The Upside to Fiscal Challenges: Innovative Partnerships Between Public and Private Sector

The first U.S. public‐private partnerships, or P3s as they are now called, began over 200 years ago. These contractual arrangements between government entities and private companies for the delivery of services or facilities have long been used for water/wastewater, transportation, urban development, and the provision of social services. And the use of such partnerships is increasing because they provide an effective means for meeting public needs, maintaining a high level of public control, improving the quality of services, and increasing the cost‐effectiveness of traditional delivery methods. Although outsourcing of public services is sometimes used to accomplish many of the same goals, P3s are likely to be a solution when public funds are not available and when:

• ? Capital is required to upgrade the infrastructure and so achieve a lower cost, or higher quality, of services.
• ? The contract horizon in the P3 transaction is sufficiently long for the investor/operation to recoup investment dollars and a rate of return.
• ? City residents make payments for the service provided, creating the revenue stream for private profits.
• ? The private partner in the P3 has a low cost of capital, often attributable largely to a large and sophisticated balance sheet.

This article uses examples of several recent P3 contracts to illustrate their role in shifting risk and increasing collaboration between the public and private sectors.     

Funding and School Accountability: The Importance of Private and Decentralised Public Funding for Pupil Attainment

We discuss the issue of how schools should be financed, concentrating on the role of private funding and public funding via subnational governments as accountability mechanisms in the provision of educational services. The historical evolution of school regulation in Italy and Spain has created differences in the percentage of pupils who attend private schools, the percentage of private school funding coming from public and private sources and the percentage of public school funding that comes from central or local government sources. We take advantage of these institutional diversities rooted in history to estimate the disciplining role of these different sources of funding in the context of an educational production function using Programme for International Student Assessment (PISA) data. Our results provide support to both accountability mechanisms and point to the presence of an important interplay between them.     

Risk transfer and stakeholder relationships in Public Private Partnerships

Drawing on stakeholder theory, this study seeks to gain an insight into the stakeholder management strategies used by the Procuring Authority in Irish road Public Private Partnerships to manage its complex stakeholder relationships.Based on interviews with 38 key stakeholders the findings of this study indicate that the allocation, transfer and management of risk impact on the quality of stakeholder relationships. A proactive and somewhat accommodating approach is used by the Procuring Authority in its relationship with the Special Purpose Vehicle, while there is some evidence that collaborative relationships exist between the public sector bodies responsible for allocating risk.     

Past Abuses and Future Uses of Private Finance and Public Private Partnerships in Transport

The article explains the origins of the Private Finance Initiative (PFI) and the way the policy has evolved under the present Labour administration into Public Private Partnership (PPP). The author gives an assessment of the future prospects for the PFI/PPP in the transport sector. He believes that PPPs can make a considerable contribution towards efficient transport service delivery and this will be maximized if there is a better understanding of what the policies are seeking to achieve. Much of the action in the immediate future in transport PPPs will be with the local authorities, including the new Greater London Authority.     

Are Public Private Partnerships value for money?: Evaluating alternative approaches and comparing academic and practitioner views

In an earlier article in this journal (Grimsey, D., & Lewis, M. K. (2002b). Accounting for Public Private Partnerships. Accounting Forum, 26(3), 245–270), we examined the intricacies of the accounting issues raised by Public Private Partnerships (PPPs). It was argued that the critical accounting question from the public sector's viewpoint is not one of whether the arrangement is on or off balance sheet, but whether it represents good value for money. However, determining value for money for a PPP is an area in which, despite strong criticisms by a number of academic writers of the methods used by practitioners to evaluate value for money, surprisingly little engagement has taken place between the practitioners and the academics on the issues involved. This paper attempts to provide such an engagement. At the same time, because many of the academic critiques focus on the situation in one country (particularly the UK or Australia), we try to put matters into a broader, comparative context by considering approaches to value for money tests in a number of countries. Our examination is thus comparative in the sense of considering value for money tests in different countries, while also comparing the views of academics and practitioners.     

