NON-PROFIT MONOPOLIES AND DEUNIONIZATION: SOME OUTCOMES

OF THE

PRNATIZATION OF YOUTH CORRECTIONS IN BRITISH COLUMBIA

by

Sheryl Catherine Foley

B.A., University of British Columbia, 1984

Extended Studies Diploma, Simon Fraser University, 1987

THESIS SUBMI'ITED IN PARTIAL FULFILLMENT OF

THE REQUIREMENTS FOR THE DEGREE OF

MASTER OF ARTS (CRIMINOLOGY)

in the School

of

Criminology

(c) Sheryl C. Foley 1993

SIMON FRASER UNIVERSITY

December 1993

All rights reserved. This work may not be

reproduced in whole or in part, by photocopy

or other means, without permission of the author.

Name: Sheryl Catherine Foley

Degree: Master of Arts

Title of Thesis: Non-Profit Monopolies and De-Unionizatin: Some Outcomes of the Privatization of Youth Corrections in British Columbia

Examining Committee:

Chairperson: Robert J. M&es, Ph.D.

Robert M. Go&~n,~= Associate Prof Tr, Senior Supeyvi~o

8 Associate Professor

Patrick J. Smith, Ph.D. External Examiner Associate Professor Political Science Department Simon Fraser University

Date Approved:

PAFii l AL COP'G I GHT L I CENSE

I hereby g ran t t o Sinan Fraser Un ive rs i t y t h e r i g h t t o lend

my thes i s , p r o j e c t o r extended essay ( t h e t i t l e o f w!-ich i s shcun below)

t o users o f the Simon Fraser U n i v e r s i t y L ib rary , and t o make p a r t i a l o r

s i n g l e copies o n l y f o r such users o r i n response t o a request from the

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f o r m u l t i p l e copying o f t h i s work f o r scho la r l y purposes may be granted

by me o r the Cean o f Graduat? Studies. I t i s understood t h a t copying

or p u b l i c a t i o n o f t h i s work f o r f i n a n c i e l ga in sha l l no t be allowed

w i thout ny w r i t t e n permission.

T i t l e o f T h e ~ i s / f p f ] $ ~ / y # t / $ ~ p $ $ ~ ~ $ f

Non-Profit Monopolies and De-Unionization: Some Outcomes of

the Privatization of Youth Corrections in British Columbia

Sheryl Catherine Foley

ABSTRACT

This thesis provides an analysis of privatization within the youth corrections

component of the British Columbia criminal justice system from 1983 to 1992. The

provincial government policy of contracting out to the private sector for the provision of

community semice order, day attendance, residential, and diversion programmes has

contributed to a dispersal of social control mechanisms throughout society and to an

expansion of the net of social control. Further, the boundaries of this net have been blurred

as public services are moved into the private sector.

The political and economic factors which led to a privatization of youth justice

programmes are considered. These factors include the apparent fiscal crisis of the state in

British Columbia in the early 1980's, and the adoption of some monetarist economic policies

by the provincial Social Credit government. These policies included the promotion of private

sector activity, a reduction in the size of the public sector, and a weakening of public sector

unions.

The effects of privatization on both the existing system of contracting out and the

organization of labour within the youth corrections system are identified and analyzed. The

government proposed that privatized services would lead to greater efficiencies at lower cost

and a general stimulation of the provincial economy. The evidence indicates that

privatization has merely led to the building of new for-profit and non-profit monopolies

within youth corrections and a weakening and reduction in the size of the main public sector

union: the British Columbia Government Employees Union (BCGEU). Employees of non-

profit and for-profit contractors within the youth corrections system are usually not union

members and membership in the BCGEU has declined. This process of de-unionization may

have had an impact on the effectiveness of youth corrections services because of job

insecurity, high staff turnover rates, lower wages, fewer benefits and other erosions of

working conditions.

The thesis concludes with suggestions for future research in the area of privatization

and social control.

For Dave and Rebecca

DEDICATION

ACKNOWLEDGEMENTS

This thesis could not have been completed without the help of many people.

First, I must offer my thanks and appreciation to my senior supervisor, Dr. Robert Gordon, for his continued belief in my abilities, and the numerous hours spent pouring over my work, critiquing and correcting, advising and encouraging.

My sincere thanks must also be offered to Dr. Ted Palys for his invaluable input; his numerous helpful comments and suggestions have added to the depth and quality of my thesis. In addition, I would like to thank my external examiner, Dr. Patrick Smith.

Mr. Dale Lovick, M.L.A. was instrumental in obtaining the data required for my research. The Ministry of the Attorney General must also be recognized as the data provided by this office was crucial to this thesis; thanks must be extended to Ms Karen Abramson, Mr. Steve Howell, Ms Brenda Miller, and Ms Anne McKeachie. Furthermore, the assistance provided by the British Columbia Government Employees Union must be noted; specifically, the information provided by Ms Janet Patterson and Ms Sharon Bronson was invaluable in completing this study. Further appreciation must be extended to persons from the various agencies who participated in interviews.

Thanks must also go to my family, especially my husband, Dave. He has never stopped encouraging me to complete this project and has always been understanding when it seemed like my thesis was more important than my family. I would also like to thank Earl and Diane Fabian, Kevin and Dorothy Fabian, Sandi and Rob Nicholson, and Mary Dulik.

There are a number of friends who have helped me to complete this project. Many thanks are owed to Lynne McInally, Joanne Goodwin, Mike Zorn, Catherine Stutt, Jill Stromnes, and Stephanie Lewis.

I would also like to thank Debbie and Aileen, as well as the secretaries in the School of Criminology, Mary, Sharon, and Liz.

Lastly I must thank Rebecca for all of the joy she has brought into my life. Although she is too young to know it, her constant smile and great delight in the things adults take for granted has reminded me that life is the continuous process of learning. She has helped me to keep my priorities in perspective.

TABLE OF CONTENTS

Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii Abstract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii Dedication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii List of Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ix List of Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xi Prologue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xii I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 11. THE PRIVATIZATION PHENOMENON: UNDERSTANDING

POLITICALANDECONOMICFACTORS . . . . . . . . . . . . . . . . . . . 11 State Social Control: Widening the Net . . . . . . . . . . . . . . . . . . . . . 11 The Fiscal Crisis of the State: The Shift to Monetarism . . . . . . . . . . . 21 Privatization: Response to the Fiscal Crisis of the State . . . . . . . . . . . 24

Legitimizing Privatization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 The 1983 British Columbia Budget: Privatization Becomes Policy . . . . . 34

The Restraint Initiatives of 1983: Government Objectives . . . . . . . . . . . 40 Privatization Continues: The Movement After 1983 . . . . . . . . . . . . . . 43

III. PRIVATIZATION IN BRITISH COLUMBIA: THE NATURE AND SCOPE OF INITIATIVES AND RESPONSES . . . . . . . . . . . . . . . . . 46 Reducing the Public Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Privatization of Youth Corrections In British Columbia . . . . . . . . . . . . 51

. . . . . . . . . . . . . . . . . . . . . Contract Recipients in Youth Corrections 55 Youth Residential Attendance Programmes . . . . . . . . . . . . . . . . . . . . 56 Youth Non-Residential (Community) Programmes . . . . . . . . . . . . . . . 60 Youth Alternate Measures and Diversion Programmes . . . . . . . . . . . . . 63 Community Service Order Programmes . . . . . . . . . . . . . . . . . . . . . .

Summary: The Major Contractors . . . . . . . . . . . . . . . . . . . . . . . . . IV . THE EFFECTS OF PRIVATIZATION ON UNIONIZED PERSONNEL .

Contracting Out: The Impact on Public Sector Employees . . . . . . . . . . Private Contracts: The Use of Unionized Personnel in Contracted Services

Private Sector Employees Versus Public Sector Employees . . . . . . . . . .

Promotion and Transfer within Private Sector Programmes . . . . . . . . . . Job Security: The effects on turnover rates and experienced personnel . .

