I WAS NOT ABLE TO ATTEND last week’s chamber meeting to hear Dr Terrence Farrell speak on the increasingly urgent topic of privatization.
I wanted to hear his list. You know, what state entities he would draw up IPOs for, and whether these would be country-specific or region-general, as in: “We should privatize all of our seaports and airports as soon as possible.” The low-hanging fruit, if you will.
Alas, the good doctor would not be drawn, as I realised on reading through his nine-page, 2 500-word speech kindly forwarded to the media by the Barbados Chamber of Commerce and Industry.
Instead, Farrell gave us a description of the state of play, noting that trade unions in the region were generally opposed to privatisation, and politicians did not like to cede management control of state-owned enterprises, since they allowed for what he termed “dispensing patronage by providing jobs for supporters of the ruling party, or feeding contracts to connected parties and supporters.”
Really? Who would have thought?
These two factors tended to keep the status quo intact, said Farrell, despite the fact that “state-owned enterprises are rarely sufficiently disciplined in the pursuit of their strategic missions”. Rarely being the operative word.
But then he stopped. Here is the problem, he said, and the solution is . . . more discussion of the problem.
In developing a new approach to privatization, Farrell said, it was critically important to build trust among the social partners – labour, business, NGOs and Government. There was also the need to accelerate the movement of professionals between Government and the private sector at the highest levels, including ministerial level; and to establish forums for dialogue on policy issues (for example, “think tanks”) which involve those partners.
Farrell, who has served at the highest levels in both the private and public sector, said his argument was for “the forging of a new kind of relationship between the public and private sectors in the region which transcends tripartism and PPPs.”
He said that building such a relationship would require the two sides, along with the non-governmental organisations, to work together on matters beyond industrial relations and taxation.
Well, I’m falling asleep already, so don’t ask me to serve on any of those panels. Privatization should be exciting, but it won’t be after all that transcending takes place. We will all be in Heaven by then.
At the end of the day, the most I got from Farrell’s speech was that he had “no difficulty with governments de-risking certain activities and then allowing the private sector to enter by privatizing the activity.” But he did not say which activities.
According to Farrell, the fundamental choice that governments have is between regulation and ownership. If it is possible to effectively regulate the activity in the public interest, there was arguably no need for the government to own the business, he said. He believed that by opening up the debate, better choices could be made as to what enterprises could be privatized.
So, okay, yes, more debate might be good. But you know what? The decision as to what to privatize is ultimately going to be made by a country’s prime minister, finance minister and one or two other members of the “inner” Cabinet, not the unions (who will oppose) or the business community (who will support), or the NGOs (whose role in this I really don’t get).
Whatever the decisions might be – and there are likely to be several over time – the administration will have to get behind each one and make it happen.
Otherwise, privatization will remain exactly where it is right now, the subject of much talk and no action.
Patrick Hoyos is a journalist and publisher specialising in business.
