Privatization’s Progeny: Canadian Offspring?

Term has happily come to an end up in now-icy Montréal, so I am catching up on all of the reading I missed in the last few hectic weeks. One paper I read some time ago but neglected to blog about is Privatization’s Progeny by Jon Michaels.

A half-thought that occurred to me at the time was whether the process described by Michaels had an effect on the Supreme Court of Canada’s 2008 decision in Dunsmuir v. New Brunswick, 2008 SCC 9.

Here is the abstract of the paper:

Privatization’s proponents are branching out. They’ve traditionally relied on government contracting to boost regulatory efficiency, maximize budgetary savings, enhance unitary control over the administrative state, and reap political dividends. Now, however, these proponents are also blazing newer, bolder paths. They’re experimenting with more powerful instruments that offer surer, quicker routes to promote privatization’s aims.

One such instrument is marketized bureaucracy. For decades, the government offered its employees generous base compensation and considerable job security. During that time, privatization’s proponents found these public-sector arrangements anathema. Rather than tear down the then-prized civil-service framework, they simply circumvented it — replacing what they viewed as overpaid and insufficiently motivated government workers with contractors. Of late, however, the tide has turned against the civil service. Across the country, elected officials are reducing government workers’ wages and benefits, curtailing collective-bargaining rights, reclassifying tenured civil servants as at-will employees, and introducing performance-based bonuses. These efforts have made government bureaucracy far more like the private sector, thus reducing the need to contract out.

Another such instrument is government by bounty. Exemplified by regulatory vouchers, prediction markets, R&D prizes, and social-impact bonds, government-by-bounty initiatives shed the conventional contractual form. In its stead are high-risk, high-reward bets that shift financial and programmatic responsibility onto bounty seekers. Unlike traditional contractors, bounty seekers invest their own money and get paid only if they win the “bet” — that is, only if they successfully carry out their given tasks. As a result, the bounty seekers are, in theory, better-motivated and less susceptible to slack, abuse, and fraud.

This Article explores how these instruments uniquely challenge the administrative state, reorienting public programs, reversing longstanding practices, and forcing courts to recalibrate core administrative law doctrines in ways traditional contracting never did. Specifically, these new instruments enable school districts to “teach to the test,” states to barter away sovereign authority, and presidents to politicize the bureaucracy. They also test the robustness of foundational legal precepts undergirding hard-look review, Chevron and Skidmore deference, and constitutional due process. Ultimately, the emergence of these instruments reflects the extent to which government today is commingling political and business-like agendas in ways both liberating and threatening.

One of the issues the Court dealt with in Dunsmuir was the applicability of administrative law rules of procedural fairness to public servants. Previously, the Court had distinguished between office holders (entitled to a public law duty of fairness and remedies) and contractual employees (entitled to contractual remedies only). In Dunsmuir, the Court abolished this distinction, on the basis that it is unsound (see e.g. para. 112). Public servants are now entitled to contractual remedies only, save in limited circumstances (see paras. 114-116).

I wonder, though, whether some of the trends identified by Michaels were influential. The outcome in Dunsmuir is consistent with giving government greater flexibility in dealing with its employees. It also seems unfair to have two classes of government employee, one entitled to the full gamut of public law procedural protections, one entitled only to what could be negotiated (most probably in a collective agreement). If Michaels is right, then the latter category is liable to increase. Dunsmuir at least reduces the possibility of such a two-tiered civil service.

Indeed, perhaps the following sentence (at para. 103) is telling: “If the Crown is acting as any other private actor would in hiring its employees, then it follows that the dismissal of its employees should be viewed in the same way”.

So maybe Dunmsuir can be viewed as another of Privatization’s Progeny.

This content has been updated on June 11, 2014 at 09:47.