"The government needs to provide adequate funding for public services in Canada, not come up with short-term revenue schemes that end up costing more." — James Clancy, NUPGE National President
Ottawa (07 Jan. 2016) — The Algonquin College campus in Saudi Arabia is based on the same business model that led to scandals at ORNGE.
Privatization of air ambulance services led to massive corruption, financial irregularities, and excessive salaries
ORNGE is the former Ontario Air Ambulance service but in 2005, Ontario created Ontario Air Ambulances Services Co., a not-for-profit entity to run the service. The company, rebranded as ORNGE (not an acronym), was supposed to change how air ambulance service was provided in Ontario.
In late 2011, news reports revealed that ORNGE CEO Chris Mazza was paid $1.4 million a year, more than any other public employee in Ontario. But ORNGE hid Mazza’s salary from public scrutiny by creating a spin-off private company, ORNGE Global. (Salaries paid at private companies are not published under the Public Sector Salary Disclosure Act.) ORNGE Global issued bonds to pay for a dozen new helicopters, paying the interest and principal on the bonds with some of the $150 million in public funding it receives. The Italian company that sold the helicopters then paid ORNGE $6.7 million for “consulting” services. The ORNGE corporate plan called for three per cent of gross profits to go to the not-for-profit ORNGE, with 97 per cent going to ORNGE investors.
One of the most disturbing pieces to this story is that the reason ORNGE was permitted to set up a web of companies whose operations would be hidden from the public was so it could sell its services to other provinces or countries looking to privatize public services. It's a new form of privatization — sometimes referred to as public-public competition — where public services are required to act like private companies.
Privatization playbook at work
The decision of Algonquin College administrators to set up a college in Saudi Arabia is based on the same assumption — operations outside of Ontario will somehow make money to subsidize public services here.
Allowing ORNGE to act like a private, for-profit business led to a host of financial irregularities and undermined a valuable public service. Now the provincial government is repeating that mistake by allowing Algonquin College to act like a private contractor in Saudi Arabia.
“When it allowed Algonquin College to open up a campus in Saudi Arabia, the provincial government showed it had not learned from the ORNGE scandal,” said James Clancy, National President of the National Union of Public and General Employees (NUPGE).
"Public services end up being compromised as governments underfund them, creating this drive to find alternative revenue sources through privatization," Clancy said. "We are losing out on all fronts."
Saudi Arabia campus subsidized by Ontario residents
Instead of making a profit, Algonquin College’s Saudi Arabia campus has lost almost $1.5 million. That means there was almost $1.5 million less in funding for the education of Ontario students.
College’s reputation placed at risk
From the start, Algonquin College faculty felt that a campus in Saudi Arabia was not compatible with Algonquin College’s mission and values. Saudi Arabia has an appalling human rights record. The nature of human rights abuses means that the activities of the college cannot be separated from Saudi Arabia’s human rights record.
Solution is adequate public funding
"The government needs to provide adequate funding for public services in Canada, not come up with short-term revenue schemes that end up costing more," Clancy said.
Both the ORNGE scandal and Algonquin College’s Saudi Arabia campus are symptoms of a larger problem. Tax cuts that benefit primarily large corporations and the wealthy have left Ontario with a revenue problem. Instead of dealing with that problem, the provincial government is resorting to privatization schemes, which provide limited short-term revenue and mean serious problems over the long term.
P3 privatization schemes have pushed up the cost of infrastructure projects by $8.2 billion. For example, selling Hydro One means we lose control over a key part of our electricity system. And schemes like ORNGE and Algonquin College’s Saudi Arabia campus fail to bring in even short-term funds, while damaging the reputation of valuable public services.
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 360,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE