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Public Enterprises Today: Missions, Performance and Governance – Les entreprises publiques aujourd’hui : missions, performance, gouvernance

Learning from Fifteen Cases – Leçons de quinze études de cas

by CIRIEC (Volume editor) Luc Bernier (Volume editor)
Edited Collection 526 Pages

Table Of Content

  • Couverture
  • Titre
  • Copyright
  • Sur l’auteur/l’éditeur
  • À propos du livre
  • Pour référencer cet eBook
  • Table of Contents / Table des matières
  • Acknowledgements
  • Préface
  • Introduction : The Future of Public Enterprise: Another Look at an Old Idea / L’avenir de l’entreprise publique : Revisiter une vieille idée
  • Introduction
  • Context
  • Conceptual Framework
  • Public Mission – Definition
  • General Interest Goals
  • The Public Service Mission
  • Research Object and Proposed Methodological Approach
  • Public Mission, Market Opening, and Performance
  • Governance
  • Regulation
  • Finance
  • Distribution and Social Welfare
  • Implementing the General Interest Goals
  • Others
  • Scope of the analysis
  • Methodology
  • Organisation of the Book
  • Introduction
  • Contexte
  • Cadre conceptuel
  • Mission publique – définition
  • Objectifs d’intérêt général
  • La mission de service public
  • Objet de recherche et approche méthodologique proposée
  • Mission publique, ouverture du marché et performance
  • Gouvernance
  • Réglementation
  • Finances
  • Distribution et bien-être social
  • Mise en œuvre des objectifs d’intérêt général
  • Divers
  • Champ d’analyse
  • Méthodologie
  • Structure du livre
  • Références
  • PART 1. THE WATER AND SANITATION OR SEWAGE SECTOR
  • 1. Berliner Wasserbetriebe (BWB) : A Story of Privatisation under Financial Stress and Remunicipalisation under Citizen Stress
  • 1. Introduction
  • 1.1. Introduction and Research Question
  • 1.2. Short Presentation of the BWB and Method
  • 2. Public Mission
  • 3. History
  • 3.1. History of BWB
  • 3.2. Political, Economical and Social Environment in the 1990s
  • 3.3. Partial Privatisation in 1999
  • 3.4. Further Developments
  • 4. Regulation and Governance
  • 4.1. Governance
  • 4.2. Regulation
  • 5. Operations, Tariffs and Performance
  • 5.1. Operations
  • 5.2. Tariffs
  • 5.3. Performance
  • 6. Future Perspectives and Lesson’s Learned
  • References
  • Webpages
  • 2. Governance versus Ownership in Jointly Owned Local Government Organisations : The Case of VA SYD (Water and Sewage South)
  • Introduction
  • Local Government Cooperation in Joint Organisations
  • VA SYD (Water and Sewage South) – Public Mission
  • VA SYD (Water and Sewage South) – History and Main Arguments
  • Regulation – The Empirical Context
  • Governance and Performance of VA SYD
  • Ownership vs. Governance – A Discussion
  • Conclusions and Lessons Learned
  • References
  • 3. Milan’s Water and Sanitation Service after Corporatisation : Metropolitana Milanese SpA
  • 1. Introduction
  • 2. Operations
  • 2.1. Water Supply and Sewer Networks
  • 2.2. Wastewater Treatment
  • 2.3. Engineering
  • 3. Corporatisation
  • 3.1. A Classification of WSS According to their Legal Status
  • 3.2. Corporatisation of Milan’s WSS
  • 4. Public Service Mission and General Interest Goals
  • 4.1. Public Service Mission Goals in Watsan
  • 4.1.1. Explicit Public Service Obligations
  • 4.1.2. Non Contractual Public Service Operations
  • 4.1.3. Corporatisation and Commitment to Public Service
  • 5. Performance
  • 5.1. Financial Performance and Cost-Effectiveness
  • 5.2. Technical Performance
  • 5.3. Sustainability
  • 6. Regulation
  • 6.1. Legal and Regulatory Framework after 1994
  • 6.2. The New Regulatory Regime after 2011
  • 6.3. Regulation in ATO Città di Milano
  • 6.4. Borrowing Constraints
  • 7. Governance
  • 7.1. Formal Governance
  • 7.2. Beyond the Formal Governance
  • 8. Tariffs, Finance and Distributional Issues with Respect to Public Missions
  • 8.1. The Tariff Structure
  • 8.2. Lower Volumes, Higher Rates
  • 9. Conclusion and Lessons Learned
  • 9.1. Metropolitana Milanese
  • 9.2. Milan’s WSS
  • References
  • Appendix I
  • 4. Analysis of SEDAPAL, the Largest Public Water and Sanitation Provision Enterprise of Peru
  • Introduction
  • 1. Identification of the Enterprise
  • 2. History and Framework
  • 2.1. SEDAPAL’s History
  • 2.2. Peruvian Water and Sanitation Sector Framework
  • 2.2.1. Water and Sanitation Sector Structure
  • 2.2.2. Main Actors and Roles
  • 3. Public Mission
  • 4. Operations
  • 5. Performance
  • 6. Governance
  • 7. Regulation
  • 8. Tariffs, Investment, Finance and Distributional Issues with Respect to Public Missions
  • 8.1. The Actual Tariff Scheme (2010-2015)
  • 8.1.1. Fundaments
  • 8.1.2. The Tariff Scheme
  • 8.1.2.1. The Management Goals Achieved by 2013
  • 8.2. Tariff Structuration and Focalisation Problems
  • Conclusions and Lessons Learned
  • References
  • Web pages
  • Annex 1: Balance sheet
  • Annex 2: Income Statement
  • Annex 3: Financial Ratios
  • 5. The Remunicipalisation of the Water Service in Paris
  • 1. Parisian Specificities