WagesandBene fits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Training Programmes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 . . . . . . . . . . . . . . . . . . . . . . Employee Consortia: Fact or Fiction? 89

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 V . CONCLUSION: IMPLICATIONS FOR THEORY AND

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FUTURERESEARCH 92

Theoretical Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 Future Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

APPENDIX A: METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 APPENDIX B: TABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 BIBLIOGRAPHY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

LIST OF TABLES

Summary of Regional Contract Totals: Youth Residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attendance Programmes 107

Vancouver Island Region: Youth Residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attendance Programmes 109

Vancouver Metro Region: Youth Residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attendance Programmes 111

. . . . . . . . . . . . . Fraser Region: Youth Residential Attendance Programmes 112

. . . . . . . . . . . . Interior Region: Youth Residential Attendance Programmes 114

. . . . . . . . . . . Northern Region: Youth Residential Attendance Programmes 117

Summary of Regional Contract Totals: Youth Non-Residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Community) Programmes 120

Vancouver Island Region: Youth Non-Residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Community) Programmes 122

Vancouver Metro Region: Youth Non-Residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Community)Programmes 124

. . . . . . . . Fraser Region: Youth Non-Residential (Community) Programmes 126 . . . . . . . Interior Region: Youth Non-Residential (Community) Programmes 128

Northern Region: Youth Non-Residential (Community) Programmes . . . . . . 132

Summary of Regional Contract Totals: Youth Alternate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Measures/Diversion Programmes 134

Vancouver Island Region: Youth Alternate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Measures/Diversion Programmes 136

Vancouver Metro Region: Youth Alternate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Measures/Diversion Programmes 138

Fraser Region: Youth Alternate Measures/Diversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Programmes 139

Interior Region: Youth Alternate MeasuredDiversion Programmes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 Northern Region: Youth Alternate MeasuredDiversion Programmes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142 Summary of Regional Contract Totals: Community Service Order Programmes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144 Vancouver Island Region: Community Service Order Programmes . . . . . . . . 145 Vancouver Metro Region: Community Service Order Programmes . . . . . . . . 147 Fraser Region: Community Service Order Programmes . . . . . . . . . . . . . . 148 Interior Region: Community Service Order Programmes . . . . . . . . . . . . . . 149 Northern Region: Community Service Order Programmes . . . . . . . . . . . . . 151

LIST OF FIGURES

Figure 1

Figure 2

Figure 3

Figure 4

Figure 5

Figure 6

Figure 7

Figure 8

Figure 9

Figure 10

Figure 11

Youth Residential Attendance Programmes: Summary of Regional Contract Totals . . . . . . . . . . . . . . . . . . 57 Youth Residential Attendance Programmes: Major Contracts Across All Regions . . . . . . . . . . . . . . . . . . . 57 Youth Residential Attendance Programmes: Major Contracts Within Regions . . . . . . . . . . . . . . . . . . . . . 59 Youth Community Programmes: Summary of Regional Contract Totals . . . . . . . . . . . . . . . . . . 59 Youth Community Programmes: Major Contracts Across All Regions . . . . . . . . . . . . . . . . . . . 62 Youth Community Programmes: Major Contracts within Regions . . . . . . . . . . . . . . . . . . . . . 62 Youth Alternate MeasuresiDiversion Programmes: Summary of Regional Contract Totals . . . . . . . . . . . . . . . . . . 64 Youth Alternate Measures/Diversion Programmes: Major Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Community Service Orders: Summary of Regional Contract Totals . . . . . . . . . . . . . . . . . . 67 Community Service Orders: Major Contracts . . . . . . . . . . . . . 67

Ownership of Private Contracts . . . . . . . . . . . . . . . . . . . . . . 71

PROLOGUE

The following conversation is imaginary.. .The conversation, as Mrs. Thatcher confronted her aids after the election, might have gone something like this. "Who voted for us?" "Prime Minister, principally the home owners. " "Right, I want more of them." "Right, who else?" "Prime Minister, there is considerable evidence that people who own shares tend to vote Conservative. " "Right, we need more of them. " "All right, who else voted for us?" "Prime Minister, there is considerable evidence that people who are self-employed voted for you. " "Well, I want more." "Who else?" "Prime Minister, people who own shares in the company they work for tend to vote Conservative. " "Right, I want more of those." "All right, who votes against us?" "Prime Minister, of course, we tend to find the Labour Party dominated by members of the labour unions." "Right, I want less of them." "Who else votes against us?" "The people who live in council houses as tenants of state owned houses." "Right, I want less." "Who else tends to vote against us?" "Prime Minister, we do find that people who work for the state-owned firms in the public sector tend to vote against the Conservative Party." "Who else?" "Civil servants don't tend to vote Conservative." "Right, I want those down as well."

from Madsen Pirie, "Principles of Privatization" in Privatization: Tactics and Techniaues (1988), Walker, M.A., ed., Vancouver, B.C.: The Fraser Institute.

xii

CHAPTER1

INTRODUCTION

In the last ten years the privatization phenomenon has received increasing attention

as the restructuring of the delivery of services within and by various government agencies

has occurred across a variety of areas and in many countries. The contemporary process of

privatization can be traced to economic policies introduced in Great Britain during the late

1970's by then Prime Minister Margaret Thatcher. The process has also emerged in many

other countries, including some which have socialist governments (Logan, 1990; Pitsula, et

al., 1991; Walker, 1980:xvii-xxii). While privatization originally appeared to affect

government (or Crown) corporations, it has now infiltrated and affected numerous

government services, including the health and social welfare components of the welfare state

and, more recently, the criminal justice system.

This thesis focuses upon the privatization of the youth justice component of the

Canadian criminal justice system and, in particular, the nature and scope of such

privatization and its effect on the organization of labour within this system. Although the

larger historical and economic factors which have led to the emergence of privatization are

considered, the specifics of this discussion are limited to the youth corrections system in the

province of British Columbia.

The phenomenon of privatization is not new to the field of corrections. Private sector

involvement was relatively common in the early to mid-19th Century when companies

established industries in prisons and used inmates as workers. In Canada, specifically at the

Kingston Penitentiary, a convict lease system existed throughout the nineteenth Century.

This practice could also be found in the United States (Gandy and Hurl, 1987:186).

However, by the 1930's, labour unions, rival business interests and humanitarian reform

organizations virtually forced the private sector out of the correctional field (Gandy,

1986:30). Changes in political and economic circumstances have led to a recent return to the

privatization of many government services, including services within the criminal justice

system.

It would be incorrect to suggest that, after the 1930's, private contracting within the

corrections field in Canada faded away. Many service contracts have existed in areas such

as health and education within the corrections field for quite some time. In British

Columbia, for example, private, non-profit agencies such as the John Howard Society, the

Elizabeth Fry Society, and the St. Leonard's Society are among the many non-profit agencies

which have provided the community, as well as offenders, with residential facilities,

counselling programmes, court intervention activities, diversion and even crime prevention

programmes. The British Columbia Corrections Branch has also maintained personal service

contracts with professionals such as physicians and psychologists. In the last ten years,

however, we have witnessed a return to the practice of contracting out government services

within the criminal justice system to profit-oriented companies and organizations. It is also

noteworthy that the current move towards privatization encompasses more than auxiliary or

supplementary programmes; the entire corrections enterprise including, but not limited to,

the construction and management of correctional institutions has been targeted for control

by private sector corporate interests in the United States (Anderson et al., 1985:32). The

extent to which this has been considered in Canada is not known.

In Canada, privatization has been adopted at both the federal and provincial levels of

government (Spindler, 1980: 153). Although the bulk of privatization practices at the federal

level are related to Crown corporations, within the criminal justice system some evidence

of its influence can be found in changes to the federal parole system (Hutto, 1988:20). At

the provincial level, policy changes have allowed the influx of private enterprise into areas

which had previously been the sole jurisdiction of the government (Harrison and Gosse,

1986: 185). In 1983, the then British Columbia Premier, Bill Bennett, initiated the first of

a series of government restraint policies in response to what was claimed to be a "new

economic reality". Privatization became a common word with the government, and a variety

of agencies, services and programmes were affected, all in the name of "economic restraint"

(Redish et al., 1986: 128-129). In fact, the dominant rhetoric surrounding the move to reduce

the role and functions of the state has been one of financial restraint (Jantti, 1989:20).

