In periods of capitalist economic implosion, increased public spending and an enlarged role for the public sector becomes unavoidable, even for the most one-eyed of free marketeers.
So now US$3 trillion of US taxpayers' money miraculously becomes available for bailouts, bank recapitalisation and deposit guarantees, and even the most market-loving economists accept bank nationalisation — provided that the refloated banks are returned to their "rightful owners". At the same time, state budget deficits and public debt — regarded for the last two decades as evidence of inefficient and parasitical big government — become acceptable and necessary.
As the economic meltdown spreads, the role of public spending and the state will be debated more and more. This applies particularly to those economic areas where the public sector was for a long time the main service provider and private capital a more recent entrant.
The most dramatic Australian example is child care. With ABC Learning broke and CFK ("Cash for Kids"?) Childcare now in receivership, more than 120,000 child-care places and 12,000 jobs are at risk. Federal education minister Julia Gillard must decide how the Labor government should intervene.
Will Labor's intervention be a short-term bailout, facilitating "industry rationalisation"? Or will it be a more phased restructuring, but one that maintains private providers as predominant, even while facilitating the growth of the not-for-profit, community and social sector?
One thing is certain. Re-establishing public (social and community) provision of child care will be a huge job; 73% of long-day care places in Australia are now owned and run by private operators. This is the end result of a child-care privatisation policy that began in 1991 with the then Labor government's decision to allow private capital into the sector, and to fund it via child-care payments to parents. John Howard's Coalition government, whom Gillard now scapegoats for the present mess, simply built on those foundations.
The result after 17 years is clear: a wave of private "over-investment" in child care (not compared to social need, but in relation to profit opportunities), similar to the "over-investment" in housing driven by the sub-prime mortgage racket in the US.
What to do?
Child care should be a public service, not a profit opportunity, and in a sensible world all threatened child-care centres and the assets of the failed companies would immediately be taken over by the federal government. Their administration would be entrusted to community-based child-care organisations and local councils.
The not-for-profit child-care sector is responsive to the community and has demonstrated for more than 30 years that it can deliver quality services and manage public funds.
The next step would be to reintroduce planning to the whole sector, with the government drawing on the skills and enthusiasm of child-care professionals and their unions. The real economics of child-care provision (that is, without private profit) would first have to be established and government funding increased to guarantee adequate supply.
The end goal would be to make child care free as quickly as possible.
In the transition phase, as properly funded, community and not-for-profit child-care provision is returned to occupy a predominant place, the remaining private child-care providers would be obliged to meet strict criteria on service quality and staff working conditions.
The end result would be a considerable expansion of the public sector, but without the "big government" ogre that the champions of privatisation always invoke. Rather, child care on a not-for-profit basis would encourage provision by community and parent cooperatives, local councils and unions, as well as requiring major industry and government departments to provide child care.
The collapse of ABC Learning and CFK Childcare is an invaluable opportunity to reverse the tide of privatisation and profit-mongering in a sector that is critical to the well-being of millions of parents and children. It would be nice to think otherwise, but in all likelihood the economically conservative Rudd government will fluff it — even though early childhood education has been one of its policy mantras and cheery kids in a child-care centre a favourite prime ministerial photo opportunity.
[Dick Nichols is the national coordinator of the Socialist Alliance.]