‘We can’t keep borrowing to pay for Gov’t’

Privatization and outsourcing of Government services could be a recommendation of a new commission set up to cut the cost of running Bermuda.

And Spending and Government Efficiency (SAGE) Commission chief Brian Duperreault appeared not to rule out recommending a slimmed-down Civil Service, although Government has already set its face against large-scale public sector redundancies.

Now interim recommendations are likely to be revealed in July, in advance of the full report, which is due by October 1.

Union chief Kevin Grant yesterday cautioned against quick decisions that might have far-reaching ramifications for the civil service. 

Mr Duperreault told us in an interview: “We are looking at what functions should the Government perform, what services they should provide and, by default, what they shouldn’t.

“If there are things they shouldn’t be doing, want can they do about it? That might be privatization.”

The SAGE Commission – a pre-election pledge by the OBA – was set up to examine ways to cut the cost of governing the island and is due to report by the start of October. The independent Commission, which has four separate committees, will look at all areas of Government, including quangos, in a bid to improve efficiency and cut costs. Mr Duperreault, the former ACE boss, said: “Within that definition, there is nothing we won’t look at.”

He stressed the Commission was at an early stage of work and had yet to explore the options for change. But he said: “There are certainly positive things about outsourcing – you can make a list and competition is generally a good thing.

“But you have to judge whether there is significant competition, you would have to go into it before you make that conclusion.

“We have to have an open mind about it. Not all privatization works either. We have to take into account the uniqueness of this island before you can make a list of things that might work.”

He added: “I would hope there would be some inkling about what’s going on before October 1. I don’t know what we’re going to come up with.

“There might be things parts of the community don’t like – you can’t please everybody.”

In the UK and many other jurisdictions, services like buses, ferries and trash collection, which used to be carried out by local authority governments, have been put out to tender by the private sector.

On a smaller Civil Service, Mr Duperreault said: “The Government has taken a position on that — you can only recommend what the best structure is for the Government. They are going to have to figure out how to get from here to there.

“All we can give them are our best thoughts and recommendations on what the Government ought to look like and the Government we can afford.”

But he said: “We haven’t come to conclusions, although we don’t feel hampered in any way shape or form, except they have to be implementable. I don’t want to make suggestions that they could never do. But we’re not limited. The Government didn’t limit us.

The Minister of Finance Bob Richards didn’t say ‘remember we made a promise’ – he said ‘give me what you think is the best course of action.’ “

Mr Duperreault added: “I am optimistic about the Civil Service themselves. They know what works and what doesn’t work and what ought to be changed.He added the Commission would also look at the experiences of other countries before releasing their final report.

Mr Duperreault said: “There are ideas around, efficiencies, better ways to do things, looking at what happens in the private sector and in other countries. You don’t know who is going to give you a good idea until you see it.”

The Commission has already had more than 100 submissions from the public with their ideas on how to slash expenditure.

Mr Duperreault added that – in addition to former Civil Servants involved in the committee process – the Commission was also working with unions and current Civil Servants.

He said: “We have spoken to the unions. There is a dialogue and there have been a couple of cordial meetings.

“But we’re talking to all constituencies – we’re reaching out to the entire community. It’s a community problem and everybody has to be part of the solution.” But he warned: “The one thing we know is the situation we’re in is unsustainable. We can’t keep borrowing to pay for Government. We have to change that and that change has to be orchestrated by us as a community or it will be forced on us by our creditors at some point. We don’t want that to happen.” 

President of white-collar union BPSU Kevin Grant said: “If there is going to be consultation with the civil service and the unions then the dialogue and consultation must be meaningful. 

“Not only the BPSU but all unions have realized that nowadays that buy-in by all stakeholders will be critical in reviving this economy. We are fully aware of the pressure or big elephant sitting around to reduce the size of the civil service.

“The BPSU will continue to advocate for a pragmatic approach to addressing this issue.

“The concerning thing is that the SAGE Commission will be making recommendations on major issues within the civil service such as efficiency, privatization, metrics etc. in such a short time. Maybe it is normal for initiatives like this to be carried out in the private sector in such a short time however I have gone on record to earlier state that the civil service and public sectors are different with far reaching ramifications if poor decisions are made.

“I certainly realize that time is of the essence, however there seems to be so much happening at the same time.

“The SAGE Commission are conducting a review of the civil service and we are currently in negotiations. Will the recommendations have an impact on negotiations? One thing for sure is at this present time the unions in this country are united and I personally feel that we are stronger on a united front than we have been for some time now.

“All union presidents of the BTUC have been encouraged from the beginning of these negotiations and realize that this collaboration and united front will not only be in the best interest of our members but also the best interest of this country.” 

Privatizing bus services — the UK experience 

The UK bus service has been deregulated and mostly in private hands since the 1980s – and results have been mixed. Local authorities had run bus services as a monopoly until the Conservative government under Margaret Thatcher decided to open up the market in a bid to cut costs and increase competition.

Initially, there were a flood of operators, particularly in major cities, leading to congestion, confusion among users and sometimes what were known as “bus wars” as rival bus drivers clashed on shared routes.

The market, however, came to be dominated by large-scale operators like FirstGroup and Stagecoach, which between them control more than 36 per cent of bus services in the UK.

Both also operate overseas subsidiaries, including in the US and Canada, and have become involved in rail travel, once run by the state-owned British Rail.

Larger bus operators can use their financial muscle to squeeze competitors out of the market, leading to virtual monopolies in many areas, creating the conditions that deregulation was supposed to end.

Private Public Partnerships – where large-scale projects hospitals and schools are built and maintained by the private sector, which also provide support staff, but are mostly staffed by local authority or National Health Service employees – have also become increasingly common.

But trades union critics say that terms and conditions for workers have been cut due to the need for competitive tendering and that services have suffered as a result. Critics also argue that many services are too important to be left to the whims of the market, while fragmentation has led to increased administration costs. n