NZ: National pushes ahead with more privatisations

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In May the National government opened New Zealand’s first privately owned prison in Auckland. At the same time the Health Minister announced the trial of ‘social bonds’; effectively rewards for private corporations that are prepared to run social services such as counselling for mental health patients.

The new prison, Auckland South Correctional Facility/Kohuora, is owned and operated by a group of companies that include the notorious Serco, which manages prisons in Australia and elsewhere, and the New Zealand government-owned Accident Compensation Corporation.

The contract is for 25 years and is worth $840 million to the shareholders. This is 17% cheaper than the cost of a state-run prison of equivalent size. The 17% saving will be achieved by having a much smaller workforce; less than half the size of comparable public prisons.

Those staff will also be paid less and work longer hours, according to CANZ, the prison officers’ union. The amount paid to the group of companies is not linked to the number of prisoners at the prison; they will continue to get paid even if there are no prisoners there at all!

Despite the fact that New Zealand has the second-highest proportion of people in jail amongst Western countries, this prison was not needed. When the contract was announced there were actually 1600 prison beds empty across the country. The building of the new prison is a blatant exercise in transferring taxpayer funds into the pockets of the few wealthy shareholders of those corporations.

Making matters worse, Serco has a record of inflicting physical and sexual abuse on prisoners, using prisoners as slave labour and defrauding governments. Social agencies and church groups responded to the news of the private prison with horror. The Salvation Army stated that building new prisons is “the inevitable consequence of the criminalisation of the poor”. It is clear that with cuts to benefits on the agenda more and more poor people will inevitably end up in this for-profit jail.

The government has also announced that it will be exploring the provision of social services through the offering of ‘social bonds’. In the same month in which Relationships Aotearoa, a state-funded relationship guidance and counselling service, collapsed after 60 years due to funding cuts, the Ministry of Health is looking for corporations to ‘partner’ with in order to provide similar services.

Any corporation who contracts to the government to provide social services will be provided bonds that can be cashed in if the appropriate targets are met by the new service. As with the new private prison, profits will be achieved by employing former public servants at lower rates of pay and by delivering minimal services to their clients.

The opposition Labour Party has said very little in regards to these privatisations, and with good reason. The 4th Labour government led the world in selling off the state owned assets paid for through the taxes of New Zealand workers over the previous century.

In contrast the current National government has treaded lightly on privatisation. They are well aware that ordinary working people in New Zealand have what Prime Minister John Key called “a socialist streak”, in a 2007 private discussion with an American diplomat.

Instinctively people understand that privatisation is a method that big business uses to increase their profits at our expense. Far from selling things off we need to see all of the key sectors of industry brought into public hands and managed democratically by elected bodies of working people. Then we could start to plan for the needs of society in a planned and rational way.

By Joe Kelly