My article appears today in The Guardian:
British multinational Serco is in trouble. After years as the favoured outsourcer for public services in Britain and countless countries around the world, the latest figures show a financial crash of unprecedented proportions. The firm announced it is writing down its business value by nearly AU $3bn with no dividend for shareholders and a plea for an injection of a billion more dollars. This is a “bitter pill”, according to its chief executive Rupert Soames.
Revealingly, the corporation admitted that without its Australian detention network, its profit would have been even worse. In other words, imprisoning asylum seekers in poor conditions for extended periods of time in remote locations is good for business. Serco won the contract to manage all of Australia’s mainland facilities and Christmas Island in 2009 – I was part of a team that first published the contract between Serco and Canberra in 2011 – and the profits have soared ever since.
From a $370m contract in 2009 to well over $1bn today, surging refugee boats have been invaluable to Serco’s bottom line. Serco has benefitted from an opaque reporting process and desperate federal politicians and bureaucrats who needed corporate help with an immigration system that ran out of control when asylum seekers started arriving in large numbers from Sri Lanka, Iran, Afghanistan, Pakistan and beyond. Neither the government nor Serco could handle the influx, and both detainees and guards suffered.
During the writing of my book Profits of Doom, I spoke to a senior Serco manager who told me how his superiors gamed the system to increase income. Staff are reduced to “keep profits high” and managers are routinely moved from the most difficult centres such as Darwin and Christmas Island because they’re told that “if they get abatements [fines from Canberra], they’ll be fired’’.
Another senior Serco source recently told me that his company had planned to turn the Australian centres into less prison-like environments. A spike in boats ruined that dream, he lamented.
It’s a sign of the times that a company like Serco, with murky financial statements masking its true economic shape, is continually rewarded for failure with new and larger contracts. Just this week, the Australian government announced a “cop on the beat” system within the immigration department to strengthen oversight. This is little more than window dressing after years of Serco and government obfuscation over assessing self-harm inside detention, profit margins, guard misbehaviour and a culture of secrecy that pervades everything the firm does in Australia and Britain (I recently witnessed this when visiting the notorious Yarl’s Wood facility in England).
Vulture capitalism has become the ideology of our age, with Serco just a symptom of wider economic failure. Outsourcing remains hugely appealing, with Mitie now becoming the UK Home Office’s largest provider of immigration detention. A clean-skin, without the troubles of G4S and Serco, proves that it’ll take more than a Serco collapse to arrest three decades of privatised failure.
Privatisation doesn’t deliver better and cheaper services for our society, or even shareholder democracy. The public knows it. It’s time to empower individuals who want to wrest power from the corporations and return it to the people.