Accepting that economic factors have contributed to the privatization phenomenon in

many countries, it is necessary to consider the phenomenon itself and examine how

governments were able to implement such a widespread change in the delivery of services.

The privatization process which occurred in Great Britain in the late 1970's and early 1980's

was accompanied by the "campaign"' of Dr. Madsen Pirie. The need for privatization in

Britain was established by the government, and Pirie was willing to explain to other

interested governments how it had served to reduce government spending. Given the

economic climate of the time, and pressures on governments to reduce spending, he

suggested that once certain principles had been established, it would be possible to introduce

privatization on a wide scale with minimal resistance. He advised governments to identify

all of the advantages of privatization for all affected groups while assuring that no benefits

were lost. In his view, people must always perceive that they are receiving a greater benefit

than they previously enjoyed. Governments must be sure to make friends of their enemies

and, once the groups who could be adversely affected by privatization are identified, the

situation must be restructured to convert them into beneficiaries. Furthermore, the

government must disarm the competition - identifying all possible objections and dealing with

them in advance (Pirie, 1988:6).

Proponents of privatization argue that a shifting of public services to the private

sector results in substantial cost savings and an improvement in services. The process allows

for load shedding2, limited government contracts, fee charges for services and, most

As Dr. Pirie was simply Prime Minister Thatcher's key advisor it was not really 'his' campaign, although his position as the foremost spokesperson regarding privatization and its implementation leaves one with the impression that this was one of his foremost goals.

Load-shedding refers to services provided by government organizations which are reverted to the marketplace, or are provided by voluntary organizations. The shifting of the load may or may not be strategic. Private sector social services take the form of services provided by profit oriented organizations and individual profit practitioners become vendors (Weddell, 1986: 16).

important to the free enterprise system, increased competition between service providers to

win and renew contracts (Weddell, 1986:15). It has been further established that

privatization can mean: (i) contracting out of services (or part of a service) to one or more

private, profit oriented companies; (ii) contracting out services with private non-profit

organizations; (iii) franchising a private company to provide services in an exclusive

geographical area; (iv) awarding grants to non-profit agencies to provide services and; (v)

removing certain services from government responsibility altogether (McDavid, 1988:102).

Traditionally, the government was viewed as having two important and primary roles:

a mechanism for resolving community and societal concerns; and a provider of goods and

services to those people for whom it is responsible. The extent to which governments

provide goods and services is increasingly coming under attack (Savas, 1977:l). Part of the

rationale behind this attack is that the privatization movement has become essential to the

practice of deinstitutionalization. The process of deinstitutionalization has affected both the

health and criminal justice components of the welfare state, especially the mental health field,

and has resulted in a dispersal of social control institutions and mechanisms throughout

society. Arguably, the net of social control has been widened and strengthened (Henry,

1987). The privatization movement has further diversified and expanded the social control

net through the proliferation of correctional programmes within the community (Austin and

Krisberg , 1981).

Ideas for change such as privatization draw upon the existing social, political and

economic arrangements, as well as on previous ideas, and leave behind their own deposits

which are drawn up to shape later changes, reforms and policies (Cohen, 1985:103). In the

criminal justice context, the motor force for change does not lie in the crime control system

itself, but at the national or even global system of political and economic development

(Cohen, 1985:lOO-103). The capitalist welfare state is experiencing increasing difficulty at

the fiscal level in terms of its growth in relation to the private sector, especially when its role

as the provider of social welfare se~ices appears to have expanded. The consequence of this

is that pressure exists at all levels of government to reduce spending and limit expansion

(see, e.g., Chan and Ericson, 1981:38). In this regard, the privatization phenomenon can be

understood as part of a larger reform movement aimed at restructuring the welfare state

(Jantti, 1989:9).

One feature of neo-conservatism is a lionizing of the private sector and a denigration

of the public sector. Governments are condemned for having interfered with the ability of

individuals to make and spend money as they please. This attitude has rejected all forms of

collectivism and has little or no use for trade unions, social programmes provided by the

welfare state, government owned companies, or "unnecessary" state agencies such as those

designed to protect human rights (Pitsula, et al., 1990:8). The agenda implies not just

tolerance for social and economic inequality but an acceptance of the need to minimize the

role of the government as an instrument of collective responsibility, cooperation, community

interest, and social solidarity. Concepts such as these have "no place in the lexicon of neo-

conservatives" (Pitsula, et al., 1990:8).

These arguments set out by Pitsula and his colleagues, are clearly supported by the

spread of privatization throughout society. The practice of privatization as embraced by the

Social Credit government of British Columbia during the 1980's, illustrates the government's

intent to promote the private sector and to weaken the public sector, and this thesis sets out

to examine this process. In particular, this thesis examines the phenomenon of privatization

within the youth corrections system and considers the effects of such privatization on the

organization of labour. Privatization will result in a downsizing of the public sector. The

view that the civil servant has a vested interest in keeping the government growing becomes

part of a neo-conservative government's defense for its assault on social policy. Government

bureaucrats and neo-conservative governments become natural enemies (Pitsula et al.,

1990: 12-13).

Although governments offer "fiscal restraint" as the justification for privatization

within public sector services such as the corrections system, it can be argued that a larger,

unstated purpose exists; namely, to weaken, reduce and perhaps even decimate the public

sector. In addition, privatization has involved an experiment in locating new sources of

revenue; for example, the government has experimented and continues to experiment with

charging fees for services within the traditional public sector realm of human service delivery

(see, e.g., Warren, 1981:737). Although fiscal restraint has been an important justification,

claims of greater efficiency have been equally significant in legitimizing privatization. There

must be better value for the resources and effort expended, in the interests of the voters,

taxpayers, and the clients. In essence, privatization must guarantee a fbetter deal (Kinaide,

1986:440).

Chapter 2 of this thesis sets out to describe and discuss changing patterns of state

social control and the underlying causes of these changes. The nature and scope of

privatization in the criminal justice system, as an international phenomenon and within

Canada, will be reviewed. While numerous explanations have been offered, this discussion

will reveal that the underlying reasons for privatization are related to economic restructuring

and the implementation of neeconservative monetarist policies in advanced capitalist

societies. The state has attempted to develop and maintain itself in such a way that it no

longer plays a central role in managing the economy. The supply and/or delivery of various

previously governmental functions has been removed from the public sector and relocated

in the sphere of private enterprise.

Chapter 2 further describes the phenomenon of privatization within British Columbia.

The initiatives of the Social Credit government in 1983 are set out and the Solidarity

Movement's opposition to these initiatives is briefly described. This opposition is viewed

as an indication of the importance of legitimation strategies for the state which have a

bearing on the way in which privatization was presented to the populace and especially to

the workforce.

Chapter 3 of this thesis demonstrates that the neo-conservative economic policies

adopted by the Social Credit government during the 1980's included the need to downsize and

reduce the public sector. The specific means used by the provincial government in order to

reduce the public service are identified; the implementation of privatization throughout the

youth corrections system became one way of achieving this goal. The nature and scope of

privatization in the youth corrections system from fiscal years 1983184 to 1992193 will be

described, and the major contractors emerging out of this study will be identified. Further,

interest in the impact of privatization upon the labour force in the youth corrections system

is set out.

Chapter 4 examines what happened to previously unionized personnel as a result of

privatization. How did the state resolve problems, and what were the outcomes of this

intervention? The effects of privatization on the organization of labour will be identified and

the differences between union and non-union personnel will be set out. This will include

some discussion surrounding employee wages and benefits, job security and training

programmes and will further consider the resulting changes in services. In addition, the

question of employee consortia emerging as a result of privatization efforts will be examined.

