(PSI, 18 March 2015) There is an odd contradiction between the euphoria
about the so-called Public-Private Partnerships (PPPs) and the poor performance
these instruments have offered in the past 30 years.
Many governments are still turning to
public-private partnerships in the hope that the private sector will finance
public infrastructure and public services.
This hope also runs through the G20, the
OECD and the ongoing negotiations at the United Nations for the Sustainable
Development Goals – to be confirmed by heads of state in September 2015.
Privatisation is about to become official
UN policy. However, experience with PPPs shows that privatisation is fundamentally
flawed.
The report “Why Public-Private
Partnerships don’t work” by Public Services International Research Unit
(PSIRU) assesses the PPPs experience in countries both rich and poor.
It concludes that PPPs are an expensive
and inefficient way of financing infrastructure and services, since they
conceal public borrowing, while providing long-term state guarantees for
profits to private companies.
The research demystifies the shadowy PPP
processes, most of which are shrouded in secrecy, hiding behind confidential
negotiations to protect commercial advantage. There are no public
consultations, lots of false promises, and incredibly complex commercial
contracts, all designed to protect corporate profits.
“Governments and the UN are heavily
influenced by a powerful lobby of the biggest services, financial, consulting
and law firms, all intent on reaping profits from basic public services such as
health, water, energy,” says Rosa Pavanelli, General Secretary of Public
Services International (PSI).
“We must remember that private sector
corporations need to maximise profits if they are to survive. This is
incompatible with ensuring universal access to quality public services,
especially for those unable to pay these profits.”
Further dangers These privatisation policies are also
linked to the new round of trade negotiations (TISA, TPP, TTIP, CETA), also
secretive, without public consultation, stitched up behind closed doors between
business interests and the governments that do their bidding. The trade deals
will facilitate PPPs and lock them in, making it next to impossible to reverse
them.
A further danger is the effort by the
World Bank, the G20, OECD and others to ‘financialise’ PPPs in order to access
the trillions of dollars held by pension funds, insurance companies and other
institutional investors.
To access these funds, governments are
advised to do a whole lot of PPPs at the same time in order to create a pool of
assets that can then be bundled and sold on to long-term investors. This
is exactly what the financial services companies did with home mortgages at the
turn of the century, which brought us the global financial crisis of 2008.
From London to Santiago The author of the report, David Hall, who
was Director of PSIRU at the Business School of the University of Greenwich in
London, has analysed and compared various cases and countries where PPPs have
not delivered what was promised:
The failed programme of Transport for
London, the poor performance of the airport of Delhi, the corruption scandals
in Chile’s infrastructure projects, the financial troubles with the Troika PPP
package imposed on Portugal.
For example, “the United Kingdom has used
PPPs for a wide range of buildings and infrastructure – hospitals, schools,
roads, rail, defence, and government offices. As neoliberal limits on
government borrowing spread, so did PPPs – like in Europe, where EU rules
started to limit government borrowing to 3 per cent of GDP,” explains
Hall.
New Zealand, Australia, Canada and the USA - all began using PPPs as a way to balance budgets by concealing borrowing, to
shrink the size of governments and to reward corporate backers.
In developing countries, the development
banks, bilateral donors and multinational companies encouraged the spread of
PPPs in the 1990s, especially in the water and energy sectors, as part of the
general promotion of privatisation – and as a way around the fiscal limits
which the same International Financial Institutions (IFIs) were imposing on
developing countries. Although a number of services were privatised, the
delivery to citizens did not improve.
There are alternatives The PSIRU report proposes a public
alternative to this system, in which national and local governments can
continue to develop infrastructure by using public finance for investment, and
public sector organisations to deliver the service. This gives the public
sector a number of advantages.
The public sector gains greater
flexibility, control, and comparative efficiency – because of reduced
transaction costs and contract uncertainty, as well as economies of scale – and
the efficiency gains of more democratic accountability.
“Public services are massive pools of
potential corporate profit, and PPPs serve to access them. The ‘clients’ are
captive, the services are often monopoly,” comments David Boys, Deputy General
Secretary of PSI.
“This paper provides a synthesis of many
years of research, and should be used by union activists, concerned citizens,
but also by policy makers around the world.”
Public Services International is a global trade union federation representing 20
million working women and men who deliver vital public services in 160
countries. PSI champions human rights, advocates for social justice and
promotes universal access to quality public services. PSI works with the United
Nations system and in partnership with labour, civil society and other
organisations
This is a major piece of work that will benefit Public Sector Workers, across the Globe. PSI has achieved a endowment of qualitative global reserach r that shows