Performance Audit of the Operational Stage of Long-Term Partnerships for the Private Sector Provision of Public Services

This study investigates the challenges associated with designing a system to evaluate the mature operating phase of long-term partnerships with the private sector for the provision of public services (PPPS), an area largely neglected by a performance audit (PA) focus. It argues that assessing economy, efficiency and effectiveness (the three Es) are key to any PA, but that their nature is contextually defined; that auditing for effectiveness involves going beyond a 'watchdog' to a 'sheepdog' role; and that internal evaluation procedures provide insights that are necessary, but not necessary and sufficient to evaluating the achievement of the three Es in the PPPS mature operating stage. Findings are based on an analysis of the literature and an engagement with an audit office. The paper elucidates the meaning of each of the three Es in the context of PA of the PPPS mature operating stage.     

Private Equity: Accomplishments and Challenges

The authors provide an overview of the main accomplishments of private equity since the emergence of leveraged buyouts in the 1980s, and of the challenges now facing the industry—challenges that have been encountered before during three major growth waves and two full boom‐and‐bust cycles. In so doing, the authors review a large and growing body of academic studies responding to questions like these:

• (1) How have PE buyout companies performed relative to their public counterparts? And to the extent there have been improvements in operating performance and productivity gains, how have such gains been achieved? What role have PE firms played in this process?
• (2) Especially in light of the large fees and profit shares paid to the PE firms, or GPs, and the significant “control” premiums over market paid to the selling companies, how have the returns to the LPs that provide the bulk of the funding for PE funds compared to the returns earned by the shareholders of comparable public companies?
• (3) Apart from the high fees earned by its GPs, why is PE so controversial? Beyond their effects on productivity and benefits for investors, what are the employment and other social effects of buyouts and PE?
• (4) What are the prospects for future PE returns to their LPs, especially in light of the volume of capital commitments and high purchase multiples that were being paid, at least until the onset of the COVID pandemic? And what role, if any, should PE activity be expected to play in the recovery from the pandemic?

     

Public—Private Partnerships in Ireland: Policy and Practice

Ireland's National Development Plan 2000–2006 includes a significant programme of public—private partnerships (PPPs). The Irish Government's policy on PPPs has been shaped to ensure that capital investments under PPP are not included when calculating key fiscal aggregates. This article traces the origins of Ireland's PPP programme and outlines the extent of PPP activity to date. It details how the PPP programme has failed to make an impact in terms of addressing Ireland's infrastructure deficit and examines three particular cases where the PPP model has been applied.     

The Challenge for Public Accounts Committees in Evaluating Public-Private Partnerships

This paper examines the role PACs should play in reviewing one of the newer forms of public-sector management, the public-private partnership (PPP), and provides guidance on the critical questions PACs need to investigate if they are to ensure PPPs are fully accountable for their performance to the parliament and the taxpayer.     

Public‐Private Partnerships: Form Over Substance?

Public-private partnerships have been devised to avoid treating financing arrangements as government "debt". Governments face incentives to avoid treating these arrangements as giving rise to liabilities. Both the Australian and UK standards boards have avoided a "substance over form" approach in order to accept that PPPs may be kept off-balance-sheet. The analysis supporting their conclusions was based on consideration of whether PPPs led to the acquisition of an asset, using the analogy of accounting for finance leases, rather than addressing whether the substance of commercial arrangements means that contractual commitments may evolve into liabilities.     

Acquisitions: Private versus Public

Takeovers of privately held companies represent more than 80% of all takeovers. Despite their significance, studies of such takeovers and their impact on the wealth of shareholders are rare. Using a very large, near exhaustive, sample of listed and privately held UK targets we examine the impact of such takeovers on the risk adjusted return of listed UK acquirers over the period 1981 to 2001. Acquirers earn significant positive returns during the period surrounding the bid announcement although the gains are dependent on target status, mode of payment, and the relative size of those involved. The much quoted conclusion, derived from the experiences of listed firm bidders that the shareholders of acquiring firms fail to gain from takeovers, cannot be generalised. Acquiring a privately held company is an attractive option for maximising shareholder wealth.     

