Posted on

Right way to privatise


Right way to privatise

Social Share

GIVEN OUR HISTORY, it was necessary that all Barbadians be given access to similar opportunities to create their futures.

Over the past 50 years, the Government of Barbados has facilitated this by providing all Barbadians with free access to health care and education services. Our children and elderly are also provided with free access to transportation services.

This is, by any measure, commendable and should have resulted in us being so much further ahead.

The Government manages a diverse set of services, most of which are unprofitable and require Government funding. The Government gets the funds to pay for most of the services it manages by taxing citizens, visitors and businesses.

If the services the Government manages are inefficient, unproductive and wasteful, then it takes more money to run them. Therefore, the Government must increase taxes on Barbadians and businesses to pay for these additional “wastage” costs.

When Government increases taxes to pay for these additional costs, then parents have less money to spend, and can be forced to live pay cheque to pay cheque. When taxes are increased on businesses, then they may be forced to divert money they had planned to hire additional employees. This explains why school-leavers cannot find jobs, and parents cannot buy toys.

Since the Government can no longer afford to pay for all of the services it manages, and since Barbadians cannot afford to pay any more taxes, the Government is considering selling some of the services that it provides.

Normally, this would be good news. However, not in Barbados at this time. If the private sector purchased a poorly managed Government service, then it would likely run it profitably.

However, Barbadian consumers would not likely pay less on their bills, but may pay more depending on how convincing the new owners’ arguments for increased rates are to the Fair Trading Commission (FTC).

If the Government plans to sell our state-owned services, then the very least it should do is to allow us to benefit from the low cost of a properly managed service. This may lead to our utility bills being perhaps one half of what we are now paying. We are currently forced to pay both the cost of an efficient service, plus the additional inefficiency and wastage costs.


Once the service is properly run, then both we and the FTC will know how much it should cost to provide an efficient service. At this moment, all we know is how much it costs to run an inefficient operation.

So how can we determine what we should be paying as opposed to what we are currently forced to pay? There are two methods.

The first one is to privatise in a non-monopolistic competitive environment. When there are many competitors and no collusion, each business will tend to maximise profits by becoming more efficient than its competitor. An example of this is bus transportation.

The bus owner who has a poorly maintained bus and unproductive employees will spend more on his operation than the owner who has a properly maintained bus with productive employees. This method is unlikely to work if a monopoly, like water or natural gas, is to be sold.

Before one even contemplates selling a monopoly like the water utility, we consumers must experience a properly managed service. How do we know if we have met the minimum standard of efficiency?

Fortunately, there is an international standard called the ISO 9001 Quality Management System, which the Government had access to 30 years ago and should have implemented.

We comply with international standards for several important things. Why not for our important, but inefficient Government services? I have been asking this question for the past 15 years, and Minister of Industry and Commerce Donville Inniss finally revealed the answer while I was with him on Brasstacks Sunday (April 23). He repeatedly insisted that the ISO 9001 was a theory, and I repeatedly corrected him that it was a standard.

If the Government believes that ISO 9001 is a theory, then it remains an academic debating exercise. However, if it is actually an internationally recognised standard, then it should be attained as a minimum, and even exceeded.

For more than two decades, public services of other nations have been benefiting from the ISO 9001 system. However, we have been left behind. Why? Because we have decided to proudly declare ourselves to be ISO 9001 deniers, while the world passes us by.