The final chapter sets out the implications of the work. What have we learned from

the thesis and what are the possible future directions for work within the realm of

privatization and the criminal justice system? Methodological issues are discussed in

Appendix A and tables providing details surrounding the awarding of contracts in youth

corrections are presented in Appendix B.

THE PRIVATIZATION PHENOMENON: UNDERSTANDING ECONOMIC ANDPOLITICALFACTORS

State Social Control: Widening the Net

Although it is commonly accepted that privatization is a product of economic

problems and changes, other factors have been at work. The most significant of these is

embedded in the claim that, in the criminal justice context, the privatization initiative

includes an attempt to widen and strengthen the net of state social control by using a new

strategy or technique.

According to Stanley Cohen, social control may be defined as the organized ways that

society responds to troublesome behaviour, and the ways in which people who have been

defined as "deviant, problematic, worrisome, threatening, troublesome, and undesirablew are

regulated and controlled (1985:l). Cohen also suggests there exists a state interest in

developing planned and programmed responses to expected and realized deviance in an effort

to produce conformity (l985:2). It is becoming more evident through research that

governments participating in the privatization process are simply restructuring their responses

to crime and other forms of non-conformity to produce increased conformity (Cohen,

l985:2).

Social control theorists such as Cohen have identified changing social control patterns,

the so-called "master patterns", and have further identified the underlying causes of these

11

shifts within the social structure. The social control programme has developed from two

main roots: neeMarxist ideas, concepts, and propositions; and many of the ideas and issues

formulated by post structuralist theorists, particularly Michel Foucault. The unifying theme

within social control theory is that of incarceration. Questions about how the troublesome

populations - the "social dynamite" and "social junk" of a capitalist social order - are

incarcerated and managed are addressed, and attempts are made to explain why structural

changes in the control and regulation of these populations have occurred.

Foucault's work, published in the 1960's and 1970's, has made a significant

contribution to a revisionist history of social control and penal practices. Changes regarding

the management of madness and other forms of deviance were identified. Foucault coined

the term "the Great Confinement"; a process of incarceration which began in Europe in the

late 18th century and peaked during the 19th century. A shift in the management of deviants

occurred; inclusion was displaced by exclusion and the processes of incarceration,

confinement, and segregation became particularly effective means of social control. Further,

punishment shifted from violent public demonstrations of attacks on the hphy, to organized,

regulated punishment within the prison that was focused on the mind of the offenders.

Foucault also identified the significance of architectural design - the Panopticon - to promote

known but undetermined surveillance. This design is viewed as an additional means of

controlling behaviour within prisons by giving the impression of constant surveillance. It

is arguable that this principle of undetermined surveillance is still reflected in the use of the

private sector and privatization as a means of further controlling deviant populations through

the blurring of boundaries and expanding into the private sector.

Based in Foucault's work, several major contributors to a revisionist history of social

control have emerged. The interest in the asylum and the management of madness, as well

as the evolution of the penitentiary, was stimulated by historians such as Rothman 0980),

Ignatieff 0978), and Scull 0977). The 19th century system of social control is significant in

understanding the social control perspective as such revisionist histories have provided the

foundation of social control theory. Rothman 0980), examined the way changes were made

to the 19th and early 20th century juvenile justice and asylum systems in America. He

recognized that reformers saw serious problems in the system and sought to change and

improve conditions for deviant populations; however, it was further determined that reforms

were adopted as solutions to immediate problems which usually created new, unforeseen

difficulties (Cohen, 1985:28-9). Similarly, the work of Ignatieff 0978) specifically examines

the origins and intentions of reformers, identifies the order maintenance crisis addressed by

reformers, and acknowledges the significance of the dialectic between reform and structure.

Well-meaning reformers will only succeed if the social structural conditions are right and it

is the nature and impact of these conditions that are the focus of materialist explanations of

social control practices. Materialists, such as Scull, examine, in particular, the impact of

changes in the capitalist economy and account for the changes in the master patterns of

control in terms of the changing needs of capitalism.

Shifts in the social control apparatus of the state have been occurring since the 1970's

and 1980's although some argue that these shifts were occurring as early as World War I1

(Cohen, 1985). It is necessary to go back several decades to understand the causes of these

contemporary shifts. Emphasis has been placed on identifying the common state strategies

for social control, the factors underpinning these structures, and the reasons why changes

have occ~rred.~ Just as Foucault was concerned with the Great Confinement, social control

theorists focusing on contemporary shifts, such as Ericson 0981; 1987), Scull (l977), and

Warren 0984), are interested in the "Great De-Confinement" .

The "Great De-Confinement" or decarceration has signalled the demise of "exclusion"

as a means of social control. One result has been the shift to "inclusion", and the placement

of "social junk" and "social dynamite" back into "the community". The system has been

permeated with a series of new terms to define this new phenomenon. Deinstitutionalization

refers to the gradual emptying and closure of institutions throughout the social control

apparatus; non-institutionalization means individuals are not placed in institutions in the first

place. Trans-institutionalization or transcarceration refers to the shifting of deviant

populations from institutions in one system to those in another and, finally, privatization

recognizes the transfer of ownership of the systems of social control from the public to the

private sector (Lowman, Menzies and Palys, 1987).

See the works of Ericson (l981;1987), Lerman (l980;1984), Scull (l977), and Warren (1984).

14

Scull's exemplary text, Decarceration, (1977) is viewed as the starting point for much

of the study in this area. His work specifically examines the adult and juvenile justice

systems and the mental health system, as well as the process of emptying and closing

institutions. He argues that the process of decarceration is not a consequence of

humanitarian reform per se but, rather, is the result of a fiscal crisis of the state. He

demonstrates how the social control apparatus is confronting serious economic problems.

The expenditures of the state are outstripping allocated budgets, and the resulting gap has

led to decarceration on a grand scale, especially in the mental health system.

For Scull, decarceration has been accompanied by the claim that keeping criminals

and the mentally disturbed in our midst is more humane. We are told that this is a more

effective means of curing or rehabilitating people and, furthermore, that this is a cheaper

method of dealing with "social junkn and "social dynamite" (Scull, 1977:l). Once the fiscal

benefits of decarceration and deinstitutionalization were identified, it is not surprising that

a shift in ideology occurred and attention became focused on returning deviant populations

to the community at large.

Scull goes on to criticize each of the assertions used to support deinstitutionalization;

namely, that the decarceration process leads to more humane treatment and a more effective

means of rehabilitating criminals and the mentally disturbed. He finds the contention that

community treatment is more effective than institutionalization to be an empty one; there is

massive ignorance about what community treatment actually involves (1977:l). For the

criminal and the delinquent, community corrections "meant a further erosion of the sanctions

imposed on their conduct" (Scull, 1977:2). Individuals were less likely to be caught and the

chances of being incarcerated became more remote. Instead, they would be placed on a

large probation caseload and receive only 10 to 15 minutes of attention per week, at best.

Furthermore, economics dictated that discharged mental health patients would cluster in

ghettos to obtain cheap housing and easy access to welfare offices. Instead of achieving a

rehabilitated and "cured" deviant population through decarceration, there is simply one more

burden heaped on the victims of society's inequalities; the deviant is placed in a community

less able to cope with or care for him than the institutions were (Scull, 1977:2).

Scull goes on to suggest that a successful social control perspective requires adequate

theoretical work. The inter-relationships between deviance, control structures, and the nature

of wider social control systems must be examined and evaluated (1977:ll). In the drive to

solidify their own political control, central authorities have sought to extend a single moral

order throughout the state while attempting to homogenize the general population (Scull,

1977: 32).

Scull also recognized that over time, governments had been forced to admit that there

are significant differences between the myth and the reality of community corrections (Scull,

1987:317). The priority of fiscal over therapeutic concerns within government had become

more apparent by the 1980's (Scull, 1987:324). "What has changed is the packaging rather

than the reality of their misery" (Scull, 1987:329). Scull further suggests that decarceration

has heightened control rather than neglect (l987:332). "mhe decarceration of the criminal

has, over time, meant the widening of the network of social control" (Scull, 1987:333). As

Cohen suggests, the process involves a more or less deliberate blurring of the boundaries of

social control (l985:91).

