Public-Private Partnerships

Public-private partnerships (PPPs) are contracts or formalized relationships between a public sector institution and a private sector institution, usually relating to the provision of public services or infrastructure. All PPPs involve the transfer of risk between the parties, through the transfer of ownership, control, financing, or operation of the service. In contrast to wholesale privatization, the responsibility for a PPP is shared between the private and the public sectors and regulated by the latter.

There are significant national variations in the definition and practices of these partnerships, and their levels of formalization range from simple commercial contracts to the establishment of autonomous organizations with various degrees of authority. Countries as diverse as Canada, Ireland, and South Africa have set up governmental PPP units. Particular PPP policies and models, such as the Public Finance Initiative in the United Kingdom and the build-operate-transfer model, which is well established in Australia and Asia, have gained popularity among policymakers and have consequently been imported and adapted by other states. Leading international financial institutions and development agencies, such as the United Nations and the World Bank, have shown strong support for PPPs as a strategy for development and poverty reduction, and the private sector is now a dominant actor in public service delivery in many developing countries.

PPPs are, like privatization, subject to political contestation. Proponents of this model often claim that PPPs can bring in finances and resources otherwise unavailable to the public sector. It is also argued that PPPs represent “value for money,” as private sector business principles are more efficient and because PPP involves the transfer of risk to a private contractor. In contrast, opponents see the profit motive as unsuitable for the realm of public services, which is seen as constituted by the notion of public need. It is held that private contractors can only make a profit on public services through wage and benefit cuts and the introduction of [Page 2313]cost recovery as a pricing principle. Another criticism that has been raised is the effect of PPPs on public accountability and their perceived lack of democratic input. While proponents include “third-way” governments, business interests, and conservative political parties, the opposition to PPPs is often spearheaded by trade unions, social movements, and leftwing political organizations.

In the critical human geography tradition, PPPs are seen as important components of neoliberalism and in the historical evolution of this paradigm. It is argued that the privatization programs and competitive tendering schemes that were initiated by Anglo-American governments in the 1980s were increasingly faced with their own socioeconomic contradictions. Neoliberal regimes were looking for ways to increase market involvement in public services without surrendering control over the politics of reproduction. PPP models and new, sophisticated models of regulation emerged as a response to the lack of coordination that characterized this early neoliberalism. Gaining popularity throughout the 1990s, these partnerships blurred the distinction between the private and the public sectors in many countries. These new forms of state control and intervention combined with increased private sector involvement is often termed neoliberal governance. There are also scalar dynamics to these processes, as the PPP approach, accompanied by a discourse of decentralization, has become prominent in local authorities in the United Kingdom and elsewhere.

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