Moving
towards a 'hollow' state
In a typically piquant analysis on the "Private Slaughter of
Public Service", the radically left leaning magazine, 'Red Pepper'
last year focussed on how the Labour government in the United Kingdom
is rapidly continuing its free market goal of turning the state into
little more than a contracting organisation.
Its point was
that, in the past, the money of British tax payers had been used
to fund publicly owned services which in theory at least, they could
call to account. With the unbridled extension of marketisation and
privatisation into public services however, fifty per cent of tax
revenue - and growing - has begun going to profit making companies.
'Red Pepper's
critical examination of the manner in which the fractured parts
of this private takeover is disguised by talk of 'partnership',
underscoring the reality of a hollow state that is becoming increasingly
out of democratic control strikes common chord with Sri Lanka in
many respects. In the United Kingdom, this expansion has not been
limited to the public transport, energy, utilities and communications
infrastructure but extended to hospitals, schools, social service
and extraordinarily, to the criminal justice system. The impact
of this expansion has meant the sacrificing of the least heard voices,
such as the poor and the elderly. The state meanwhile, is increasingly
washing its hands of its welfare responsibilities and adopting the
role of a mere financier or purchaser of services with the management
and delivery performed by the private sector.
The picture
thus painted of a state with a hole in it, is a bleak one. In Sri
Lanka, we have already seen the privatisation of gas with telecom
and the national airlines part privatised. Now, it appears that
the gloves are off and we are making no bones about moving towards
a hollow state and rapidly at that. While some media reports talk
about the state transport sector being handed over to the British,
others downscale the news by talking of a 'partnership' with a British
bus company. Meanwhile, the rail services and water are also on
the list as are, apparently, the universities.
The Petroleum
Corporation, the Ceylon Electricity Board and the Insurance Corporation
have also been specifically identified for privatisation. And amidst
the resultant hosannas of those fervent believers in free enterprise,
gloomy predictions of the human cost involved if such a massive
wave of privatisation were allowed to sweep unchecked and unfettered
across this country, may appear to be inappropriate but nevertheless
ought to be made.
This argument
is, of course, wholly based on the concept of public power that
is ideally held in trust by the State for the people. This means
specifically that the utilising of such public power should be strictly
monitored and its infringement be amenable to judicial review and
particularly to the rights protection afforded by the Constitution
to aggrieved citizens. We have already seen what has happened to
the country's once-upon-a-time national carrier with accounts of
stupendous financial pilfering and mismanagement dominating headlines.
While this was allowed to go unchecked with only intermittent public
interest demonstrated, losing public control of the national airlines
was further accelerated by the 2001 Supreme Court ruling that the
Emirates cum Sri Lankan airlines partnership had effectively taken
the airlines out of the ambit of the fundamental rights chapter
in the Constitution. Actions by the management could henceforth
not be reviewed for substantial breach of rights obligations.
It is well to
recall at this point of time that the Court, in giving its decision
in this case, leant heavily on the fact that the approved business
plan for an initial period of ten years gave the day to day running
of the company to be in Emirates. Accordingly, the fact that the
agreement provided specifically that, in matters over which Emirates
exercises such power, control and authority, it shall not be required
to refer such matters or seek the approval at a general meeting
of the company or the Board of Directors ( in which the Government
had the majority) was held to take away the "deep and pervasive
power" enjoyed previously by the government over the national
carrier. The contrary argument that it was the Board which delegated
authority for management and consequently had the right to revoke
that power and that overall, the Board had the right of control
over the company was dismissed as was the fact that the Government
had kept to itself its majority percentage in its shareholdings.
This ruling
remains pertinent for more reasons than one with privatisation of
essential services poised to expand in the near future. Is this
the precedent that we would like to adopt for services such as transport
and rail, to mention two particularly crucial areas of interest
for the Sri Lankan consumer if similar contracts of management or
'partnership' are entered into between the Sri Lankan government
and foreign partners? Would we not be reducing the whole concept
of constitutional monitoring of public power to be a farce and a
not so amusing farce at that?
In previous
and far less complicated times, it had been unequivocally laid down
that the government (by resorting to the device of the corporate
entity), cannot be permitted to liberate itself from its constitutional
obligations in respect of fundamental rights which it and its organs
are enjoined to respect, secure and advance. It was primarily on
this basis that, in 1987, the Supreme Court held that actions of
the management of AirLanka could be reviewed by the Court for fundamental
rights adherence as they amounted to executive and administrative
action under Article 126 of the Constitution.
This thinking
prevailed through the years despite scattered decisions that put
the actions of the Insurance Corporation, the National Paper Corporation
and the People's Bank beyond the reach of the Court. These decisions
took the view primarily that where the State's only significant
involvement is through financial support or limited regulation,
it may be well to inquire whether the State has so thoroughly "insinuated"
itself into the operations of that particular body. Previously,
the actions of the University Grants Commission had been held to
come within judicial supervision as the Act assigned to the Commission
certain vital government functions pertaining to university education.
However, the
view that the juristic veil of corporate personality donned by a
company for certain purposes cannot debar constitutional protection
survived the first wave of privatisation, consequent to 1994. Thus,
in 1999, actions against Sri Lanka Telecom were held entitled to
claim constitutional protection on the basis that the government
still retained beneficial ownership in the majority of the shares,
thus subjecting the management to judicial scrutiny.
All this legal
quibbling on corporate personality or otherwise, may, of course,
come to nought, if the government decides to push ahead with unrestrained
privatisation without even the fiction of its presence. It is well
that, as correctly befitting the great unwashed public, we decide
exactly what we want at this moment in time. The choices appear
to be deceptively simple; regulated privatisation (if privatisation
we must have) or private slaughter of public rights? Allowing the
government (any government) to make this choice for us would be
too risky for words.
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