  • 1.1. A Small, Densely Populated Municipality
  • 1.2. A Predominance of Collective Housing
  • 1.3. Multiple Extra Muros Water Resources
  • 1.4. Two Easily Accessible Water Distribution Networks
  • 1.5. A Tradition of Public Water Supply and Wastewater Management Services Involving Private Operators
  • 2. History
  • 2.1. The Chirac Era
  • 2.2. The First Mandate of Delanoë
  • 2.3. The Municipal Elections of 2008 and the Beginning of the Second Mandate of Delanoë
  • 3. Public Missions
  • 4. Operation and Performance
  • 4.1. Network Performance
  • 4.2. Quality
  • 4.3. Other Performance Indicators
  • 5. Governance and Regulation
  • 5.1. The Current System of Governance
  • 5.2. The Organising Authority, the City of Paris
  • 5.3. The Operator, Eau de Paris
  • 5.4. The Role of Users
  • 5.5. The Integration of Staff
  • 5.6. Regulation and Evaluation
  • 6. Tariffs and Financing
  • 6.1. Evolution of the Average Bill and the Fraction and Price of Drinking Water
  • Conclusion and Lessons
  • References
  • Monographs, Studies, Articles
  • Communications, Public Documents and Reports
  • PART 2. TRANSPORTATION
  • 6. Wiener Linien : Governance and Provision of Services of Local Public Transport in Vienna
  • Introduction
  • 1. History of Local Public Transport in Vienna
  • 2. Public Mission
  • 2.1. General Interest in Local Public Transport
  • 2.2. Legal Regulations
  • 2.3. Contractual Regulations
  • 2.4. Other Standards and Documents
  • 2.5. Quality Assurance through External Certification
  • 3. Operations and Performance
  • 4. Finance and Investments
  • 5. Governance and Regulation
  • 5.1. Formal Organisation – Players and Responsibilities
  • City of Vienna
  • Wiener Linien
  • Wiener Stadtwerke Holding AG
  • 5.2. Cooperation Between the Key-Players
  • 5.3. Other Stakeholders and Interest Groups
  • The Federal State
  • VOR – Eastern Region Transport Association (Verkehrsverbund Ostregion)
  • The Vienna Local Railways (Wiener Lokalbahnen)
  • The Vienna Economic Chamber (Wirtschaftskammer Wien)
  • Federal Chamber of Labour (Bundes-Arbeitskammer)
  • Wiener Linien Employees
  • Vienna LPT Passengers
  • 5.4. Interplay between Stakeholders
  • 6. Setting of Tariffs and Distributional Aspects
  • Conclusions and Lessons Learned
  • Conclusions
  • Lessons Learned
  • References
  • Official reports and documents
  • 7. L’opérateur de transport public à Bruxelles (STIB) et la Région de Bruxelles-Capitale : 25 ans de vie commune
  • 1. Introduction
  • 2. Identification de l’entreprise
  • 3. Historique
  • 4. Les enjeux des transports publics à Bruxelles et les missions de service public
  • 5. Le cadre réglementaire européen
  • 6. Performance opérationnelle
  • 7. Les aspects financiers
  • 7.1. Taux de couverture
  • 7.2. Endettement de long terme
  • 7.3. Transferts publics
  • 8. La politique tarifaire
  • 8.1. Évolution des prix
  • 8.2. Les aspects redistributifs de la tarification
  • 9. Régulation et processus de prise de décision
  • 9.1. Les instruments de contrôle ou de régulation
  • 9.1.1. Les organes d’administration et de gestion
  • 9.1.1.1. Le conseil d’administration
  • 9.1.1.2. Le comité de gestion
  • 9.1.1.3. Collège des commissaires aux comptes
  • 9.1.2. Le contrôle parlementaire
  • 9.1.3. Les lieux de concertation et de consultation
  • 9.1.4. La planification
  • 9.1.5. La contractualisation
  • 9.2. L’intervention de la STIB dans la sphère stratégique
  • 10. Conclusions
  • Bibliographie
  • Annexe 1
  • 8. Dire Straits Ahead : British Colombia Ferries, 1985-2014
  • A Short History of BC Ferries
  • The Public Mission of BC Ferries
  • The Operations of BC Ferries
  • The Performance of BC Ferries
  • Governing BC Ferries
  • G: Regulating BC Ferries
  • Investing and Financing BC Ferries: Conclusions and Lessons Learned
  • References
  • Appendix A
  • 9. Balancing Commercial and Wider Economic Objectives : The Case of the Dublin Airport Authority
  • Introduction
  • Rationale for DAA Establishment, Objectives and Activities
  • Objectives of General Interest
  • Investment in Airport Infrastructure
  • Affordability
  • Continuity, Safety and Security
  • Operations
  • Performance
  • Financial Performance
  • Governance
  • Board of Directors and Top Management
  • Employees
  • Consumers
  • Regulation
  • The Commission for Aviation Regulation
  • Conclusions
  • References
  • PART 3. SERVICES AND MULTI-SERVICES ENTERPRISES
  • 10. Infrastructure Ontario : The Agencification of Public Works in a Canadian Province
  • Section A: Identification of the Enterprise
  • Section B: History
  • Section C: Public Mission
  • Section D: Operations
  • Section E: Performance
  • Building Performance
  • Design Quality
  • Operations
  • Section F: Governance
  • Section G: Regulation
  • Section H: Conclusions and Lessons Learned
  • References
  • 11. La Poste : Emblème du service public à la française ou futur groupe leader européen ?
  • Introduction
  • 1. Une organisation issue d’une très longue histoire
  • 1.1. Une origine ancienne sur des fondements protéiformes
