Using charities or non-profit groups to privatize public services doesn’t generate the same reaction as when for-profit companies take them over, but the problems associated with privatization are still there.
Ottawa (8 July 2020) ― The connections between the Prime Minister and WE Charity are only one of the things that is wrong with the recently cancelled contract with WE Charity to operate the Canada Student Service Grant. Having the WE Charity take over the program would have privatized it. And even if it isn’t privatized, the way the Canada Student Service Grant is designed means it is likely to add to the problems of precarious work and income inequality.
Charities increasingly being used to privatize public services
Contracting out public services to charities or non-profit organizations is an increasingly common new form of privatization. Using charities or non-profit groups to privatize public services doesn’t generate the same reaction as when for-profit companies take them over, but the problems associated with privatization are still there.
First among these is secrecy and loss of accountability. Even though WE Charity would have been paid up to $19.5 million to administer a program costing over $900 million, the terms of the contract between the federal government and WE were not released.
This is similar to what has happened with other public services that have been privatized using charities or non-profit companies. Medavie, which manages health care services in several provinces, controls how over $1 billion in public funds are spent, but the public are not allowed to see its financial statements. To prevent people in New Brunswick from finding out about problems with the ambulance services it controls, Medavie pushed for a provision in its collective agreement with paramedics that prevents the union local “from speaking to the media about out-of-service units.”
Privatization schemes often involve links between those benefitting and politicians
What is also common is for those benefitting from privatization to have links with the politicians making decisions about whether to privatize public services. The only thing unusual about the links between the Prime Minister and the WE Charity is the coverage they have received.
Prominent political party activists being paid to lobby for privatization and former politicians getting lucrative jobs with companies that benefitted from the privatization schemes they supported are all too common. Recent examples are Mike Harris getting a job as chair of Chartwell Retirement Residences after privatizing long-term care when he was premier, and former Conservative cabinet ministers and political staffers lobbying for companies selling e-learning services at the same time the Ontario government was planning to make e-learning mandatory.
Canada Student Service Grant would pay less than minimum wage
Finally, there is the role programs like the Canada Student Service Grant play in the expansion of precarious work and the increase in income inequality.
To get grants for “volunteering” many students will be putting in over 20 hours a week doing the type of work for which people normally expect to be paid. But because the program classifies students as volunteers, minimum wage laws and other measures meant to protect workers don’t apply. As Charlie Angus, NDP MP, pointed out, the program institutionalizes precarious work.
And because participants will be earning less than minimum wage, the program will increase income inequality. Participants from wealthier backgrounds will be able to get help from their families to offset the lost income, while students from modest backgrounds will have to borrow more.