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Are public private partnerships (PPPs) – set up to enable local authorities and privately run businesses to collaborate with one another – a promising way to get things done or are they putting the politics of the common good at risk? Prof. Michael Schäfer and Ludger Rethmann discuss this and other questions in their recently published book: “Öffentlich-Private Partnerschaften. Auslaufmodell oder eine Strategie für kommunale Daseinsvorsorge?” [Public private partnerships. A discontinued model or a strategy for providing essential public services?].
In the authors’ opinion, this kind of cooperation work between the public and private sectors is by no means obsolete but is often examined from too narrow a perspective. In their book, they provide plenty of facts to show how, over the past few years, both the media and the scientific community have primarily focused their attention on PPPs involved in infrastructure projects. While there is a whole series of negative examples that have attracted much publicity in this segment, the authors concentrate instead on the myriad of long-standing successful collaborations dedicated to delivering essential public services.
Taking a critical look at this specific type of cooperation work and providing concrete examples, the conclusion they draw is considerably more positive: PPPs between municipal companies and private partners with high levels of expertise work smoothly, are structured to run over a long period of time and benefit both parties. This is underlined by the results of a poll of district authority leaders and mayors – the first of its kind – that showed them to be in favour of a joint venture. Around half of those canvassed prioritised a company with the public sector partner as the majority shareholder, while the versions “awarding contracts to third parties” and “a company with the private sector partner as the majority shareholder” were less popular. This factually based book also reveals that PPPs are particularly common in the energy sector (31.5%) followed, some way back, by waste management and recycling (7.5%).
Looking ahead, one thing is certain: demography, digitisation, sustainability and infrastructure will create huge challenges for compartmentalised, local structures. It will be very difficult for councils to overcome them on their own. One solution here is to team up with a suitable partner, who has the necessary know-how and can grow efficiency and guarantee that essential public services can be delivered reliably with maximum cost stability – and not just in one but in all areas. This not only includes efficient waste collection services but also clean drinking water, public transport and the provision of electricity, gas and the internet. So what is special about these particular services? Local authorities in Germany are obliged to deliver these essential services to their local inhabitants – even if competitors and the market fail. The provision of such public services is, therefore, very different to other segments of the economy – and considerably raises the demands on a PPP business.
In their book, the authors introduce a new term, moving away from ÖPP (PPP in German) to ÖPD (a public-private sector collaboration for delivering essential public services). The ÖPD cooperation between local authorities and private sector partners guarantees that citizens are provided with the essential services they need reliably and efficiently despite the ever more complicated framework conditions. There are some excellent PPPs around as the authors’ fact-based conclusion clearly shows. “Joint ventures set up between the public and private sectors to deliver essential public services have become the norm when the parties work together closely and sensibly. What’s more, they will become a must looking at the increasing division of labour and the objective coexistence of privately and publicly owned productive property,” explains Ludger Rethmann, REMONDIS Board Chairman.
Ludger Rethmann, REMONDIS Board Chairman (left) and Prof. Michael Schäfer