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The coronavirus pandemic has not only had a negative impact on industrial businesses and SMEs. Local authorities are also finding themselves under huge financial pressure. They are having to perform a juggling act at the moment with their business tax revenue having plummeted by up to 70% and their costs continuing to rise as they try to overcome the crisis. Ludger Rethmann, REMONDIS board chairman and vice-president of the Transdev Group, and Prof. Michael Schäfer, retired professor of public sector economics at the Eberswalde University for Sustainable Development, travelled to Berlin recently to meet with other high-profile guests and take part in a panel discussion held under the aegis of Dr Reiner Haseloff, minister president of the German state of Saxony-Anhalt. The subject: how best to deliver key services in the future.
Public private partnerships (PPPs) are by no means obsolete nowadays. They are just looked at from too narrow a perspective. This is at least the opinion of the two authors, Prof. Michael Schäfer and Ludger Rethmann, who have had two books published by SpringerGabler this year: ‘Öffentlich-Private Partnerschaften. Auslaufmodell oder eine Strategie für kommunale Daseinsvorsorge? ’ [Public private partnerships. A discontinued model or a strategy for providing essential public services?] and ‘Öffentlich-Private Daseinsvorsorge (ÖPD) in Deutschland. Gemischtwirtschaftliche Unternehmen auf kommunaler Ebene als strategischer Erfolgsfaktor’ [PPPs dedicated to providing key services in Germany. Public-private joint ventures at local authority level as a strategic success factor]. In both these books, 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 have been a few successful projects in this area, this segment has had more than its fair share of scandals, fraudulent dealings and poor performances, all of which tend to make it into the headlines.
(from left to right) Ludger Rethmann, REMONDIS Board Chairman and Vice President of the Transdev Group, Dr Reiner Haseloff, Minister President of the state of Saxony-Anhalt, and Prof. Michael Schäfer, Professor of Public Sector Economics
In contrast, both authors focus on the myriad of long-standing successful collaborations that are dedicated to delivering essential public services. These are primarily municipal companies, which have sold a share of their business to a private sector partner with high levels of expertise. These PPP companies, which are normally majority owned by the local authority, do not make the headlines because they generally work smoothly, are structured to run over a long period of time and benefit both parties. As far as both authors are concerned, one thing is certain: it will be practically impossible for compartmentalised, local structures to overcome the upcoming challenges on their own – whether it involves demography, digitisation, sustainability or infrastructure. Local authorities need to work with partners. The authors’ fact-based conclusion: “There are indeed top PPP companies. 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”.