  • 1.2. Les transformations du cadre institutionnel : la libéralisation postale européenne
  • 1.3. L’émergence et la consolidation du groupe La Poste depuis le début des années 1990
  • 2. Les missions publiques actuelles et leur financement
  • 2.1. Le service universel du courrier et du colis
  • 2.2. La distribution de la presse
  • 2.3. La contribution à l’aménagement du territoire
  • 2.4. Le service bancaire
  • 3. Une stratégie expansive et de mise en synergie des diverses activités
  • 3.1. Le courrier
  • 3.2. Le colis
  • 3.3. La banque
  • 4. Les performances de La Poste dans la mise en œuvre des missions publiques
  • 4.1. Le service postal universel et le maillage territorial
  • 4.2. Le service bancaire
  • 4.3. Les résultats financiers du groupe
  • 5. Les modes de gouvernance d’une « entreprise publique emblématique »
  • 5.1. La gouvernance institutionnelle : un conseil d’administration tripartite
  • 5.2. La gouvernance des missions postales territoriales
  • 5.3. La gouvernance de l’entreprise et les salariés
  • 5.4. La gouvernance bancaire
  • 6. Une architecture multiniveaux de la régulation publique
  • 6.1. La stratégie de La Poste en tant qu’expression d’une régulation économique et sociale nationale
  • 6.2. Les déclinaisons locales de la régulation publique dans le périmètre postal
  • 6.3. Le rôle et l’action de l’instance indépendante de régulation postale : l’ARCEP
  • 6.4. Les spécificités de la régulation bancaire
  • 7. Des choix stratégiques de tarification et d’investissement
  • Conclusion
  • Bibliographie
  • 12. Et Lux Non Fuit : The Privatisation of ENEL and the Structure and Performance of the Electricity Market in Italy
  • Introduction
  • 1. The History of ENEL
  • 1.1. ENEL and the Development of the Electricity Sector in Italy
  • 1.2. The Budget Performance of the Private Firms
  • 1.3. The Nationalisation of ENEL and its Economic and Financial Performance
  • 1.3.1. The Incorporation of ENEL (S.p.A.)
  • 2. The New “Market Oriented” Mission and Governance
  • 3. The New Market Regulation
  • 3.1. The Italian Electricity Industry and the Wholesale Market
  • 4. The Behaviour of Privatised ENEL on the Market
  • 4.1. Tariffs and Distributional Issues in the Liberalised Electricity Industry
  • Conclusion
  • References
  • 13. The Transformation of Milan’s City Energy Enterprise in a Leading National Industry Group
  • Introduction, Research Context and Rationale
  • 1. The Largest Italian Multi-Utility Enterprise
  • 2. The History of a Successful Public Enterprise
  • 2.1. A Public Response to a Private Monopoly in the Electricity Sector
  • 2.2. Backing Milan’s Economic Miracle
  • 2.3. Seizing the Opportunities of Reformed Local Public Service Provision and Liberalised Energy Markets
  • 3. Towards a Large Number of Loosely Defined Public Missions
  • 3.1. The A2A Public Missions: the Enterprise’s Perspective
  • 3.2. The A2A Public Missions: the Municipality’s Perspective
  • 3.3. Open Issues in the A2A’s Public Mission
  • 4. Keeping Public Control through Corporate Governance Arrangements
  • 4.1. From Public to Mixed Ownership
  • 4.2. From a Traditional to a Two-Tier Corporate Governance Model
  • 4.3. How the Public Owner Controls the A2A
  • 4.4. Unresolved Issues
  • 5. A Mixed Economic Performance
  • 5.1. Beefing up Milan’s City Budget
  • 5.2. Profits, Losses and Debt Structure: Two Sides of the Same Coin
  • 5.3. Subject to Market Scrutiny
  • 6. Conclusion
  • References
  • Appendix
  • Statistical data about AEM/A2A development 1997 to 2011
  • AEM and A2A, electricity produced and electricity sales
  • AEM and A2A, gas distributed and gas sales
  • AEM and A2A, heating services sales
  • AEM and A2A, number of clients by business lines
  • AEM and A2A economic performance from 1997 to 2011
  • 14. La Caisse de Dépôt et Placement du Québec : Straddling between Two Worlds
  • Identification of the Enterprise
  • History
  • Public Mission: Economic Development
  • Operations
  • Performance
  • Governance
  • La Caisse and Coordination. Is There a Modèle Québécois?
  • Regulation
  • Conclusions and Lessons Learned
  • References
  • 15. Stadtwerke Köln : A Market-based Approach Towards Public Service Provision
  • Introduction
  • Portrait of the SWK Group
  • Public Mission
  • Key Performance Data
  • Regulation
  • Governance
  • Conclusions and lessons learned
  • References
  • Annual reports and other documents by the SWK group
  • Conclusion : Les entreprises publiques aujourd’hui et demain / Public Enterprises, Today and Tomorrow
  • Les entreprises publiques aujourd’hui
  • La mission de service public
  • Opérations et performance
  • La gouvernance et la régulation
  • L’aspect financier
  • Autres enjeux
  • Que retenir d’études de cas ?
  • Pour la suite
  • Public Enterprises Today
  • The Public Service Mission
  • Operation and Performance
  • Governance and Regulation
  • The Financial Aspect
  • Other Issues
  • What do the Case Histories Tell Us?
  • And for the Future
  • References
  • About the Authors / À propos des auteurs
  • Social Economy & Public Economy
  • Series titles / Titres parus

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Acknowledgements

CIRIEC’s International Scientific Commission Public Services/Public Enterprise launched the research project with a Research Steering Committee including Gabriel Obermann, President of the Commission (WU Vienna University of Economics and Business, Austria), Philippe Bance (University of Rouen, France), Luc Bernier (ENAP Québec, Canada), Massimo Florio (University of Milan, Italy). These project leaders have been helped and supported in this project by the international secretariat of CIRIEC: Barbara Sak together with initially Maya Abada in the early stages of the project and at the end Lia Caponetti. They should all be thanked for their precious help and time devoted to this project.

The editor of the book would like first to thank the authors of the various chapters for their contribution. He would also like to thank Bernard Thiry and Benoît Lévesque for the improvements they suggested to the book and Jacques Fournier who wrote the preface of the book. It is an honour and a privilege that scholars and practitioners of such a high quality and reputation help us in this endeavour.

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Préface

Jacques FOURNIER*

Conseiller d’État honoraire, président d’honneur de la SNCF, ancien président du CIRIEC international

L’entreprise publique est-elle une espèce en voie de disparition ou une plante vivace porteuse d’avenir ?

Les quinze études de cas présentées dans cet ouvrage ne peuvent que conforter dans le choix de la seconde branche de l’alternative.

Ce livre ne nous présente pas que des réussites. Il ne sous-estime pas les difficultés rencontrées. Il fait par là comprendre les évolutions en cours et permet d’éclairer l’avenir.

Les entreprises concernées opèrent dans neuf pays, en Europe ou sur le continent américain, elles ont des champs d’activité très divers – eau et assainissement, transport, services urbains, finances, énergie, communication –, leurs niveaux d’intervention, national, régional ou local, et leurs modes de gouvernance, plus proches, selon le cas, du droit public ou du droit privé, sont différents. Mais elles ont toutes en commun le service de l’intérêt général, elles sont toutes des organisations hybrides, entreprises, agissant sur le marché, mais entreprises publiques, contribuant à l’action publique.

L’intérêt de la recherche engagée sous l’égide du Ciriec International est de montrer les problèmes qui se posent à elles en ce début du 21e siècle, dans le troisième temps de l’évolution qu’elles ont connue depuis la fin du dernier conflit mondial.

Le premier temps fut celui de leur affirmation comme acteur essentiel d’un développement économique fortement encadré par les pouvoirs publics, à un moment où l’intervention de l’État dans l’économie paraissait naturelle. Les entreprises publiques sont alors, à côté des administrations, l’un des fleurons dans la panoplie des acteurs publics. Grands services publics de réseau, établissements de crédits et entreprises industrielles constituent un vaste ensemble, tantôt plus centralisé comme en France ← 11 | 12 → et au Royaume-Uni, tantôt plus proches de l’échelon local comme en Allemagne ou en Autriche et leur rôle aura été déterminant, d’abord dans la période de reconstruction de l’après-guerre, puis pour mettre en place, au cours des « Trente Glorieuses », les bases du développement.

