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9. December 2018

“Having the private sector help provide public services is a must”

A collaborative project between Prof. Michael Schäfer and Ludger Rethmann aims to promote a culture of PPPs

Examples of the public & private sectors working together successfully

Prof. Michael Schäfer is well known for his belief that the public sector should provide the services its local inhabitants need – especially essential public services. He and Ludger Rethmann have now got together to write a book on the subject of public private partnerships (PPPs). Among other things, this project aims to show how public and private sector companies can, in the majority of cases, collaborate successfully. According to Prof. Schäfer, who specialises in public sector economics, PPPs are by no means a long list of flops and failures. In the following interview, he describes how the public and private sectors can work together.

Have you changed your opinion about whether the private sector should provide public services or not?

Prof. Schäfer: Having the private sector help provide public services is a must. Joint venture businesses owned by both public and private sector companies play a major role here. I would always argue that the local authorities should have a majority share in any joint venture, i.e. at least 51%. This has always been my opinion ever since I began thinking about this issue. The principle behind this train of thought is that whoever is responsible for the services – and this is always the local authorities – should also have a say in how the services are provided.

What role will the private sector play then in providing public services over the long term?

Prof. Schäfer: The list of public sector services that need to be provided is dynamic. The new services being added to the list, such as supplying broadband, requires specialist levels of know-how. Such requirements can be found across the board – from energy, to waste management, to water. If public sector companies wish to retain their trademark of being close to their local inhabitants – and this will become ever more important as digitisation increases – then they will have to considerably step up their collaboration work. Among each other, just as with the private sector. For the most part, the private sector has very high levels of specialist know-how which is essential to be able to provide high quality public services. Public sector companies – especially the smaller ones – generally don’t have full access to such expertise. For example, I simply cannot picture the public sector being able to create a perfect circular economy without having public private partnerships.

What do you hope this collaborative book will achieve over the long term?

Prof. Schäfer: Public sector companies exist in a world shaped and characterised by private ownership. Which is why having the public and private sectors working together is an objective requirement. This, in turn, means everyone has to take off their ideological blinkers. If the different parties’ interests can be balanced out to create mutual advantages and if transparency is maintained at all levels and at all times, then cooperation work between the two sectors can be beneficial for both sides – and last for a very long period of time. This needs to be discussed pragmatically and objectively. We wish to promote such a culture.

Prof. Michael Schäfer

Professor Michael Schäfer was born in Weimar in 1952 and taught Public Sector Economics at the Eberswalde University for Sustainable Development until 2018. He set up the first and only MSc course in Public Sector Economics in Germany. He is also the publisher of the magazine, UNTERNEHMERIN KOMMUNE [Entrepreneurship in local authorities], and wrote the first ever standard reference book in Germany for public sector economics.

Image credits: © REMONDIS


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