with less" working out in the real world. I find it difficult to believe that, except in cases of gross mismanagement, "outputs" can truly remain at the same level while costs go down and profits go up - I'm not aware of a rigorous hybrid empirical/qualitative study on this, though.

Karl Stein

Valmont wrote: »

The profit motive and the possibility of losing one's customers

Ah yes, the assumption of 'perfect competition' or in other words 'total fantasy'.

Valmont wrote: »

any number of regulations, guidelines, or promises, which is all a state monopoly (outsourced or not) can provide.

Often a 'monopoly' is the only way to ensure a degree of efficiency that the profit motive cannot. Consider a plethora of profit seeking electricity supply companies running innumerable cables alongside one another to every home in the land and back to numerous generating stations. Or how about multiple road companies running roads parallel to each other in competition? The notion is absurd.

Sheldons Brain

I don't think you can have multiple driving licence agencies, so it is natural monopoly. Because of this care must be taken in its administration and this does not seem to have happened.