Est venu ensuite un second temps, celui de la remise en cause, au nom d’un néolibéralisme qui a progressivement envahi la pensée économique. L’entreprise publique est dans le collimateur de la vision dominante. Elle subit les coups de boutoir qui lui sont assénés au nom du consensus de Washington et du New Public Management. La supériorité intrinsèque de la gestion privée est érigée en dogme. En Europe la présence de l’entreprise publique reste tolérée mais on lui fait obligation de se banaliser – c’est la doctrine absurde de l’investisseur privé avisé sur le comportement duquel l’État actionnaire devrait calquer son action – et on entretient autour d’elle une suspicion permanente de violation des règles de concurrence. En découlent des programmes massifs de privatisation, parfois voulus, ailleurs imposés, dans les États de l’Union.

Nous sommes entrés maintenant dans un troisième temps, celui de la résilience. L’entreprise publique a résisté. Même si son champ s’est restreint, elle est toujours là. L’intérêt général continue à pointer son nez, au travers de l’enchevêtrement mondialisé des échanges marchands. La crise et la menace d’effondrement des systèmes bancaires ont entraîné un regain momentané de nationalisations. Mais le mouvement est plus profond et il est bien mis en valeur dans les deux volets du projet de recherche du Ciriec pilotée du CIRIEC par Philippe Bance, Luc Bernier, Massimo Florio et Gabriel Obermann. Les études de cas recensées dans ce livre doivent en effet être rapprochées des analyses transversales qui ont été menées parallèlement et qui feront l’objet de publications dans plusieurs revues scientifiques. On voit ainsi se dessiner un tableau complexe et instructif.

Les études de cas nous montrent que l’entreprise publique est un instrument malléable, capable d’évoluer, de s’adapter, de se moderniser, qu’elle est susceptible de répondre à des attentes très diverses et qu’elle peut associer dans sa gouvernance les intérêts de multiples parties prenantes. Loin de constituer pour elle un handicap, son hybridité est une force. La tension qu’elle génère est féconde si elle est bien gérée. La culture que l’entreprise publique a de l’intérêt général, l’engagement de ses personnels, le rapport qu’elle est en mesure d’entretenir avec la société civile sont des atouts valorisables.

Les analyses transversales, de leur côté, révèlent qu’il n’y a pas aujourd’hui dans le monde un mouvement à sens unique de restriction du secteur public. Vues à l’échelle de la planète, privatisations et publicisations se balancent dans un équilibre relatif, variable selon les activités et les pays concernés. On voit la poussée des participations ← 12 | 13 → publiques réapparaître là même où l’on s’y attendait le moins, comme aujourd’hui en France dans le domaine de la politique industrielle. Et il est clair que l’entreprise publique reste un recours possible face à de nouvelles crises, qu’il s’agisse d’une crise économique de l’ordre de celle que l’on a connue en 2008 ou de la survenance de dérèglements climatiques majeurs qui rendraient nécessaire le déploiement au niveau mondial de moyens d’intervention nouveaux à rentabilité aléatoire.

L’avenir de l’entreprise publique dépend désormais de sa capacité à maintenir sa spécificité, son originalité. Il lui faut, entre pressions libérales et exigences citoyennes, tenir fermement les deux bouts de la chaîne, savoir faire face aux réalités du marché tout en restant fidèle à sa mission d’intérêt général.

Secteur public et secteur privé ne sont pas deux mondes différents. Ils sont étroitement imbriqués et peuvent s’influencer l’un l’autre. Le public peut trouver des exemples utiles dans les méthodes de gestion du privé. Le privé gagne à reconnaître sa responsabilité sociale. L’un comme l’autre ont aujourd’hui une vision internationale de leur développement. Ils peuvent coopérer, comme le montrent plusieurs des études présentées dans ce livre. L’entreprise publique n’est pas un oiseau rare isolé dans sa cage. Elle vit sur le marché. Elle en connaît les pratiques et doit savoir les mettre en œuvre à bon escient.

Mais, ce faisant, elle ne peut perdre un instant de vue la mission dont elle est investie. Sa vocation, même si l’exigence d’un équilibre dynamique s’impose à elle comme à toute autre entreprise, n’est pas d’enrichir ses actionnaires. Elle a une mission publique, elle fournit des services collectifs, elle est un acteur de l’économie des besoins. À ce titre, et indépendamment des objectifs sectoriels qui lui sont assignés, elle doit toujours être, d’une manière ou d’une autre, en quête de plus d’égalité dans le bénéfice de ses prestations, d’une meilleure qualité des services qu’elle rend aux diverses catégories de la population, d’une plus grande convivialité avec toutes les parties prenantes du monde politique économique et social et de la société civile.

