Latest report of UN Special Rapporteur on extreme poverty and human rights highlights dangers of privatisation

The UN Special Rapporteur on extreme poverty and human rights this week presented a report to the UN Human Rights Council on the failure of global poverty eradication efforts. Within the report, the Special Rapporteur highlights the dangers of privatisation and the shrinking of public services.

This note sets out key extracts of the report that relate to the role of public services and the effects of privatisation on human rights.

The impact of pro-market policies and privatisation

The report outlines how privatisation and pro-market policies harmfully impact poor people:

Traditional pro-growth policies, such as lower corporate tax rates, labor ‘reforms,’ deregulation, austerity-driven cuts to services, and privatization can have devastating effects on the well-being of poor people and the state’s capacity to reduce poverty. Unless they are carefully calibrated, shrinking public services, liberalizing trade, and deregulating labor markets can hurt workers. Privatization of services disproportionately hurts poor people, often leading to higher user fees and cuts to wages in pursuit of disproportionately high profits for investors [para. 62].

Philanthropy

The report discusses the “serious challenges” presented by philanthropy as an approach to poverty eradication:

Just as the privatization agenda has gained excessive prominence in the SDG context, so too can philanthropy jeopardize governments’ capacity to set priorities, provide funding and implement programs [para. 75].

As tax rates fall, often after intensive lobbying, and funding for crucial services like education and healthcare declines, governments rely more on private giving. Such contributions are then rewarded from the public purse through tax incentives. Some give in areas where they had previously pressed for government cuts, shifting support from the public to the private arena. The result is a weakened public system, an empowered role for the wealthiest, and rights bearers dependent on “generosity” and handouts. Despite claims of greater private sector efficiency, there is little efficient about tens of thousands of foundations, each with duplicate staff and overhead, competing to identify and implement worthwhile projects [para. 76].

Philanthropic giving... is a form of private political power, one in which wealth can dictate policy without regulation or accountability. Above all, it is no replacement for an equitable tax system or robust publicly funded programs that fulfil the human rights of all people and work to eliminate extreme poverty [para. 78].

Concluding comment

In its conclusion, the report warns against relying on the private sector to defeat poverty:

Ever-greater reliance on the private sector to defeat global poverty, whether through PPPs or philanthropy, is a blind alley. Businesses are not motivated, managed, empowered, or incentivized to perform many of the essential public functions being systematically outsourced to them. This trend represents an abdication of responsibility by governments and international organizations [para. 84].

Learn more about GI-ESCR's work on private actors and public services here.