Public–Private Partnerships in Urban Infrastructures: Reconciling Private Sector Participation and Sustainability

The speed and scale of urbanization provide serious challenges for governments all over the world with regard to the realization, maintenance, and operation of public urban infrastructures. These infrastructures are needed to keep up with living standards and to create conditions for sustainable development. The lack of public funds and the inefficiencies of public service provision have given rise to initiatives to stimulate private parties to invest their resources in public urban infrastructures. However, private sector participation creates a whole range of new challenges. The potential benefits are countered by concerns about the compatibility of the private sector's focus on short-term return on investment with the long-term perspective needed to realize sustainability targets. On the basis of a review of literature on experiences with private sector participation in urban infrastructure projects, this article identifies governance practices that help or hinder the reconciliation of private sector participation in urban infrastructure projects with the objective to increase the sustainability of the urban environment.     

An Evaluation of Private Sector Provision of Public Infrastructure in Australian Local Government

Private sector provision of public infrastructure in Australia at all levels of government, including local government, has steadily increased over the past twenty years. Nevertheless, this method of providing public infrastructure remains controversial. This article seeks to provide a critical review of the arguments surrounding private sector provision of infrastructure in Australian local government. It examines both the case for private sector provision of municipal infrastructure in Australia and the major arguments advanced against this approach to infrastructure development. Given the conceptual argumentation and empirical evidence on private municipal infrastructure provision, it is argued that policy makers should employ a nuanced performance evaluation framework to assess the benefits and weaknesses of private provision on the basis of the specific type of infrastructure in question and the kind of services it provides rather than simply endorse carte blanche privatization.     

The Curse of Sisyphus: Public Sector Audit Independence in an Age of Economic Rationalism

Consistent with the economic rationalist philosophy which now pervades the decisions and policies of all Australian governments, the persuasive aura of competitive markets has been used to justify the provision by the private sector of an increasing range of public services. Governments who have been consistently antagonised by the findings of the auditor-general are now attempting to use the arguments for competition in the public sector to diminish the stature and role of the auditor-general. In place of audit models which are based upon an auditor who is able to conduct audits on behalf of parliament, the auditor-general is to be increasingly isolated from the means to audit. This represents the onset of a radical interpretation of public sector audit which will usher in the last days of an independent public sector audit function.     

Are Leftist Governments More Generous Toward Public Sector Employees? Evidence From Canada, 1967–1984

This article tests the hypothesis that leftist governments concede higher wage increases to their public sector employees than right-wing governments. Leftist governments are expected to be more generous toward public sector employees because of their commitment to public sector intervention, and because of the heavy representation of the public sector among leftist party elite and clientele. The study examines all major wage settlements signed between 1967 and 1984 in the Canadian provincial public sector and finds that, everything else being equal, wage increases are 10% higher under leftist governments. The standard economic variables (labor demand, expected inflation and spillover from previous contracts) that have been shown to affect wage increases in the private sector also emerge as significant. Finally, the data indicate that the greater the public debt the more constrained governments feel to negotiate minimal wage increases. These findings establish that a proper understanding of public sector labor relations requires a consideration of political as well as economic variables.     

Local Government Restructuring: Privatization and Its Alternatives

Local government restructuring should no longer be viewed as a simple dichotomy between private and public provision. A 1997 survey of chief elected township and county officials in New York shows that local governments use both private and public sector mechanisms to structure the market, create competition, and attain economies of scale. In addition to privatization and inter‐municipal cooperation, two alternative forms of service delivery not previously researched—reverse privatization and governmental entrepreneurship—are analyzed here. Logistic regression on the 201 responding governments differentiates the decision to restructure from the level and complexity of restructuring. Results confirm that local governments are guided primarily by pragmatic concerns with information, monitoring, and service quality. Political factors are not significant in the restructuring process and unionization is only significant in cases of simple restructuring (privatization or cooperation used alone). Fiscal stress is not a primary motivator, but debt limits are associated with more complex forms of restructuring. Restructuring service delivery requires capacity to take risks and is more common among experienced local officials in larger, higher‐income communities. Restructuring should be viewed as a complex, pragmatic process where governments combine public and private provision with an active role as service provider and market player. © 2001 by the Association for Public Policy Analysis and Management.     

Contracting Out and Accountability

Governments are increasingly moving to contract out the provision of public services which have previously been delivered by public service departments. Contracting out typically implies provision by private sector contractors. However, it may also include in-house provision by public service departments or other public agencies where the right to provide is won through competitive tendering and is governed by contract. At the Commonwealth level, the trend has been given added impetus by the Coalition government elected in 1996 (Reith J 996; National Commission of Audit 1996).
The main rationale for contracting out is to improve efficiency in service provision by harnessing the virtues of competition, in particular the superior productivity engendered among competitive providers (Industry Commission (IC) 1996, B3.4; Appendix E). At the same time, there is a legitimate expectation that providers of public services paid for by public funds will be publicly accountable (IC 1996, BI). However, contracting out has the potential to reduce the extent of public accountability by transferring the provision of public services to members of the private sector who are generally not subject to the same accountability requirements as public officials. Indeed, reduction in such accountability requirements may be one of the reasons for the greater efficiency of the private sector.     

