RoadWorks: Privatization Report: Some Ups, Some Downs
Governments at all levels are turning to private options to help them get through, and break out of, the current recession, according to the Reason Foundation’s Annual Privatization Report.
“Governments are swimming in red ink and realizing the effects of the recession will be felt long after the economy recovers,” said Leonard Gilroy, editor of the report and the foundation’s director of government reform. “Interest in privatization is sky-high and rightly so. Now more than ever, policymakers need to study their priorities, re-examine what are really core government functions, and then tap the private sector’s expertise in all of the areas where they can save taxpayer money and improve the quality of services.”
In his introduction to the report, Gilroy says that the current national economic recession “has swung the pendulum strongly toward federal intervention in the economy and there are many indications this interference is making the economy worse, not better. At the very same time, however, interest in privatization is sky-high and far reaching, with many state and local governments facing severe and prolonged fiscal crises. Even privatization-resistant states like California, New York, Massachusetts and New Jersey are now turning to the private sector to help solve major fiscal and capital investment challenges.”
The report, the foundation’s 23rd, forecasts “a bleak outlook for competitive sourcing under the Obama administration and a hostile Democratic Congress.”
According to the report there are “numerous discrete privatization initiatives in the states,” and policymakers’ interest in state privatization and government efficiency boards is rising with advisory commissions on privately financed infrastructure set up in several states. The report also looks at local government, especially Chicago’s $1.15 billion parking meter system lease – which it calls both “groundbreaking” and “troubled” – and reports that Los Angeles, Pittsburgh and other cities are contemplating similar initiatives to generate municipal revenues in the economic downturn.
The report examines developments across the country, including the following:
Florida’s Council on Efficient Government identified 511 outsourced projects in 2008. A review of 21 potential privatization projects forecast $94 million in savings for taxpayers.
Louisiana Gov. Bobby Jindal established a Commission on Streamlining Government that is using privatization to help reduce the size and cost of state government.
California Gov. Arnold Schwarzenegger signed a public-private partnership law that enables and encourages the private sector to fund and manage road, prison and courthouse projects.
New York Gov. David Paterson created a Commission on State Asset Maximization to identify areas where public-private partnerships can save the state money.
New Jersey policymakers are achieving a major environmental goal by privatizing the cleanup of nearly 20,000 contaminated properties in the state.
The Reason Foundation (www.reason.org), created in 1968, says it is a nonprofit organization advancing “free minds and free markets,” and advances a free society by developing, applying, and promoting libertarian principles, including individual liberty, free markets, and the rule of law. v
Industry Fraud Worldwide: Losses decrease but cases increase
The global construction, engineering and infrastructure industry saw a significant decline in fraud activity with companies losing an average of $6.4 million over the last three years, according to the latest edition of the Kroll Annual Global Fraud Report. This new figure represents less than half of last year’s amount of $14.2 million.
Construction, engineering, and infrastructure companies registered a below average loss compared to other sectors, with the financial services industry being hit hardest by fraud over the past 12 months. The findings are the result of a survey Kroll commissioned from the Economist Intelligence Unit of more than 700 senior executives worldwide.
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