...in 'corrections', as in other social control systems, the more control comes to be legitimized in terms of diagnosis and treatment rather than rules, responsibility and punishment, the more likely it is to intrude into the emotions, thought, and behaviour of the individual and to be concerned with generalized behavioral problems rather than specific acts. The threat thus looms of a massive extension of official intervention into the lives of those who had previously escaped notice or attention - all under the guise of 'helping' them (Scull, 1987:337).

Cohen 0985) is particularly interested in the impact of reform ideas, and in the gap

between the rhetoric and the reality of reform. He examines the focus on the destructu~g

reforms of the 1960's during which controlling mechanisms were returned to the community,

and sees the emergence of a different, wider, and more effective social control net as a

consequence of this destructu~g process. He claims that this expansion of the net of social

control was probably an unexpected outcome resulting from the return of social control

mechanisms to the community.

Cohen describes entry to the deviancy control system as analagous to a gigantic

fishing net "cast by an army of different fishermen and fisherwomen" who know the rules,

routines, authorities, and controllers (l985:41). The influx of deviants, or "fish" to use

Cohen's analogy, entering the system often includes those who would not have been

processed previously (Cohen, 1985:44). Instead of replacing the original set of control

mechanisms, decarceration has merely served to supplement them; that is, a wider, different,

and denser net has been cast (Cohen, 1985:44). The use of programmes such as diversion

has served to divert deviants the system rather than to keep them as it proposed to

do (Cohen, 198552). The result has been the creation of a hidden custodial system (Cohen,

1985:61). Similarly, the accompanying privatization movement, which allows private

entrepreneurs to process deviant populations for profit, moves from coercive to deceptive

forms of social control. The Great De-Confinement is merely a means of increasing the

invisibility of the net's boundaries (Cohen, 1985: 68-69).

Cohen finds it necessary to explore the causes and the nature of destructuring rhetoric

(that is, the intentions) and the causes of the emerging master patterns and their

correspondence with the rhetoric (that is, the outcome or reality) (l985:87). He suggests that

the spirit of innovation and reform changed the state control system. The system is viewed

as a direct and rational response to the problem of crime, and while this helps to account for

its expansion, it fails to explain boundary blurring or dispersal and invisibility (Cohen,

1985:90-91). A second model which argues in favour of increased social control is that of

"organizational convenience" (Rothman, 1980). Reform impulses are blocked, resisted, or

accepted for the wrong reasons and good intentions may go wrong (Cohen, 1985:92).

Furthermore, ideological contradictions may exist and because careful analysis and

deliberation may not have preceded the implementation of new programmes, what will

appear as errors in implementation can, in fact, be the result of contradictions and distortions

inherent in the underlying ideology (Cohen, 1985:lOO).

Another model which, according to Cohen, might account for expanding social

control is that which highlights professional interests. Accompanying the decarceration

process was the emergence of a new group of specialists, experts, and professional deviant

populations. This group of "experts" established a monopolistic claim over the lives of the

deviants over whom they claimed control: "Only the experts know what to do (knowledge);

only they should be allowed to do it (power)" (Cohen, 1985: 101).

The final model which might account for changes in state social control is that of

political economy. An emphasis is placed on political economy as a source of power which

leaves behind new forms of economic power and rationality (Cohen, 1985: 103). As outlined

by Scull, in the 1970's the welfare state in most industrial societies experienced a fiscal

crisis, divested itself of expensive institutions, and diversified (1977). Cohen sees one

strength of this model in its ability to move outside the crime control structure and into the

larger society through an examination of political and economic variables. Crime control

policies are not the simple consequences of internal organizational loops and must be

understood in relation to structural impediments or imperatives (1985:llO). The model allows

for the detection of major changes in state social control strategies that might have gone

unnoticed at the organizational and professional level (Cohen, 1985:llO). It is justifiable to

widen the net if one can convince others that this will result in more good for more people

(Cohen, 1985:llO). "This is the essence of humanistic civilization: to exert power and to do

good at the same time" (Cohen, 1985:114). As Lerman (1982) has pointed out, however, the

destructuring process simply integrated and introduced newer forms of institutions. The use

of locks, physical restraints, and seclusion were replaced by the use of curfew rules and

restricted access, medications and other such means of social control under a new

'humanitarian' guise (1982:208). Arguably, these new "institutions" include the private

sector and its contracted services.

Spitzer and Scull provide an excellent example of privatization occurring as a direct

result of the fiscal crisis of the state. In their historical analysis of private and public

responses to crime 0978), they address the rapid escalation of costs within the criminal

justice system. When coupled with the massive expansion of other forms of state activity

the result has been the 'fiscal crisis of the state' (Spitzer and Scull, 1982:236). The efforts

made to alleviate this crisis include, at least on a limited scale, the privatization of police and

correctional services. They define the differences between public and private controlling

agencies and suggest the differences are not in the source of funding but in "the character

of 'relationship' between those seeking and those supplying services" (Spitzer and Scull,

1982:238). If a service is provided by public servants as agents of the state it is public; when

service is furnished through a competitive profit market it is private (Spitzer and Scull,

1982:238).

While much of their work is descriptive, they present multi-dimensional reasons for

the phenomena which occurred; from humanitarian ideals and charismatic reformers, to the

apparent increase in crime rates requiring more effective methods of control. They view the

'crime control establishment' as "an establishment which both reinforces the priorities and

reflects the problems of the modern capitalist state" (l982:249). Spitzer and Scull ultimately

focus on a single reason for the shift in ownership of control practices: the changing

political and economic climate of society.

If one accepts the premise that privatization represents a new form of social control,

then its emergence probably means that the net of control has been widened and

strengthened. Additionally, by involving non-state agencies in certain forms of penality, the

legitimacy of the state may be reproduced. If community programmes are removed from

the direct management of the state, the state will appear less totalitarian and, in some senses,

privatization becomes a means of displacing responsibility for problems onto a non-state

agency. In short, the growth of social control entrepreneurship gives rise to new aspects in

the theory of social control (Warren, 1981:737). Social control, which has usually been

managed by the state and state agencies is now removed from government and placed in the

hands of the private sector.

The Fiscal Crisis of the State: The Shift to Monetarism

The dominant economic policy in Canada during the 1950's and 1960's was built upon

Keynesian economic principles. This was based primarily on a formula that invoked an

interaction between monetary policy (variations in interest rates and supply of money to

stimulate investment or to check inflationary tendencies) and fiscal policy (tax cuts and

increments to government spending calculated to stimulate spending and employment)

(Wolfe, 1984). However, beginning in the late 1960's, the economy began to decline, the

Keynesian strategy began to falter, and stagflation (a combination of inflation and

unemployment) emerged (Crane, 1981). The emergence of stagflation in combination with

an ever deepening recession suggested that a Keynesian strategy was no longer workable.

The problems were experienced in other western, industrial nations and the reputation of

governments for successful economic management was lost (Calvert, 1984; Crane, 1981).

The primary response to these economic problems was the adoption of monetarist

economic policies. The new focus of governments was almost entirely upon the supply of

money as an explanation for inflation and levels of economic activity. Monetarists assert that

there is a direct link between the rate at which the money supply grows and the rate of

inflation. They further assert that the best way for government to maintain a healthy national

economy is not to interfere with private budget decisions in the free market. In other words,

shrink social spending and shift taxes as progressive levies on income to regressive sales

taxes (Crane, 1981; Wolfe, 1984). In many senses, monetarism is simply a means of

removing the protections and benefits extracted from government under the guise that

increased savings will provide incentives for individual efforts and investments, thus

stimulating the economy (Calvert, 1984; Crane, 1981).