Local government grants and income tax revenue: Redistributive politics in Norway 1900–1990

An important aspect of the welfare state is public provision of private goods, primarily education and health care. In Norway the provision of these services has been organized through the local public sector. The development of the welfare state has to a large extent been the development of welfare communes. The important revenue sources of the local and county governments, grants and income tax revenue, have been controlled nationally, and the paper addresses the determinants of these revenues during 1900–1990. The approach combines a demand model of local public services emphasizing price and income-elasticities with a political economy model of central government ideology and strength. The decision making is understood as bargaining between the government and interest groups, and the political structure consequently is of importance for the policy outcome. The analysis shows how politics matter, and the results indicate that a minority coalition government implies 30% more grant and income tax revenue to local and county governments than one party majority in the long run.     

Unanswered questions in service provision for modernizing states

In ‘Innovations in the provision of public goods and services’ (Pinto, R. (1998). Public Administration and Development, 18 (4): 387–397), Pinto contributes to the ongoing policy debate on service provision in two important ways. First, he points out that service provision reform is a complex, evolutionary process that is at once political and economic. Second, he argues that public management and administration, rather than becoming obsolete, will have to become more naunced and refined as governments increasingly allow private sector and citizen participation in the delivery of services. Both these propositions could be further developed by acknowledging the ongoing redefinition of what makes services ‘public’. Governments in developing countries will successfully redefine the ‘public’ character of services only when they resolve the enduring trade-offs between efficient delivery and distributive justice, between the roles of citizen and consumer. Copyright © 1998 John Wiley & Sons, Ltd.     

The management and administration of parastatal organizations for the promotion of indigenous enterprise: A West African Experience

Among the various functional types of public corporation and statutory authority, those concerned with the regulation and provision of economic opportunities and social amenities constitute one of the most interesting developments in West Africa's parastatal sector today. Taking as a case study the recent initiatives of the Ghana Government ta promote indigenous enterprise (which have had an important demonstration effect on neighbouring Nigeria), the article analyses the performance of parastatal organizations that have been instrumental in fulfilling public policy objectives in this area. It examines first the management objectives established by the guiding legislation, secondly the corresponding choice of organizational structure, and finally the ways in which parastatal managers therein endeavour to implement the tasks of redistributing opportunities between foreign and indigenous private enterprise. Particular emphasis is placed on the innovative roles played by public officials and their organizations in mediating between government and the two segments of the private sector (foreign and indigenous). This includes especially the organization for disinvestment and the management of access to opportunities thereby created: identification of affected business and evaluation of their assets, provision of information for applicants, determination of rules of eligibility for the channelling of demand, supervision of purchase, transfer of management and labour relations during the period of negotiation and transfer. Finally, the article considers the effectiveness of resources use by recipients of enterprises, including patterns of distribution amongst the latter, in order to determine the impact of parastatal organization procedures on policy outcomes.     

Construction Procurement and State Government Strategy: Aligned or Disconnected?

Australian state governments are engaging in strategic planning processes and publishing departmental and/or overall state strategic plans. One means of achieving the goals outlined in these strategic plans is via public procurement processes. Investments in construction projects by governments are strategic in nature and made to create infrastructure, which enables the provision of public services. This article investigates the contribution that construction procurement across the five Australian state governments who expend the most money on infrastructure makes towards the achievement of government strategy. The research draws on interviews with experienced project managers to assess whether public sector construction procurement is aligned or disconnected with publically stated government strategies.     

Private finance for social housing in Australia

Abstract

A significant change in the finance of social housing in the 1980s was a movement to transfer responsibility for funding to the private sector. This article argues that governments must continue to be involved in social housing finance as this movement progresses. Financing initiatives undertaken in Australia are used to signal the risks associated with the provision of social housing finance, to illustrate the mechanisms employed to manage these risks, and to highlight the conflicts that arise when a mix of public and private funding is attempted.

The article proposes the introduction of “equity bonds” as an innovative way to raise funds for social housing and to overcome inefficiencies arising from the present complex and costly administrative structures. However, a commitment to ongoing subsidies to close the full rental gap is necessary for equity bonds to serve those most in need.     

Comparing Accountability in the Public and Private Sectors

Analysis of public accountability tends to concentrate on public sector institutions. However, increasing use of the private sector in the provision of public services suggests the need to compare accountability in the two sectors. While private sector (for-profit) companies are more accountable in terms of their 'bottom line', accountability requirements in the public sector are generally more stringent, particularly with regard to process and general policy.     

