Understanding Private and Public Partnerships

Understanding Private and Public Partnerships

Luke Strongman (Open Polytechnic, New Zealand)
DOI: 10.4018/978-1-5225-4197-4.ch009

Abstract

New public management organisations tend to import managerial processes and behaviour from the private sector, and have been doing so in the post-Keynsian era. Increasingly those economies that were nationalised for large collective rebuilding programs after the Second World War were being deregulated and new models of management based on private enterprise and monetary accountability became the norm. This chapter provides an overview and contextual commentary on the origins of the public and private, the current era of public management, describes the characteristics of public and private partnerships; the factors of partnership performance, the characteristics of success and limitations, and concludes with a contextual discussion of Public and Private Partnerships.
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Introduction

New public management organisations tend to import managerial processes and behaviour from private sector, and have been doing so in the post-Keynesian era. Increasingly those economies that were nationalised for large collective rebuilding programs after the World War II were being deregulated and new models of management based on private enterprise and monetary accountability became the norm. Public managers emulate supposedly successful techniques of private sector counterparts, which may include management by objectives, total quality management, devolved management, and performance-related pay (Boyne, 2002, p. 97). Sayre argues that public and private organisations are “fundamentally alike in all unimportant respects” (1953, p. 102). The main conventional difference between public and private organisations is ownership. Private firms are owned by entrepreneurs, and public agencies are owned by members of political communities, or more broadly by citizens (Boyne, 2002, p. 98). This chapter examines the origins and typical compositions of public and private partnerships.

The public realm arose from the extension of natural rights theories for the purpose of setting limits on ruling power. It is related to issues of taxation, a public/private distinction in which taxation from the state was seen as the gift of a private donor the taxpayer, arranged through parliament. The idea arose that contract is an entirely private institution between consenting individuals and the state (Horwitz, 1982, p. 1425). Thus, the idea of public interest was formulated in proceduralist terms in the interest of group pluralism. As Ring and Perry suggest, there is a paradox of public administration, that is, the constraints of beaurocracy being at odds with a positive force of high ideals of public service–those values of efficiency and high moral character that may exclude some forms of monetarist instrumentalism (1985, p. 277). A mixture of market incentives and political authority is important for a design decision in a Public Private Partnership (sometimes known as a PPP, 3P or P3) it is a central issue (Perry & Rainey, 1988, p. 182). The public-private distinction may often be used in a summative fashion with variables such as ownership, impact on societal values, and openness to external influence (Perry & Rainey, 1988, p. 183).

The ‘public’ has its origins in the Latin word for people, and defines it as referring to matters pertaining to people and nation states; private in comparison is defined as being ‘deprived of public office’ or set apart from government by a personal matter (Perry & Rainey, 1988, p. 183). The public involves government bureaus, whilst the private involves other organisations or business firms. The blurring of public and private shows concepts is multidimensional (Perry & Rainey, 1988, p. 183). Most of the common definition of public and private relates to ownership and/or funding and ownership is the crucial distinction between private and government organisation (Perry & Rainey, 1988, p. 184) In government organisations, ownership rights can’t be transferred among individuals and the risk is thus diffused (Perry & Rainey, 1988, p. 184). Public ownership subjects an organisation to the institutional controls of government as opposed to economic markets. Government organisations that are funded through market sales or user charges have a greater autonomy from government controls (Perry & Rainey, 1988, p. 184). Organisations that overlap one-another represent mixed or hybrid types as government corporations, government contractors, and public utilities (Perry & Rainey, 1988, p. 184). Hence as Munksgaard et al. relate the fundament of a PPP may involve: “A relationship serving as a device for increasing efficiency may do so by way of linking activities between actors that can reduce costs of, for example, operations., logistics and handling which will also affect the partners’ mutual adaptations and investments” (2016, p. 76).

Key Terms in this Chapter

Force Majeure: Unforeseeable circumstance that prevent the fulfilment of a contract.

BOOT: Build, own, operate, transfer.

Concessionaire: A holder of a concession or grant used for trading rights.

Equity: A security representing an ownership interest.

Managerialism: A terms used to describe professional managers and their methods and lexicon.

Post-Keynsian: Following after the trend for government influencing aggregate demand through economic interventionism.

Public Private Partnership: A PPP is a cooperative arrangement between two or more public and private sectors.

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