The Relative Efficiency of Private and Public Schools: The Case of Thailand

Cost-effectiveness is a key consideration in the policy debateon the appropriate role of private schools in predominantlypublic school systems. This article analyzes the relative performanceof public and private schools in Thailand in enhancing eighthgrade student scores in standardized mathematics tests, givenstudent background and school characteristics. Its main conclusionis that private schools are, on average, more effective andless costly than public schools in improving student performancein mathematics.     

Advancing Public Accountability? The Social Services 'Star' Ratings

An important development in the UK public sector is the rating and classification of service providers. The authors examine a significant exercise of this kind: the 'star' ratings awarded to local authority social services departments in England. The article explains why it is difficult to accept the Government's claim that these star ratings provide a significant advance in public accountability.     

Selective Commercialisation of Public-Sector Accounting and its Consequences for Public Accountability

This paper examines the exclusion of two accounting standards from the commercialised public-sector accounting model in Australia. It locates the commercialisation in the wider context of the global neo-liberal reform ideology and argues that the selective commercialisation is a product of the neo-corporatist standard-setting process and policy networks that can be explained by public choice and agency theories. It is found that the exclusions have resulted in a significant erosion of public accountability. As implementing the excluded standards will constitute a contradiction in policy, abrogation of the commercialised accounting model might be feasible and appropriate     

Public Versus Private: The Empty Definitions of National Accounting

The policy-making processes and the policies of the two international systems of national accounts are addressed, from the perspective of the accounting discipline. The particular measurement issue that determines which parts of an economy are public and which are private - the reporting entity - is discussed. The main conclusion is that the definition of the reporting entities is so vague as to be empty; in other words, national accounting's definition of what is public and what is private is empty.     

Management Controls in Public–Private Partnerships: An Analytical Framework

Drawing on transaction cost economics and organisational theory, this paper proposes a framework to analyse management controls in Public–Private Partnerships (PPPs). The paper contributes to the related literature at a conceptual level by showing how three control archetypes, namely market, bureaucratic and clan, in conjunction with two control strategies, namely performance evaluation and trust‐based strategies, could be used by public partners to minimise relational and performance risk, thereby achieving value for money. Practitioners could also use the linkages identified in this paper to develop management control systems for PPPs.     

公共部门理财学科的兴起与建设

随着我国政府职能转变和非营利组织的不断发展,公共资金的管理问题倍受社会公众关注,也成为学术研究的热点。但是,从教育层面来说,高等学校关于公共部门理财学科的建设比较滞后,存在理论交叉、课程互相取代和不完整的状况。本文从公共部门理财学科的兴起历程研究公共部门不同理财课程的内涵和外延,提出高校相关专业应当在背景学科、基础学科和核心学科三个层面设置公共部门理财类课程,以完善公共部门理财学科的课程体系,为培养复合型人才服务。     

The Changing Nature of Contracting and Trust in Public‐Private Partnerships: The Case of Victorian PPP Prisons

This paper examines shifting constructions of contracting and trust that are manifest between pre‐2000 and post‐2000 public‐private partnerships (PPPs) providing prison facilities and/or services in the Australian State of Victoria. As such, this paper is significant because it outlines longitudinal insights into the nature of changing practices sustaining these PPPs. The post‐2000 period examined reflects a change of government and the policy context. Our examination is based on a range of primary and secondary documents. The primary documents comprise three pre‐2000 Prison Services Agreements and two post‐2000 Facilities Services Agreements. A number of government and other reports constitute the secondary documents consulted. While there are many substantive similarities between the contracts, we find five main areas of changed contracting practices over the period examined. These relate to: first, the objectives of the PPP prisons; second, risk management practices; third, the approach to performance measurement and reporting; fourth, the structuring of incentive and payment mechanisms; and fifth, the emphasis on collaboration. Overall, we find that the post‐2000 contracts promote a more overt development of goodwill trust and relational contracting, building on presumptions of contractual and competence forms of trust. However, quite different outcomes have been achieved from particular contractual contexts. Our study suggests that in complex PPP contracts, the influences of both the transacting parties and the transaction environment have been insufficiently recognized in the literature on PPPs.