Bargaining Power, Political Transaction Costs and Institutional Change: Private and Public Dental Care in Denmark1

Rational choice institutionalism underexposes institutional change as well as the interaction between institutions at different levels, and this article therefore investigates national and local institutional change. In the Danish dental care sector private and public provision of services have coexisted since the establishment of a publicly financed dental health care system, and the fight between supporters of the two solutions has generated many institutional changes, both nationally and locally. This article analyses all Danish parliamentary proposals and local decisions regarding dental care coverage and provision. The general finding is that increasing pro-public bargaining power seems to promote higher coverage and public provision, while increasing pro-private bargaining power leads to stable coverage and private provision. The institutions do not, however, change whenever bargaining power changes, and national institutional change does not necessarily result in local change. The article explains this in terms of political transaction costs. These costs might also explain why national institutions change more often than local ones, and why local pro-public changes are faster and more frequent than local pro-private changes.     

THE CONCEPT OF PUBLIC MANAGEMENT AND THE AUSTRALIAN STATE IN THE 1980s

Abstract: The adoption of the discourse of management by Australian public services in the 1980s can be seen as a cultural revolution. Results-oriented management, subordinated to economic considerations, is the dominant approach. The upper levels of the public services have been remodelled in the form of a technically-oriented elite recruited on merit, defined in terms of higher education credentials, drawing a technical intelligentsia, or "new class", into public employment. Although "people and process" approaches, espoused in particular by women, find a place in the new culture, they are subordinated to the demands of scientific management. While the technical intelligentsia is resistant to traditional forms of bureaucratic authority and open to rational debate and new ideas, its members are not well equipped to take account of the substantive concerns of public policy and service provision. The distinctiveness of public management is submerged by inappropriate private sector models, and issues tend to be reduced to economic ones. The paradox that this culture has risen to prominence under Labor governments is explored and the developments are placed in the context of contemporary demands placed on the Australian state by private capital.     

Employment,privatization, and managerial choice: Does contracting out reduce public sector employment?

We examine the effects of governments' use of alternative service provision on public employment using panel data from a nationally representative sample of local governments. We model the effects of alternative service provision on the size of the public workforce and hypothesize that alternative provision jointly impacts both full‐ and part‐time employment. We find evidence of an inter‐relationship between these employment types. Our results from seemingly unrelated and 3SLS regressions indicate that full‐time employment in the public sector declines when additional services are provided by for‐profit providers, while part‐time employment increases. The net employment effect in the public sector is negative when government services are moved to the for‐profit sector. These combined effects result in a compositional shift toward more part‐time public sector employment. © 2006 by the Association for Public Policy Analysis and Management     

Goats or wolves? Private sector managers in the public sector

Public administration reforms have propagated the use of private sector management skills in the public sector, and an increased openness to managers with a private sector background. This has created a debate between those who think private sector experience improves public institutions by bringing core managerial values such as results orientation, efficiency, or openness to innovation, and those who argue that private sector experience can damage core public sector values, such as impartiality and equity. Despite the abundant anecdotal evidence, broad empirical evidence on the effects of private sector experience on public managers' values remains limited. Using data from a survey among central government top managers in 18 European countries, we show that public managers with private sector experience have, as expected, more core managerial values. Yet, unlike the conventional view, core public values do not suffer.     

Rethinking ‘Crowding Out’ and the Return of ‘Private Affluence and Public Squalor’

This article traces the history of ‘crowding out’, and its use as a justification for austerity and state deflation from its origins in the 1920s to its latest post-2010 incarnation. It examines why governments have kept turning to austerity and continue to justify it on the grounds that public sector activity crowds out more productive private activity, despite the accumulated evidence that this traditional pro-market formulation has failed to deliver its stated goals. It examines three other embedded forms of crowding out that have been highly damaging—leading to weakened social resilience and more fragile economies—but which have been ignored by both governments and mainstream political economists.     

The Tender Trap – Tendering for Public Sector Work

With the government's current focus on a managerial approach to resource management there are many opportunities for private sector businesses to obtain contracts for the provision of public services. While government work may appear attractive and lucrative, there are new issues that have arisen as a result of this trend that both tenderers and administrators need to be wary of. This article will examine two of these issues and suggest some ways in which these risks may be minimised.     

The Changing Public-Private Infrastructure Mix: Economy-wide Implications

This article provides an economy-wide perspective on the changing role of the public sector in developing economic and social infrastructure in Australia. It analyses the scale and macroeconomic significance of the key economic and social infrastructure sectors — communication services, electricity, gas and water supply, transport, education, health and community services, government administration and defence. It then canvasses the major policy issues that have arisen in the progression from public to private infrastructure provision and considers why concerns about the trend fall in traditional public works spending may be misplaced in light of recent economic and institutional changes.     

Sector Switching from a Business to a Government Job: Fast‐Track Career or Fast Track to Nowhere?

This paper examines the career consequences for public managers of having had full-time private sector work experience. We find positive career outcomes for public managers with private sector experience: Individuals with such experience are more likely to have been recently promoted relative to peers and to supervise somewhat greater number of employees, especially if their most recent job was in the private sector. While experience in the private sector enhances such career outcomes, the length of such experience diminishes them. The authors conclude by identifying three career scenarios emerging from the models and discussing the managerial and theoretical implications of "sector-switching careers."