With the failure of Keynesian economics the imperfections of the market were

emphasized and the need for government policies to deal with these imperfections was

recognized (Crane, 198 15). With the increasing rate of inflation during the era, economists

agreed that a means of dealing with these imperfections would be to go beyond Keynesian

monetary and fiscal policies, and turn to monetarism. They believed that the control of the

supply of money was a sufficient tool to manage the economy because inflation is viewed

as a problem resulting from too much money chasing too few goods (Crane, 1981:2).

Monetarists believe in a freely competitive society where the forces of supply and demand

determine prices and investments for production (Crane, 1981:2). Monetarists further

advocate the withdrawal of the state from a central role in economic management and a

return to a laissez-faire economy. The best means of accomplishing this is through a

reduction in public sector expenditures. This results in a call for lower taxes: tax cuts for

businesses, weakened government regulations, a reduction in social benefits (Crane, 1981:3)

and, ultimately, forms of ~rivatization.~

The first sign of the adoption of new monetarist policies came in 1979 with the

emergence of new economic strategies in Britain propounded by a conservative government

headed by Margaret Thatcher. This government introduced a major privatization programme

which began with the privatization of the National Freight corporation, and continued with

Telecom (the British phone company), the National Bus Company, the electric supply

industry, British Gas, the Shipyards, British Airports Authority, and the Trustees Saving

' The end result of this process is a slow economic growth rate, and high unemployment is viewed as the cure. Monetarism becomes economic medicine that produces costly side effects before it has any impact on the problem it is intended to cure (Crane, 1981:2). The h u m aud social costa of these policies are enormous. The public service sector becoma dismantled, despite the increasing needs of those dependent on the service. Worse still, despite thew sacrifices, the policies fail to nsolve the economic crisis. Indeed, a new crisis d t s . Stagflation, d w to falling tax revenue8 and increasing public expenditures necessPry to assist the victims of this crisis (the increased number of unemployed) prevent any improvement in the economic situation (avert , 1984:xiv).

Bank (Pirie, 1988). While Britain has privatized numerous Crown Corporations and

industries it has stopped short of allowing privatization to enter the criminal justice system

(Borna, 1986).

From a political dimension a government engaging in privatization speaks to several

audiences. This audience includes managers of Crown Corporations, workers (both

employed and unemployed), the general public as customers of Crown Corporations, the

general public as taxpayers, potential investors, the finance and business community, and

media commentators (Pirie, 19885). Thatcher's initiative was based on monetarist principles

and affected members of British society in all walks of life. Following the patterns in Britain

and the United States, (Crane, 1985; Logan, 1990; Mackay, 1985; Mahoney, 1988) policies

of privatization began to emerge in Canada and have been introduced at both the federal and

provincial levels of government (Jantti, 1989; Ohashi, 1981; Pitsula et al., 1990; Spindler,

198 1).

Privatization: Res~onse to the Fiscal Crisis of the State

The British experience with privatization was shared with governments in other

countries (including Canada) who sought answers to the fiscal crises they were experiencing.

The British practice of "downsizing" governments became known internationally, and neo-

conservative governments were more than willing to consider the virtues of this process. Dr.

Madsen Pirie, Thatcher's main spokesperson on privatization, was invited by those interested

in learning more about the privatization process to teach them what he could about how the

privatization initiative could be implemented, but without producing considerable unrest

amongst those who would challenge the process.

Pirie established four techniques which would achieve the results desired by

government. First, the government must appear to sell the privatized commodity too

cheaply. If privatization involves the sale of shares, this will result in a rise in the price of

shares on the first day of sale. In turn, this means that share purchasers receive immediate

gains and thus support privatization. Second, during the tendering process the government

must maximize share ownership and minimize concentrations of ownership which is good

for social and political reasons.' Third, the government must consider selling a privatized

entity to both management and the workfor~e.~ While it may be cheaper to sell to a

company, selling to these groups allows more participants to become involved in the process.

Finally, the government must be sure to privatize the popular and easy services first; never

begin with the difficult and the unpopular (Pirie, 1988:lO). Each of these practices

establishes the need for governments to "sell" the practice of privatization to the public,

minimizing negative responses and ensuring that the public perceives that privatization is,

in fact, a useful and valuable objective. The necessary attention to appeasing public

This is essential if the government is to maintain political power. As more members of the public are positively affected by the privatization process, the government can ensure its position of political power. If only a select few are viewed as reaping the benefits of privatization, the government will be placed in a precarious and dangerous position when facing the voters during an election.

It is interesting to note that this is, in fact, exactly what the Social Credit government of British Columbia did. The government established programmes for employees affected by privatization which assisted them in contract bids in an attempt to minimize employee opposition to the privatization initiative. See Chapter 3 of this thesis.

objections to privatization supports the premise that governments projected that there might

be problems in legitimizing the process.

Fletcher 0987) recognizes three models of privatization: (i) an extreme abdication

of government responsibility for funding and the delivery of services previously located in

the public sector and the withdrawal of government funding to non-profit societies and

private service providers; (ii) the government continues the major funding responsibilities

but simply transfers service to private and non-profit agencies; and (iii) the government

assumes responsibility only for statutory services. All preventative or remedial social

services are considered the responsibility of voluntary non-profit or entrepreneurial for-profit

agencies (op. cit., 1987:79).

Proponents of privatization argue that shifting many public services to the private

sector results in substantial cost savings and the improvement of services. Poole (1988)

suggests that the reasons for continued privatization can be traced to fiscal pressure on local

governments. Citizens resisted the rapid expansion of government services and thus

government plans to remove services from the public sector were accepted and welcomed

(Poole, 1988:81). Given that governments were encouraged to "set the stage" before

implementing privatization, it is possible that public acceptance was not quite as simple as

Poole claims.

According to Calvert (1984:32), the business community wished to abolish the welfare

state, thus enabling it to pass on even more of the costs of the economic crisis to working

people in the form of lower standards of living, poorer services, and little or no public

assistance for the unemployed, elderly, single parents, disabled and others bearing

disproportionate burdens as a result of the economic crisis. This is reflected in the Thatcher

government's core social policies: (i) increased austerity programmes and lower living

standards; (ii) new forms of labour discipline; (iii) reconstruction of new class alliances and

politics that incorporate small middle strata; (iv) elaborate exclusionary policies towards

minorities and the white underclass; (v) an ideological form of a new moral consensus of

order, discipline, and individualism to underpin the new conservative economic and social

policy and; (vi) an enlarged repressive side of the state in the direction of creating

exceptional state formations (Ratner and McMullan, 1985187).

The climate of strikes and urban violence experienced by Britain made it possible for

Thatcher and her supporters to occupy the foreground of British politics by shifting the

popular anxieties from economic to social concerns. The crisis of declining markets, falling

profits and high inflation were redirected to the commonsense grounds of authority,

discipline and control (Ratner and McMullan, 1985:191). In both the United States and

Britain there was a shift in the balance of class forces to the political right (Pixie, 1988;

Stricker, 1984). The ensuing problems regarding the maintenance of law and order were

identified, as was the need to address these concerns. All of this engendered a moral climate

receptive to the application of monetarist economic policies while shielding the defects from

public scrutiny (Ratner and McMullan, 1985:194).

The privatization phenomenon was easily introduced on a wide scale given the

political and economic attitudes of the time. The belief existed that the private sector was

better suited to deliver many services formerly provided by the public sector.

Competitiveness was viewed as positive; however, the shift in responsibility left services

subject to the fluctuations and conditions of an open market (Jantti, 1989:90).

The objectives of privatization appear to be to remove a huge tide of losses from

inefficient public sector bodies. Governments are usually unwilling to allow a transfer of

assets to foreigners or to unpopular minority groups and are further concerned with avoiding

large job losses that might cause enough unrest to threaten their hold on power (Young,

1987:204). As a result of these concerns, privatization becomes an integral part of a

restructuring movement in advanced capitalist economies. Furthermore, privatization allows

the state to reduce its central role in the economy and becomes a means of implementing and

executing neo-conservative monetarist policies. Interest in the privatization of services can

be linked to federal and provincial initiatives to reduce costs through a marked reduction in

person years. Through the use of privatized programmes government is able to reduce its

commitment to programme delivery and the accompanying bureaucratic costs of monitoring,

regulating and assuring standards (Zarnbrowsky, 1986:37).