Aucune des entreprises publiques présentées dans cet ouvrage ne réussit sans doute à satisfaire toutes ces exigences. Mais il n’est pas une d’entre elles qui ne s’y essaye d’une manière ou d’une autre, avec des succès bien sûr inégaux. Le panorama ainsi dressé n’est pas exhaustif. Des différenciations peuvent se faire jour. De nouvelles variétés peuvent apparaître. Mais ce qui caractérise l’entreprise publique, association d’une mission d’intérêt général et d’une action sur le marché, est bien une nécessité durable.

La plante reste vivace et continuera sans nul doute à diversifier et enrichir le jardin de l’économie.

* Auteur de L’économie des besoins, Éditions Odile Jacob, Paris, 2013.

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INTRODUCTION

The Future of Public Enterprise

Another Look at an Old Idea

Luc BERNIER

ENAP

Massimo FLORIO

University of Milan, Italy

Introduction

Despite the large-scale privatisations over the last three decades (Bognetti and Obermann, 2008), Governments, either at national or local level, still own or partly-own a wide range of organisations providing public services (and of course other functions). They have also created new ones. For several reasons, privatisation policies have left under the control of Government a core of public enterprises. The question arises: how should Governments define the missions, the performance criteria, and the governance mechanisms of the old and newer public enterprises in a changing environment?

CIRIEC’s International Scientific Commission on Public Services/ Public Enterprises has launched an international research project to revive the subject of public enterprise as an important field of analysis in the perspective of public economics and of social sciences in general. Special issues of Journal of Economic Policy Reform (2014) and of the Annals of Public and Cooperative Economics (2015) have been published or will be in the near future in relation to this book that is an essential part of this project. The book includes fifteen cases studies that have been presented at the Milan European Economy Workshop in June 2013 that has been co-financed by the funds of the Jean Monnet Chair of European Union Industrial Policy and CIRIEC.

This introduction presents the context, rationales, concepts, scope of the analysis, methodology of the project that have lead to these cases ← 15 | 16 → studies that are presented in the following chapters. At the end of the book, a general conclusion presents the lessons learned.

Context

According to Christiansen (2011), who reports the results of a wide data collection exercise, State-owned or partly State-owned enterprises (SOE) in the OECD Members States employ more than 9 million people, are worth USD 3 trillions in terms of net assets, and are mostly concentrated in the network industries and the financial sectors. In absolute terms, countries as diverse as the USA, Japan, France, Italy, UK, Poland, Turkey, Canada, just to mention some, stand out as the hosts of important SOEs. These include mostly public utilities, but – following the recent global crisis – also temporarily, for example, a major car manufacturer in the USA (General Motors), one of the biggest banks of the world (Royal Bank of Scotland), and other entities as well as insurance companies.

The OECD survey is incomplete in terms of country coverage, and of type of firms. For example, the very large number of municipally-owned utilities in Germany or in the Scandinavian countries are not covered. Some information at country level is provided by CEEP (2010), which focuses, however, on the different issue of mapping the provision of services of general interest in Europe. Thus, the exact definition and statistical information on contemporary public enterprises are relatively un-surveyed.

Nevertheless, it is beyond doubt that Governments in Europe and elsewhere (fully or partly) own a large number of organisations providing public services. These include inter alia electricity and gas supply, telecommunications, postal services, water and sewage, waste collection, local transport, railways, ports and airports, and several others. In many countries, core financial players are under the control of Governments, including major banks, insurance companies, pension funds, etc. Social services, such as health, education, childcare, vocational training, etc. are still widely supplied by public organizations, in some cases as trusts, public corporations, public-private-partnerships (PPPs).

In this book, we shall refer to “public enterprises”, in the broad meaning of organisations (a) directly producing public services, either through liberalized market arrangements or under franchised monopoly, (b) ultimately owned or de facto controlled by public sector entities, (c) with a public mission that can be identified in legislation, regulation, statutes, etc., (d) whose ownership in principle can be shifted to the private sector.

This definition excludes from our scope of research several other organisations: ← 16 | 17 →

 manufacturing companies owned directly or indirectly by the public sector;

 departments or agencies, which deliver core government functions (defence, law and order, etc.);

 companies which have been put temporarily under Government control following a bankruptcy, or for other reasons, but for which no public mission can be identified (more on this below).

In this perspective, Governments still own substantial productive assets, recruit managers and employees, and accumulate human capital in the public sector, in activities where private investors actually or potentially operate as well. Is this fact a remnant of past history, due to delays in the privatisation agenda, or is it a symptom that public enterprises will remain with us in the future? And, if the latter holds, how can we explain and forecast the survival of these organizations? The case studies presented here illustrate how varied the experience of public enterprises can be and how they can adapt to changing environments in different parts of the world.

Conceptual Framework

Public Mission – Definition

Given our definition of public enterprises, it is important to distinguish two different issues related to public missions of the organizations to be considered: missions of general interest, and public service missions (CEEP-CIRIEC 2000).

