Last week, in a piece headlined rather provocatively “Who do trade unions represent,” the issue of the privatisation of State assets was raised in this space—not for the first time and hopefully not for the last time either. Among the responses to that piece was a comment from an old friend that “the myth of private sector efficiency needed to be exposed” and one from an online blogger on the Guardian’s Web site who argued that “the issue is accountability, regardless of ownership (CL Financial, HCU, UDecott) and trade unions were created to protect employees from abusive employers.” Both of these responses raise the issue of whether privatisation is a one-size-fits-all answer to the questions about what is the appropriate path to development for a country like T&T and what road should we take to get there. It is clear—from experience here and overseas—that privatisation is not a one-size-fits-all answer. If we look at the experience of WASA under Severn Trent, the English water services company that won a contract to manage the utility in the last decade, it is clear that the private sector is not appropriate for all companies and at all times. (It is clear, though, that while Severn Trent may have improved some of the efficiency measurements at WASA, they were the wrong company at the wrong time). The process of deciding which are the companies that should be privatised needs to start with an understanding—and eventually agreement, if not consensus—of what are the appropriate areas for the State in a T&T to be focussing the spending of taxpayers’ dollars.
There is likely to be agreement that the State should be involved in domestic and national security. The idea of outsourcing the job of the police and soldiers to the private sector would probably strike most readers as being anathema; although there are outstanding examples of public/private partnerships, even in this area with the transportation of prisoners to and from court being a good example. There is also likely to be agreement that the State should be involved in the provision of infrastructure. This accounts for the plethora of State enterprises that have got involved in this area, starting from Nipdec and including Udecott, EMBD, NIDCO and others. But even here there is room for the involvement of the private sector. In my view, there is absolutely no reason why the Government should be entirely responsible for funding the construction of the highway from San Fernando to Point Fortin, when all over the world, including in our Caribbean neighbour Jamaica, such infrastructure is being built by the private sector based on some element of cost recovery by way of tolls collected at strategic points. One wonders why the Government ignored the toll option for the Point Fortin Highway and whether the basis for that position is related to the failure by the State to make public the detailed feasibility studies for the highway. Should the Government be involved in the provision of health and education? All over the world, this is a highly contentious issue and there is merit on both sides of the argument. While I would like to hear from readers on whether they think the private sector should take over the provision of all healthcare and education in T&T, my own view is that the dual system of both public and private provision, in theory, works well here. There are clearly, though, serious issues of efficiency, affordability, equitable distrubtion of resources and, as it relates to education, uneven performance that need to be addressed.
If there is agreement on the areas that the Government should be involved in, what are the areas that the State needs to step away from and allow the private sector entry. I would argue that there is no reason the Government should be involved in telecommunications, banking or in many parts of the energy sector and have supported the announcement by former Minister of Finance, Winston Dookeran, in the 2012 budget, the Government proposed to issue an initial public offering of shares in the state-owned banking group, First Citizens. The minister made clear that the offering “will not affect Government ownership of the bank” and that it would assist the bank “in widening its capital base and so facilitate its expansion programme in which the bank is currently engaged.” The State proposes to sell between 20 and 25 per cent of its stake in First Citizens—which I understand is about 97 per cent owned by Corporation Sole as the Central Bank and the National Insurance Board hold small percentages—and it is proposed that this will raise between $800 million and $1 billion. Unfortunately, we are almost at the point of the 2013 budget and, as yet, there has been no concrete proposal for the privatisation of First Citizens, which can easily follow the template established the last time the State divested a company—the establishment of National Enterprises Ltd some 12 years ago. As I recall, in the creation of NEL—which is a holding company for some or all of the State’s shareholdings in TSTT, NFM, Phoenix Park Gas Processors, Tringen and Atlantic LNG—a certain percentage of the shares being sold were offered to the employees of constituent companies.
Shares would also be allocated to individuals and to organisations that are owned by the “small man,” such as credit unions and trade unions. The National Insurance Board and the country’s mutual funds are also expected to be interested in the shares of First Citizens. If there is a tradition in this country of privatisation in a way that ensures “the widest possible participation of the public,” allocating shares in companies that are being divested first to the workers, then to T&T nationals and then T&T institutions, why would trade unionists oppose the privatiation of State-owned companies.
Why would one of the unions at WASA issue a news release last week in which it sneered at what it described as the intention by the Government to privatise WASA as “a part of its overall policy of privatisation, which, by admission of the former Minister of Finance, is to involve ports, airports, public utilities and healthcare provision.” According to the union, the aforementioned privatisations are in addition to the announced intention of the Government to privatise First Citizens, merge and privatise TTMF/Home Mortgage Bank, seek a foreign partner for Petrotrin and to divest Plipdeco.
Why would Vincent Cabrera, the president of the Banking, Insurance and General Workers Union, oppose the sale by the Government of 20 or 25 per cent of First Citizens, when the first people who will be allocated shares in the bank will be its employees.
As I have had cause to point out before, Mr Cabrera is the president of the trade union which represents the First Citizens employees yet he is the leader of an incipient campaign for those same employees not to share in the bank’s profits. Because he has an irrational fear that the sale of 20 per cent of the bank marks the beginning of the transfer of First Citizens to foreign ownership, Mr Cabrera has argued, in effect, that the State must continue to own all of the bank’s shares and the employees of the bank and the people should own none. As someone who started campaigning against the sale of RBTT Financial Holdings to the Royal Bank of Canada nine months before Mr Cabrera, David Abdulah, Errol McLeod and the late Dennis Pantin got involved, I am acutely aware of the need to ensure that our financial institutions remain in local hands. But local hands must mean ownership by the people and institutions of T&T and not by the State. Mr Cabrera is also the leader of the trade union that is fighting Republic Bank to ensure that its workers get a few thousand dollars more a year—of which 25 per cent automatically goes back to the Government—when what the union should be negotiating is for more Republic Bank shares in the company’s Employee Stock Ownership Plan—which is tax free.