The principles guiding the development of privatized services include: (i) increased

accountability to the community; (ii) promotion of innovative programmes; (iii)

encouragement of the community to develop local solutions for social problems and; (iv) the

provision of services which do not require the dislocation of the client (Daniels, 1986:26-27).

The internal and external factors promoting the use of locally based agencies recognize

public demands for accountability, and government programmes of constraint limiting public

service growth encourage community board responsibility. The growth of service advocate

groups who seek a stake in provincial services further supports the privatization initiative,

as does the accelerated development of the private operation of residential and community

based agencies. In addition, public acceptance of alternatives to custody sanctions for youths

and the implementation of the Young menders Act (1984) support the use of a range of

alternatives to custodial sanctions (Daniels, 1986:26-27). Each of these factors allows for

public acceptance of the use of private agencies in the provision of government services.

The private sector is viewed by governments as having a number of advantages over the

public sector including greater efficiency, greater flexibility because of the capacity to

respond more quickly, and greater creativity. Further, the private sector also provides

services within a market place, (i.e., within a competitive framework) and also has the

capacity to provide less expensive services by reducing the element of elaborate bureaucratic

structures (Zambrowslq, 1986: 37).

It must be noted, however, that the most basic objection to for-profit human services

provision is that there is an inherent contradiction between the purposes of human service

delivery and the profit-making goal of entrepreneurship. "Each has its place in the

institutional fabric of a democratic capitalist society but they are not the place"

(Zambrowslq, 1986:38).

One means of ensuring that privatization does not do more harm than good at the

political level is for the government to assure the public that privatization does not result in

unjustified increases in expenditure. The relationship with the contractor must be

characterized by independence. Further, management costs must be reduced and the private

sector must be capable of providing the services. The need for reasonable monitoring and

accountability must be recognized and established and an ongoing evaluation of the services

provided must be feasible and implemented (Harrison and Gosse, 1986:187).

Legitimizin~ Privatization

One question remains: if privatization requires all of these rules and methods for

implementation in order to succeed, how are governments able to achieve this in a peaceful

and stable manner? The goals of privatization, such as downsizing the public service and

reducing government spending, while economically driven, could have severe political

consequences if they cannot be legitimized. Governments undertaking a privatization

initiative were forced to consider how various groups would react and one obvious source

of opposition would be public sector unions. The need to create and maintain a stable labour

environment, while removing government services that had traditionally belonged to the

public sector, meant that governments have " . ..to curb organized labour, depress wages, and reduce social and education spending in order to allow tax concessions to footloose foreign

firmsw (Allen, 1986a:ll).

Two political legacies of the 1980's have coloured and constrained the economic

policies of the 1990's. A renewed cultural enthusiasm for private enterprise has been

fostered and the enduring deficit has induced an imperative to limit government spending

(Donahue, 1989:3). At the Canadian federal level, the Neilson Task Force determined that

savings to government did occur in the use of the private sector. These savings were largely

the result of reduced overhead costs, much lower salaries in the private sector, and limited

programmes and staffing (Ericson et al., 1987:371). Non-state controlled agencies are able

to pay lower wages, offer fewer benefits, and may hire and fire staff with minimal

consequence as the employment security of civil servants does not exist in the private sector.

Furthermore, private agencies can use the 'ability to pay' argument to reduce staff if

profitability becomes a problem (Ericson et al., 1987:370). This was not an option available

to the government as public sector programmes were designed to provide a service rather

than to make a profit.

The private sector is now providing services which were formerly viewed as a

government or public responsibility within the corrections sphere. As there is no evidence

(other than that provided by the Neilson Task Force and cited in Ericson et al., 1987) that

the quality of service is improved or that costs are necessarily reduced, one must then ask,

what is the "real" purpose of privatization? Perhaps, the "real" objective of the government,

in the name of fiscal restraint, is a call for a reduction in real wages and in the size of the

public sector union. This process will infringe upon the power of labour unions. Evidence

of the government's intent to undermine the bargaining power of unions in both the public

and the private sectors exists, while the government continues to argue that the policies of

reducing real wages and eroding the power of organized labour are regarded as necessary

in order to capture or retain export markets (Redish et al., 1986: 122-3). The privatization

of corrections, for example, aims to reduce the power of certain labour forms, especially the

public sector unions. As long as public sector unions remain powerful, the process of

legitimizing privatized services is restricted. Further, privatization can be viewed as

undercutting the size and influence of selected components of the civil service.

Union opposition to the privatization initiative has been strong and well documented.

Unions are indeed one component of the bureaucratic structures of the welfare state whose

power the neo-conservatives wish to eradicate (Jantti, 1989:29). While trade unions are

believed by many conservatives to be the cause of economic problems, the facts indicate that

the opposite is true. Unions improve the performance of the economy, and thus their growth

should be encouraged rather than restrained (Allen, 1986b:225). The labour movement in

Canada as a whole has probably raised the incomes of working people above levels they

would have received without unions. Furthermore, unions are only able to raise wages as

they raise productivity within competitive, constant cost industries (Allen, 1986b:230).

Essentially, privatization within the corrections enterprise has served to weaken the unions

by encouraging a competitive market.

The government argues that restraining the pay of public sector employees is a means

of reducing government costs. This leads to lower average qualifications of public servants

and results in an overall decline in productivity. The more experienced and able public

sector employees are forced into the private sector to ensure that their standard of living is

maintained (Kesselman, 1986: 84).

In the late 1980's, the Saskatchewan government openly directed fire against labour

unions. Unions were blamed for interfering with the workings of the market and for

restricting the freedom of individual employees and employers. The government publicly

stated its intent to reduce union rights and weaken the labour movement (Pitsula et al.,

1990: 2).

The new right claims that labour unions obstruct the operation of the free market and restrict the ability of individuals to make independent choices about their working lives (Pitsula et al., 1990:234).

The government blamed the trade unions for restricting a competitive market and accused

them of making aggressive wage demands which lead to a competitive decline. Unions were

viewed as serving their own selfish interests at the expense of consumers and further limiting

individual liberties by dictating where people could work and who they could support

politically (Pitsula et al., 1990:234).

While Saskatchewan's recent neo-conservative government launched a blatant attack

on the public sector union in its effort to privatize services, such attacks were not always

obvious and easily identifiable within other jurisdictions. Reagan's implementation of

conservative economics also weakened the unions, reduced workplace protests and

undermined the importance of welfare programmes. Such measures are necessary for

monetarism to work (Stricker, 1984:SS). It is impossible to promote a competitive, free

market and successfully implement monetarist policies without reducing the power of

organized labour. In British Columbia, the Social Credit government was taking a similar

approach in the early 19803, although the underlying goals of privatization, particularly

within the provincial corrections system, were not as clearly stated or as easily identifiable

as they were in Saskatchewan in the mid 1980's.

The 1983 British Columbia Budget: Privatmbo . .

n Becomes Policy

When privatization began in British Columbia in the late 1970's, the focus was on

Crown Corporations. In order to cope with an alleged fiscal crisis in British Columbia, in

1982 the Social Credit government implemented restrictive economic policies including

reductions in the size and role of government, "downsizing itself through cutbacks and

privatization" (Korbin, 1993a; Schofield, 1984). The 1983 provincial budget placed

considerable emphasis on "restraint" initiatives, and government intentions to eliminate and

privatize numerous services and agencies throughout the province became evident. The

government further perceived the recession affecting British Columbia in 1982 as a mirror

of the restructuring of capitalism, and responded to the crisis by restructuring its economic

policies (Redish and Schworm, 1986). The objectives explicitly set out in the 1983 Budget

included privatization, wage reduction, deregulation, employment through megaprojects,

concentration of power, and the downgrading of education and social programmes (Redish

et al., 1986: 121-6). According to Korbin (l993a: 8) "...the political imperative was to reduce

the size of the public service".