General Interest Goals

Governments always have some broad objectives in terms of macroeconomic and other national policy goals. These include for example policies related to employment, containment of inflation, promotion of research and development, of human capital, of fixed capital accumulation, competition and industrial policies. The internalisation of these objectives from public and private enterprises depends upon laws and other forms of regulation. Historically, public enterprises have been involved in these general interest goals in several ways: for example, they had to sustain public investment, to employ labour in certain regions; they were not allowed to increase their tariffs in times of high inflation, etc. Market opening clearly constrains the potential commitment of public enterprises in these areas of Government intervention. And via regulation, the European Union for example also subjects state aid to scrutiny. ← 17 | 18 →

The Public Service Mission

Under a more direct mechanism of control, public enterprises are required to perform certain specific tasks. Here Government ownership may act through hierarchical linkages. While issues of principal-agent relations and of asymmetric information have been discussed in the context of any regulated organisation, public enterprises are closer to the public principal, and hierarchy is a more effective mechanism than under private ownership. Specific forms of universal service obligations, in principle, can be applied to any service provider, including the private ones, but the direct linkage between Ministries, regional Governments, Mayors and public service providers is a powerful internalisation mechanism.

Research Object and Proposed Methodological Approach

The traditional normative theory of public enterprise started often from a set of assumptions, such as statutory monopoly at national or local level, the direct relationship between public planning and service provision, symmetric information between principals and agents, departmental regulation of prices, etc. These assumptions are less realistic today. In contrast, contemporary public enterprises are often operating in the context of mixed oligopoly, exposure to international markets, regulation by independent authorities, information asymmetries, and a less close relationship with public policy making. In many cases the legal arrangements for public enterprises have changed as well, from public sector entities subject to administrative law toward corporate entities subject to civil law, applicable in similar ways to privately owned organisations.

If public enterprises are to survive in the next decades, what kind of predictions and prescriptions can be distilled by modern public economics theory, and by the advancement of other social sciences, in order to improve their efficiency and effectiveness? Can we learn from privatisation and re-nationalisation? This book offers a few answers that will have to be completed by future research.

One possible approach to look at these two broad questions (actual missions and normative theory) is to focus on case studies of contemporary public enterprises. In an evolutionary perspective, organisations which have been able to adapt themselves to the new post-privatisation/liberalisation environment may suggest lessons to be learned, drawing from their resilience and change in the new context. There is also something to learn from failures in the adaptation process and of mixed results.

The most promising candidate case studies have been selected based on a call for proposals. The number of selected organizations does not always ← 18 | 19 → need to be high. Albert Hirschman built his seminal book “Development Projects Observed” around eleven case histories. Elinor Ostrom also used a limited number of case histories in her work on common goods. There are several other examples in social sciences of influential research based on limited, but well-chosen and carefully analysed case studies, and we should be inspired by former research based on this approach.1 The fifteen case studies presented here can also be supplemented by recent work built in similar fashion (see Lethbridge, 2014; Macdonald, 2014).

The case studies focus on a set of specific themes including at least the six following ones.

Public Mission, Market Opening, and Performance

Under market opening, a plurality of actors enter the arena of public services provision, from multinationals to NGOs, from public-private partnerships (PPPs) to municipally or State-owned enterprises, and compete in some way. They have different performance criteria: financial profitability for private investors, social welfare for public enterprises, or combined criteria for PPPs. Competition can take the form of competition in the market, or for the market (à la Demsetz). How can missions of general interest, and specific public service missions, be accommodated in this environment? Does this plurality of players lead to stable equilibria? Under which conditions does public ownership welfare-dominate other arrangements? Is market opening desirable per se or is it wasteful in some cases? Models of mixed oligopoly have tried to answer the questions, and some empirical studies have been carried out in this area. There is however less evidence on the adaptation necessary to the public enterprise to survive the change. Is in fact the adaptation destroying the public missions of the organisation? Or can the general interest and public service missions be preserved within the new environments and strategies? What can we learn from case studies of contemporary and past arrangements under market opening?

Governance

This topic has been widely researched for private organisations in recent years, also because of the perceived wide failures of arrangements in such industries as banking, or in large listed companies, etc. Do we have any evidence that some governance mechanisms are more effective for public enterprises? Is the huge literature on corporate governance of large private firms relevant to public enterprises, with citizens as the ultimate owners instead of shareholders and consumers? The OECD and the World Bank have occasionally suggested corporate governance ← 19 | 20 → principle for public enterprises, when privatisation is unfeasible or undesirable. The New Public Management (NPM) literature has suggested quasi-market mechanisms. There are traditional and new questions in this domain. Who appoints managers? To whom are they accountable? How to pay them? How to measure the performance? Should industrial relations be designed to imitate the private sector? To what extent should employees and consumers be represented in the governance of public enterprises?2

