Sunday, November 14, 2010
Owen McShane: Large Scale Cities require Small Scale Advisors
While privatisation was a great idea when first proposed – and still is in many cases – in recent years the privatisation process has been largely taken over by these large consulting firms who have no interest in increasing efficiency and every interest in milking the system.
As Clint Krislov says in the introduction to Aaron M. Renn's Newgeography essay "The Privatization-Industrial Complex":
“I think this is just the latest way for people to make money off state and local governments. This is the new way the investment banks, their lawyers, and consultants squeeze the taxpayers. ... They’re going around making these deals, and it’s very lucrative. It’s like a circus coming to town.” - Clint Krislov
Renn acknowledges that "Traditionally, privatization was used as a tool that subjects government monopolies to competition from the marketplace, driving down costs and improving quality of service".
However, he reminds us, "Today, sadly, privatisation is less about operational effectiveness and more about providing jackpots for financiers who stand at the core of a growing privatization-industrial complex."
While cost escalations of large infrastructure projects within large public organisations are relativley common, the same "multinational takeover" now permeates all kinds of activities, in all manner of public bodies, from the very large to the very small.
Not long ago in New Zealand, most local District Councils employed an in-house engineer (indeed the City Engineer used to essentially share the CEO partnership with the Town Clerk), the District Plan was written by a local firm of surveyor/planners, resource consents were processed by local planning firms, and the City Engineer or an in-house Contracts Manager managed the roading and other construction and maintenance contracts.
Similarly, local contractors carried out the maintenance projects and built the swimming pools or whatever.
The rates that funded these activities stayed within the District.
These days the smallest council is likely to grant a monopoly contract to a major multinational to manage the resource consent process, and to another multi-national to write the District Plans, and even employ a third multinational to negotiate the contracts with these major corporates. These monopoly contractors have no stake in the local community and their rational self-interest lies in generating as much work as possible and collecting as much revenue as possible.
District Plans get thicker and thicker and soon local applicants have to employ multinational planning consultants to prepare the applications now demanded by these massive and complicated plans. Their consultants proceed to bleed the applicants dry while writing applications designed to match the size and complexity of the Planning Documents.
When the music stops the consulting firms swap chairs but just clip a different set of tickets.
Large multinational corporations are much more comfortable dealing with other large multinationals and so inevitably we find that local Councils are soon granting all the construction and maintenance projects to other large corporations most of which operate well outside the region.
Why aren't local companies winning any contracts?
The general solution to this problem of ever-expanding empires, dedicated to clipping the ticket, rather than serving the local community, is to promote genuine local or even sub-local government in those areas where the locals genuinely know best and have to live with the outcomes of decisions, and their impacts on friends and neighbours.
at 9:26 AM