Large outsourcing companies are increasingly being given control of essential services in Australia, as our federal and state governments follow global privatisation trends. Serco is a British company that’s been making inroads into the Australian public services sector since the 1990s.

Contracted to run Australian immigration detention centres and several prisons around the country, Serco is now turning its attention towards public housing, after the NSW government announced plans early last year to privatise up to a third of the state’s affordable housing.

The NSW Coalition government is set to start transferring the management of public housing over to private housing providers this year in areas such as Waterloo, Telopea and Arncliffe. The initial plan was to transfer tranches of 1,000 homes to non-government organisations.

However, Serco has a different idea. As reported by Fairfax Media last August, the company has suggested that smaller community housing providers are ill-equipped for the job, and the British model of outsourcing to larger management companies should be followed.

When the cheapest is best

This large scale model was found to be a resounding failure in the UK. Serco, along with rival outsourcer G4S, provided inferior housing to asylum seekers that was often pest-infested, a British parliamentary inquiry found. And the companies were also involved in intimidating their tenants.

Public housing provides an affordable option for people living on a low income who are otherwise unable to rent privately. As housing prices are going through the roof in this country, affordable housing is more essential than ever.

So the idea of handing over control of a vast amount of public housing to a large company that has the aim of turning a profit seems counter-intuitive. It will lead to poorer members of the community being further disadvantaged as cost cutting measures are taken to provide the cheapest accommodation possible.

This is especially true when the housing provider has a track record like Serco’s.

Profiteering from displaced people

In 2009, Serco began running eleven of Australia’s onshore detention centres, as well as the Christmas Island facility. And despite damning reports of the conditions in some of these centres, the Australian government renewed their five-year contract back in 2014.

During the first contract period, the company was raking in the money as the number of asylum seekers arriving in Australia surged to 10,000. And at the time, this revenue was propping up Serco as the company was suffering heavy losses from other contracts.

But reports of deplorable conditions and the use of military-style security began emerging from Christmas Island detention centre. In July 2014, a leaked report revealed that self-harm incidents had risen six-fold over the previous half year.

President of the Australian Human Rights Commission Gillian Triggs paid a visit to the centre that same month. She found there was an escalation of mothers on suicide watch, and there were babies being held in small metal containers, which didn’t allow them to learn to crawl or walk.

But, the numbers of asylum seekers on Christmas Island has dwindled, and the centre is slated for closure at the end of this year. In fact, the federal government announced last year that it would be closing many of the nation’s onshore detention centres.

With asylum seeker profit margins plummeting, Serco is now focusing on the more lucrative markets of public housing and prisons.

Profits over rehabilitation

Serco currently runs three correctional facilities in Australia: Acacia Prison and the Wandoo Reintegration Facility both in Western Australia, along with the Southern Queensland Correctional Centre.

The problem that surrounds the privatisation of prisons is that there is little incentive for companies like Serco to provide any meaningful rehabilitation services, as they make their money out of housing inmates, so lower incarceration rates mean less profits.

A 2014 report found that Australia has the highest proportion of prisoners in privately run correctional facilities in the world. For companies like Serco, along with G4S and GEO, keeping Australians behind bars is big business.

A half dozen British prisons are also run by Serco. It’s been well-documented that conditions in these prisons are squalid and the company has been running them using what’s been described as “institutionalised meanness.” In an effort to cut costs staffing levels are low, and if a service is not contractually required, it’s not provided.

Back in 2015, the WA Department of Corrective Services found that there were a number security issues at the Serco-run Acacia prison. In order to deal with these problems, the state government penalised the company through loss of profits.

Prisons are supposed to act as a deterrent to crime and a place of rehabilitation for offenders, but with private prisons the focus seems to be much more upon the private company’s profit margins, rather than the needs of the prisoners and the community as a whole.

Australia is gearing up to broaden the private prison sector as a consortium of four companies, including Serco, is set begin construction on Australia’s biggest gaol this year in northern NSW. The Grafton Correctional Facility will have the capacity to detain 1,700 prisoners.

A lack of accountability

NSW Minister for family, community services and social housing Pru Goward told Crikey that the tenders for the outsourced 18,000 public housing properties in this state were to be issued late last month.

It’s yet to be seen whether Serco will become the landlord for thousands of low income earning Sydneysiders. But people should be concerned about this prospect, after the travesty that occurred in Britain when the company was contracted to find accommodation for vulnerable asylum seekers.

The UK Public Accounts Committee report released in 2014 outlined the company consistently failed to inspect properties before taking them over, leading to long delays and extra costs. And the standard of the accommodation that was eventually provided was unacceptable.

The committee found that the decision to go with larger contractors posed risks as the level of expertise and knowledge that smaller service providers possessed was lost. And when contractors started to fail, there were fewer alternative options for the government to turn to.

Indeed, this is the problem with handing over essential services to large private companies. Their focus is solely on their profit margins, which leads to a situation where there’s a lack of accountability, as well as an absence of care about the quality of the services provided.