The privatization of the B.C. Systems Corporation was one of the first initiatives

taken by the provincial government, although attention was quickly averted to other targets.

Regional offices in many ministries were closed; these closures were accompanied by the

argument that saving public employee wages would buttress the restraint initiative

(Kesselman, 1986). Further, these cost saving measures and restraints were presumed to

raise the measured productivity of public sector employees as fewer workers were involved

in handling the same numbers of clients, inquiries, forms, permits et cetera. The Budget

ignored the extra costs imposed upon businesses and households as a result of a leaner public

service and instead, by saving public employee wages the government increased expenditures

in private costs (Kesselman, 1986:83).

Similar cutbacks also affected family support workers and child abuse teams in the

guise of a need to reduce government costs. However, the long term costs to society were

not considered and while immediate economic savings might be realized the long term effects

would mean more battered, disturbed and violence-prone children (Kesselman, 1986: 87).

According to Kesselman (1986) future costs will arise through

... the individuals' reduced productivity as workers, increased unemployment, decreased tax payments, and increased welfare receipts. And in many cases there will be personal and property damages from criminal activities , as well as increased costs for the police, court, and prison systems (Kesselman, 1986:87).

Allocations of monies for universities were also cut, which decreased access to higher

education for British Columbia's youth. The consequence was increased tuition fees, which

resulted in decreased access to higher education for less affluent youths; simultaneously, the

government also cut student grants (Kesselman, 1986: 88).

In addition, changes designed to promote mini-efficiency through reduced budget

costs and a diminished burden of government on the business sector occurred. Funding for

the Rentalsman, Legal Aid, and the Ministry of Consumer and Corporate Affairs was

red~ced.~ Eventually, agencies such as Motor Vehicle Inspections, Employment

Standards, and the Rentalsman Office were abolished. The obvious result of these decisions

is reduced protection for lower income groups, wage earners, minorities and consumers in

' Kesselman argues that such changes will actually increase public costs because disputes are now forced into courts thus prolonging court proceedings, congesting court schedules, and perhaps even decreasing the quality of court judgements. Similarly, Legal Aid cutbacks might also deprive innocent defendants of proper ~unsel and result in additional unnecessary and costly imprisonments (Kesselman, 1986:86).

general. The end result is a greater cost than the apparent immediate saving (Redish et al.,

1986: 124)

The 1983 Budget also reflected a government policy of privatization, ostensibly in the

interests of economic restraint; " . . .privatization essentially means less government and lower

expenditures" (Budget 1983 in Redish, et al., 1986: 122). The budget made it clear that the

Social Credit government was determined to reduce government expenditures even though

the costs and burden to society might be much greater than the immediate savings. Cutbacks

in the health and welfare sectors could only lead to increased unemployment benefits for

those who lost their jobs; furthermore, the detrimental effects of such policies on the clients

of these systems must also be considered. Restraint initiatives which included cutbacks in

health and welfare services and the closure of related agencies would result in more serious

problems for the lower classes of the province in later years (Kesselman, 1986; Redish et al.,

1986).

Since the economy of British Columbia is highly dependent on economic conditions

in Canada as a whole, as well as the rest of the world, provincial fiscal policy can moderate

but not eliminate a recession. It is important that provincial and federal politics provide an

adequate safety net for those who lose their jobs and businesses as a consequence of market

' For example, in closing Government Motor Vehicle Inspection Centres the costa to private individuals become obvious. The extemal costa of unsafe cars such M increased pccidenta resulting in vehicle damages, personal injuries, and deaths would all lead to an inevitable increase in lnsumu Corporation of British Columbia rates. Furthenmre, increased health care Pad welfare costa will also be incurred ( K - h , 1986: 84-5).

conditions over which they have no control. However these are not the policies which the

provincial government decided to implement (Redish et al., 1986). Rather, the actual policy

was quite the opposite: a return to the fiscal philosophies of the early 1930's which were

dominated by the concept of restraint.

Restraint measures encompassed a combination of tax increases, reductions in public

service, staff cuts, and wage controls. The most obvious, and arguably the most detrimental

consequences of such decisions are to deepen the depression, increase unemployment and

promote inequality which in turn inflicts needless suffering on the less privileged members

of the community (Redish et al., 1986:120). It was important that the government pursue

a broad range of policies to raise the economic well being of British Columbia. There was

a need for a more expansive fiscal policy dealing with structural unemployment in single

industry towns and the improvement of the education system. However, the government

failed to recognize these important options (Allen, 198&.12)?

The need to avoid extreme policies of resttaint is carefully established by Redish et al. 0986) in the following:

In fact, in a severe recession, provincial and f e d 4 f i t 4 policy should not merely rely on automatic stobihem to sustain employment, but should actively increase the demand for goods and servicea by increasing government expenditure or reducing tax rates. The fundamead problem in a recession is that the d e d for goods and servicea is too low to fully employ the labour force and,...@ problem cannot be solved by waiting for market fo- to lower wage%...The provincial government can increase employment directly by expanding the public service, and it can increase employment indirectly by purchasing provinciaUy-produced goods and services. Thirdly, it can cut tax rates, leaving more purchasing power in the hands of households and busin-, thus increasing the demand for goods and services. Finally, it can raise "transfer payments," such as income support payments, which add to the purchasing power of households. All these methods have further, "multiplier" effects, as those whose employmat and incoma are raised purchase more goods and servicea in their turn (Redish, d al., 1986:llg).

However, it is apparent thnt the 1983 Budget did nothing to sddress the above, and in k t , did the exact opposite.

While the restraint budget of 1983 was intended to cut costs, the Social Credit

government further assumed that the monies saved through their fiscal policy would be

reinvested in the promotion of secondary manufacturing by offering foreign and domestic

investors tax concessions (Allen, 1986a:29). Conventional theories of British Columbia's

economic development accept that the promotion of secondary manufacturing through the

encouragement and promotion of investment, usually foreign, will ensure future prosperity

in British Columbia.lo However, as Marchak (1984) notes, while the Social Credit

government did attract investors, the finances of such investors were not directed at

secondary manufacturing as promised. Corporations, mostly Japanese and American, were

only interested in raw materials, which were then transported to other areas for

manufacturing (Marchak, 1984).

British Columbia appeared to be outdoing the neo-conservative governments of the

United States and Britain in downsizing the public sector in the name of increased free

enterprise and competition (Kesselman, 1986:78). The restraint programme proposed in the

1983 budget masked the fact that the budget actually predicted an increase in expenditures

of 12.3 % (the real increase was 9.4%). This was partly due to the inevitable and automatic

effects of the recession: an increase in income assistance and increased interest payment on

lo Both umservative and social democrat programmes are confident that the growth of secondary manufacturing will ensure the future prosperity of B.C. (Allen, l986a: 12). Conservatives contend that expanded "export oriented secondary manufacturingw through diminished organized labour, depressed wages and reduced social and educational spending are required to encourage foreign investment (Allen, 1986a:lO-ll). Social democrats believe that withdrawal from the international economy is the best means of expanding secondary manufacturing (Mmhak, 1984:39). While conventional policies differ in their means both programmes insist that the expansion of secondary manufacturing is essential in addressing economic recession.

the public debt (Redish et al., 1986: 128). It must be remembered that the reduction of public

sector employment, through privatization and downsizing, not only affects unemployment

but also further affects private sector employment by lowering incomes and therefore, retail

sales (Redish et al., 1986: 128).

The Restraint Initiatives of 1983: Government Obiective~

Allen (1986a) has argued that conventional conservative theories of economic policy

assume that prosperity is dependent on "export oriented secondary manufacturing". The

three scapegoats usually identified as preventing the development of secondary manufacturing

include unions, taxes and multinational corporations (Allen, 1986a:29). The provincial

government established three broad objectives for the 1983 restraint programme which

targetted these scapegoats. These objectives included: a reduction in the overall cost of

government services to the taxpayers of British Columbia; a reduction in the number of

per