Transcript Public-Private Partnerships as a Policy Instrument

Public-Private Partnership as a
Policy Instrument
Hong Qiu
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Outline
1. What is P3
2. Why P3
3. How to develop P3
Case 1:The Confederation Bridge
Case 2:Sponsorship Program
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A Historical Overview
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Early 1980s in USA and UK
Increasing public debt
Emergence of New Public Management
A dramatic growth in the development of a
very wide range of P3
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A Historical Overview
• Canadian Council for Public-Private
Partnerships (CCPPP) was established in
1993
• Canadian federal government and Policy
on Alternative Service Delivery
• A Canadian guide on P3 was issued by
Industry Canada in 2001
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What is P3
• Public-Private Partnership is a cooperative venture for the provision of
infrastructure or services, built on the
expertise of each partner that best meets
clearly defined public needs, through the
most appropriate allocation of resources,
risks, and rewards.
Canadian Council for Public-Private Partnerships,
http://www.pppcouncil.ca/aboutPPP_definition.asp
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What is P3
• The main idea is the same:
– How to utilize private sector’s expertise and resources
to address public needs or to meet political goals
• But no standard definition
– P3 takes a wide variety of forms, discrepancy on
contract services and privatization
– Legal implication of “partnership”
– Development of P3 blurred the boundaries between
public and private sector
– Evolution of the concept of partnership
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P3 and the Risk Transfer Continuum
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Why P3
• From the controller to the partner
• Internal impetus
– Fiscal deficit
– Extensive spending cuts and public service
downsizing
– New ideas about public service delivery
• External pressures
– Information technology weakened governments’
power over individuals
– The need to develop domestic private sector’s
capacity in response to global competition
– NPM, emphasis on decentralization and efficiency
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Why P3
• The new politics calls for new skills –
skills in building bridges and alliances,
broking interests, forging consensus,
articulating shared values…The future of
governance is partnership and shared
responsibility.
Jim Armstrong , Donald G. Lenihan
From Controlling to Collaborating: When Governments Want to be Partners
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Why P3
• Change of values
– Relates to the role shifting of the govt.
– Crown Corporations vs. P3/Privitization
• The term partner conveys a sense of
empowerment, flexibility, collaboration,
consultation, proactivity, efficient and a
service orientation
M. Charih & A. Daniels (Eds.)
New public management and public administration in Canada
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Why P3
• Evaluation of policy instruments
– Effectiveness
• e-government initiatives and private IT companies
– Political feasibility
• The increasing public demands
– Administrative feasibility
• How to hold private sector accountable for delivering public
service ?
– Efficiency
• Private sector is better at delivering value for money
– Equity
• private sector is given equal opportunities to compete with
governments’ departments
• How to ensure the equity criterion will be complied by private
partner?
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Why P3
• A blended approach
• P3 often comes with other policy
instruments
– e.g. spending, information and regulation etc.
• The success of P3 depends on how well
the instrument package works
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How to Develop P3
• The pros and cons of P3
• The implementation problems associated
with P3
• How to overcome these problems
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P3 Matrix
Parameter
Components
What is the
purpose?
•Focus: range from external-oriented to internal oriented
•Aims: range from employment creation to employment
redistribution
•Range of activities: range from single project to longterm program
•Level: range from strategic-oriented to one-off project
collaboration
Who is involved?
•Range of actors: range from public sector to private
sector
•Structure: range from legal binding contracts to general
agreements
•Process of mobilization: range from top-down
approach to bottom-up approach
•Power relationship: range from unequal power to fair
power relationship
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P3 Matrix
Parameter
Components
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Stages: range from pre-development to operation
Decision points: range from close partnership to
continuous partnership
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Area: range from geographical area to client group
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Implementation mechanism: range from standalone partnership organization to agreements
influencing existing services
When?
Where?
How?
Adapt from S. Osborne (ed), Public–Private Partnerships: Theory and Practice in International Perspective
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The Confederation Bridge
• A 13 km toll bridge built in 1997 linking
Prince Edward Island to New Brunswick
• A Build-Own-Transfer P3 project valued at
$840 million
• What purpose?
– Reduce public cost
• Why P3?
– Fiscal constraints
– Private technical expertise
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Who is involved?
Other Federal Depts
PWGSC
NB Crown Corp.
P3 &
Intergovernmental
collaboration
Provincial Govts
SCDI
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The Confederation Bridge
• Stages (when)
– From proposal stage to the completed
construction, 10 yrs
– Construction period, 44 months
– SCDI will operate the bridge for 35 years
(1997 to 2032), then transfer the bridge to the
federal government
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The Confederation Bridge
• Area (where)
– “a continuous means of communication
between Prince Edward Island and the
mainland.”
• Implementation (how)
– Feasibility analysis and negotiation were quite
long
– Focus on risk management
– Significant delay due to a federal election
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The Confederation Bridge
• Overall, a positive experience
• 1+1>2 effects
– compared with former failing efforts to build
such an infrastructure
• Innovative design
– a 100-year design life vs. an average 40-50
year life span
• Effectiveness and efficiency
– a 44-month construction period is remarkable
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Sponsorship Program
• A contract P3 program initiated in 1997
• Became a scandal and got cancelled on
December 2003
• What purpose?
– promote the profile of federal government in
Quebec
– more strategic-driven rather than projectdriven
• Why P3?
– Lack of in-house marketing experiences
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Who is involved?
Communication Canada
After 2001
CCSB
Contracts
Crown Corps.
Advertising Companies
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Sponsorship Program
Expenditures and events sponsored
Source: http://www.oag-bvg.gc.ca/domino/reports.nsf/html/20031103xe01.html
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Sponsorship Program
• Area (where)
– Quebec and 1995 referendum
• Implementation
– has been audited at least three times since 2000 for
misused funds and mismanagement problems
• “The use of the Sponsorship Program for
purposes other than national unity or federal
visibility because of a lack of objectives, criteria
and guidelines for the Program”
2003 Auditor General’s report
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Sponsorship Program
• Presents many negative aspects of P3
• Sacrificed public interests
– political corruption
– lack of performance and risk management
• Accountability problems
– within the public sector, top-down decisionmaking and speak truth to power
– contracting out model puts little risk on the
private partner
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• Partner selection problem
– process is manipulated by someone
– there is a weak market and the potential
partners are limited
• Organizational difficulties
– in the public sector, election or public sector
reform
– in the private sector, the risk of bankruptcy
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Lesson Learned
• The reason for using P3 must be justified
• Clear criteria for partner selection
• Selection process should be competitive,
impartial, and transparent
• The role and responsibilities should be
clearly defined and fully communicated
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Lesson Learned
• The commitment for the project should be
demonstrated by all partners
• a reasonable and fair share of resources
and risks and mutual benefits
• A systematic management framework
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Conclusion
• PPP is like a marriage
• It takes time for partners to get to know
each other and find a good way to work
together
• The earlier private partners are involved,
the better results may be achieved
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Thank You
Questions? Comments?
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