Wall legacy will include costs of outsourcing

Brad Wall’s choice to pick a losing fight with Alberta over contractors’ licence plates — and the resulting backlash from all but the most blinkered of Saskatchewan Party and United Conservative Party mouthpieces — has ensured that his departure from the premier’s office will include some immediate recognition of his failings as a premier.

But while an evidence-free political attack on a neighbouring province makes for a readily understandable parting narrative, Wall’s more lasting impact will be found in choices which can’t be so easily reversed. And a much more important story has developed which should serve as a cautionary tale for his successor.

Earlier this month, the British construction company (and provider of outsourced public services) Carillion LPC went into liquidation.

A business which had been seen as reputable enough to be entrusted with the operation of hospitals, schools, prisons and other vital public services reached the point of shutting down due to unrealistic operating margins. And the result was to put those services (not to mention tens of thousands of jobs) in imminent danger before the U.K.’s government stepped in to resume providing them.

Theresa May’s Conservative government tried to deflect responsibility by saying it was only a customer of the corporation it chose to perform essential services — not a manager which held any direct power. But while that may explain how Carillion’s collapse came as an unpleasant surprise, it hardly represents an excuse for abandoning the government’s management role in the first place.

In other words, Carillion represents a stark real-world example of the myths behind the privatization of services.

The arrangements made to maintain our schools, care facilities and highways will also be at risk due to corporate choices.

On paper, Carillion agreed to reams of contracts which were trumpeted as transferring risk from the public sector to the private sector. But in reality, those deals resulted primarily in plenty of money being extracted by executives and shareholders while the going was good — while the British public was left to clean up the mess once Carillion’s house of cards collapsed.

The Saskatchewan connection to Carillion lies in the public-private partnership set up to build and operate North Battleford’s new hospital, which was relying on Carillion’s Canadian arm to provide maintenance for three decades after the hospital’s completion.

Needless to say, Carillion won’t be performing the maintenance work which was assigned to it. And once again, while the formal risk involved in finding a replacement falls on a one-off partnership formed to build the hospital, the reality is that the province can’t walk away from the need to maintain its major infrastructure.

Meanwhile, Wall’s more general preference for public-private partnerships and outsourcing has left Saskatchewan exposed to long-term contractual liabilities, as well as decades of dependence on other corporate service providers built on the same model as Carillion. Because of the Saskatchewan Party’s ideological choice to turn public services into generators of private profits, the arrangements made to maintain our schools, care facilities and highways will also be at risk due to corporate choices.

Unfortunately, that means we’re locked into long-term contracts which provide far less certainty than advertised. But it also means that any realistic assessment of Wall’s privatization model — not to mention his mismanagement of Saskatchewan’s finances — will need to account for the hidden costs and dangers of placing too much faith in private providers.

Now, we do have time to change direction to avoid taking on even more risk. And with a change in leadership set to occur in short order, we should expect that our future premiers will learn better than to turn a blind eye to the downside of privatization the way Wall has.