OPINION: Privatization is a political issue, not an economic one

When municipalities or provinces turn utilities like water or power over to private management, it's usually pitched as a cost-saving measure. But David McDonald, Professor of Global Development Studies at Queen's University, says the benefits are unclear, and privatization is more a political decision than an economic one.

McDonald uses the French capital of Paris as an example. 

"Paris is a great place to start. When it comes to debates about water privatization it is very symbolic, because it's the headquarters of the two largest private water companies in the world, Suez and Veolia. And water has been private on and off there for the past 150 years, including a most recent contract of about 20 years which was split between the two firms. In 2010 the municipal government of Paris decided they wanted to make it public once again. And when the contract they had with these two companies came to an end they simply made it public again, and most Parisians really didn't even notice the transition. But it immediately saved the city 35-million euros a year which would have otherwise gone to profit to the companies, and the water continues to be as good as it was." 

McDonald says according to his research, at least 235 cities in over 30 countries around the world have taken their water systems out of private management over the last 15 years, and made them public once again. 

"Generally speaking, one of the reasons city want to remunicipalize is that it's cheaper. There was this notion for thirty years that privatization would save cities money, and that simply hasn't panned out. And the research is overwhelming in demonstrating there is no evidence of cost savings through privatization for a host of reasons, and so cities have either saved money or they've broken even, but they've gained on a whole bunch of other fronts, such as democratic control."

It's not rocket science, providing water and electricity. We've been doing these things for well over a century.- David McDonald, Queen's University

McDonald wants to challenge the notion that privatization is automatically a sound economic decision. To him, it isn't necessarily a rational economic decision, but an ideological, political one.

"It's not rocket science, providing water and electricity. We've been doing these things for well over a century. You can bring a private company in and it will continue to provide services. It's not a question on the technical front over whether the public or private entities can run these things better. It's really a social and political question of the nature of public services and their democratic accountability"