Regulation

The relationship between public enterprises, regulators and policy makers is now perhaps more complex than it was in the past. Do independent regulators, which after all are public sector employees, bring an added value when public enterprises are concerned, or do they add to the transactions costs of their management? Do managers tend to capture regulators? How do regulators act when they face a mixed oligopoly? The current regulatory economics literature focuses more on the issue of “incumbents” and asymmetric regulation, but often tends to skip the paradoxes arising from different public sector entities, which interact in the market. It would be important to understand the nature of the relationship between regulators, Ministries, and public enterprise managers, as this is perhaps the most important change in the architecture of government that has changed the role of public enterprises, beyond the Morrisonian tradition of arms’ length control.3

Finance

Public enterprises used to be financed in three ways, according to countries and sectors: transfers from the Treasury (i.e. general taxation), bond finance, and tariffs. One core aspect of the traditional doctrine of public enterprise was optimal pricing, e.g. the Ramsey-Boiteux view of the case of budget constrained firms (which is the normal case under EU state aid legislation). In the Laffont-Tirole framework the optimal pricing mechanism has been widely modified by principal-agent issues. In practice, there is limited evidence that price equilibria in regulated mixed oligopoly have converged towards socially efficient pricing of a sort. Which is or should be the pricing strategy, if any, of public enterprises in the current circumstances? This issue is closely related to the next topic. Transfers from the Treasury are now limited by State aid regulations in the EU, but exceptions are still possible. Bond finance, ← 20 | 21 → assisted or not by guarantees from the state, is also a current opportunity. In some cases, indirect international bond finance is possible (e.g. by the European Investment Bank (EIB), European Bank for Reconstruction and Development (EBRD), World Bank). What should be the optimal financial mix for the future, learning from the experience?

Distribution and Social Welfare

Another core concern of the traditional theory was about distributive issues. Cross-subsidies of tariffs were used to force universal coverage under balanced budget, and other mechanisms were in place to ensure the distributive mission of public enterprises. Do public enterprises still perform a role in redistribution of welfare, or has this role been definitively delegated to taxation/subsidies and other mechanisms? There is considerable literature on these issues,4 for example related to fuel poverty, but the way social affordability of public services should be achieved is still lacking an adequate frame of analysis.

Implementing the General Interest Goals

Public enterprises, as mentioned, and recently restated by Millward (2011), had also some political functions, related to national or local strategies. This was or still is also a matter of perceptions by users and by decision-makers. Examples are issues of territorial cohesion, security of supply, strategic considerations. Are some of these issues still important today for public enterprises in some sectors?

Others

Additional topics include, for example:

 the consequences for public enterprises when owners or stakeholders are spread over different Government levels and jurisdictions;

 human resources, including education and background of managers, incentive pay, role of trade unions and industrial relations in general;

 corruption and quality of institutions;

 climate change, environmental considerations, sustainable development, etc.

Scope of the analysis

Details

Pages
526
ISBN (PDF)
9783035264999
ISBN (ePUB)
9783035299267
ISBN (MOBI)
9783035299250
ISBN (Book)
9782875742247
Language
English
Publication date
2014 (December)
Published
Bruxelles, Bern, Berlin, Frankfurt am Main, New York, Oxford, Wien, 2015. 526 pp., 65 graphs, 60 tables

Biographical notes

CIRIEC (Volume editor) Luc Bernier (Volume editor)

CIRIEC (International Centre of Research and Information on the Public, Social and Cooperative Economy) is a non-governmental international scientific organization. Its objectives are to undertake and promote the collection of information, scientific research, and the publication of works on economic sectors and activities oriented towards the service of the general and collective interest. Luc Bernier is professor of public policy at the École nationale d’administration publique (ÉNAP), where he is also the director of the research center on governance (CERGO). He was president of CIRIEC’S International Scientific Council from 2011 until 2014. His research interests are on the impact of organizational variables such as entrepreneurship or corporate governance on the implementation of public policy. He has published frequently on public enterprises, central agencies, complex organizations, administrative reform and on the implementation of public policy. Le CIRIEC (Centre international de recherches et d’information sur l’économie publique, sociale et coopérative) est une organisation scientifique internationale non gouvernementale. Ses objectifs sont d’assurer et promouvoir la collecte d’informations, la recherche scientifique et la publication de travaux interdisciplinaires concernant les secteurs économiques et les activités orientés vers le service de l’intérêt général et de l’intérêt collectif. Luc Bernier est professeur à l’École nationale d’administration publique (ÉNAP) et directeur du centre de recherche sur la gouvernance (CERGO). Il a été le Président du Conseil scientifique international du CIRIEC de 2011 à 2014. Ses intérêts de recherche portent sur l’impact que des variables organisationnelles telles que l’entrepreneuriat ou la gouvernance d’entreprise ont sur la mise en œuvre de politiques publiques. Il a de nombreuses publications à son actif sur les entreprises publiques, les organismes centraux, les organisations complexes, la réforme administrative et la mise en œuvre de politiques publiques.

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Title: Public Enterprises Today: Missions, Performance and Governance – Les entreprises publiques aujourd’hui : missions, performance, gouvernance