Interview with Satoko Kishimoto on
remunicipalisation, PPPs and public service values
The debate on
alternatives to privatised ownership models for public services is back on the
academic and political agenda. One new contribution to the discussion is the report “Reclaiming Public
Services: How cities and citizens are turning back privatisation,” which draws
on an impressive body of “remunicipalisation”
cases from various economic
sectors and countries. The report demonstrates how such changes reduce costs,
improve working conditions and service quality, as well as increase
accountability. We spoke with Satoko Kishimoto, coordinator of the Public
Alternative Project at the Transnational Institute, who, together with Olivier
Petitjean, co-edited the Reclaiming
Public Services report.
What is new
For the past 30
years, we have been told that market is the only solution. Expanding the domain of the market was supposed to bring innovation,
more investment and lower costs. After the financial crisis, privatisation
pressures intensified in a climate of austerity that pushed governments to
reduce debt, even as they spent money
to save banks. But workers and citizens are starting to understand that
privatisation does not deliver on its promises. People have had enough. Popular
movements are looking for public alternatives that are more democratic and
accountable, as well as more effective at responding to social,
environmental and climate challenges.
How does remunicipalisation differ from nationalisation?
privatised services to the
public sector can also occur at the initiative of central governments, but such
nationalisations can come with ulterior motives. Though
many re-nationalisations in Latin America had very clear social objectives, for
instance to make services available and affordable for the entire population, other cases
also served less noble goals.
provision in Japan is a good example of a government stepping in to temporarily
fix private sector failure. The nuclear reactor of Fukushima was privately
owned by TEPCO. After the Fukushima disaster, the Japanese government
nationalised the company. It intends to privatise the TEPCO shares when market
conditions are favourable again.
We focus on remunicipalisation
because it relates more closely to the local public interest and direct citizen
needs. People have a direct interest in strong public services where they live
and work. We documented 835 cases of remunicipalisation of public services involving
more than 1,600 cities in 45 countries.
Public-Private Partnerships (PPP) are a common privitisation model, do they
explain the difference between PPP and public procurement. Through procurement,
a local government can choose a company to build a hospital or school. The
operational management of the service can then be provided by the local
government itself or assigned to another company through another procurement
contract. In a PPP, however, the contracted concessionary keeps control every
step of the way, from financing to construction and eventually operating the
actual service. There are substantial negative consequences to this
construction of a school, for example, will almost always involve borrowing
money. This is the case regardless of whether it is a PPP or not. But a PPP
will cost a lot more than classic public procurement, during which the
government takes on the loan itself. Whereas governments get a loan at 1% or 2%
percent interest, private companies can only do so at 7
% or 8%. It makes a PPP-project that
much more expensive and we all pay for it.
PPP supporters make it look like the
private sector provides capital, but
you are saying it is a public expense?
debt taken on by the private company for financing a PPP has to be repaid. In
the end the public pays for it through taxes and user fees. The private
companies obviously want to make a profit and this expectation is calculated
into the price offered to the contracting government. This explains why a PPP
is almost never value for money, at least not from the public point of view.
The attraction of PPP for local governments in Europe has to do with austerity
policies. The budgetary rules of the European Union allow a PPP to be recorded
off government balance sheets under certain conditions. In that case, the
annual expense to the private partner affects the budgetary deficit or surplus,
but is not added to the public debt. Of course, the debt does not magically
t’s just taken
on by the private partner. But the government
– all of us
– pays for the higher interest rates. This is why
TNI believes the debt of the PPP should always appear on the public balance
sheet. When the real financial consequences are shown, governments can make
more informed decisions
social and economic reasons for remunicipalisation. What about ecological reasons?
We live in an
era of climate crisis. Energy transition needs to happen fast. The big energy
corporations, with their large fossil fuel reserves, have no interest in
switching to clean sources of energy. Remunicipalisation on the other hand is a
vital element of a serious transition towards a low-carbon economy. Especially
in Germany, many municipal companies, often in collaboration with citizen
cooperatives, are focusing on local production and distribution of renewable
’s not just the energy sector where
municipal services show their ecological worth. Private waste disposal
companies have no commercial incentive to reduce waste, because more waste is
actually more profitable. In contrast, citizens and local governments have a
real interest in reducing waste. The same with contaminated water, which is a
source of profit since it requires capital and chemical intensive technological
solutions. Preventing water from getting polluted is not in the private sector
’s interest. In Paris, after
remunicipalisation, the water company Eau de Parishas has worked with
farmers who live upstream from the river Seine, to reduce their use of
chemicals. When the water is less contaminated, drinking water is cheaper and
How do the
values of the public and private sectors differ?
are about universality and affordability. Universal access means that services
are delivered across an entire city and not just to the most profitable areas.
Affordability, especially when it comes to energy and water, is the cornerstone
of the public sector
mission. For many,
energy has become unaffordable. In Spain and the UK, 10% to 20% of
families are not able to pay their bills. Private companies can easily drop a
non-paying customer unless legal protections are in place. Public utilities, on
the other hand, are obliged to provide services to citizens.
Protecting workers is another essential public value.
If you want to provide good public services, you need well-paid, respected and
committed workers. Public emergency workers in Japan — firefighters, police
officers, rescue workers and medical staff — give their best when typhoons or
earthquakes occur. In the face of danger, solidarity is another crucial public
service value. In
exceptional events, the private sector does all it can to eliminate liability
and responsibility for providing services.
This means we
have to be extra careful about what is in PPP contracts. Private companies are
not bound to a
public duty. They want to operate in normal conditions because this is easier and
more profitable. But we are talking about life and death situations here. Can
you imagine a case when disaster strikes, that governments, local authorities
and private concessionaries would first have to negotiate about who does what?
municipal companies and services offer better accountability than PPPs?
It starts with
notoriously complex PPP contracts. A government has to budget 10% to 20% of a PPP project for legal consultancy fees.
Private companies do all they can not to disclose information in the name of commercial
confidentiality, so local governments sometimes have to drag private service
providers to court just to get relevant financial and operational information.
A telling example comes from Berlin where city council members could not even
look into the contract between the city and the private water company. It took
citizen initiatives and a referendum before council members were allowed to do
is not automatically transparent, but it is a crucial precondition for
democratic public services. It allows citizens to make collective decisions.
Still, in itself it is not enough. What we need are permanently transparent
governance structures like the ones many cities in Spain are developing.
Citizen platforms like Barcelona En Comu are demanding not just
remunicipalisation and ownership changes, but also accountable, democratic and
transparent public services. If you want to involve citizens in how public
services are run, you need full disclosure of financial and operational
information. To go a step further, it is necessary to reserve seats on the board of public companies for
workers, users and communities to limit corruption.
How do these
Spanish programs look in practice?
the citizen coalition Barcelona in Comu had to work very hard just to get the
facts about the degree of privatisation and outsourcing that had gone on. This
again had to do with non-transparent contracts. Eventually, it became clear the
city had outsourced nearly 250 services. After calculating the costs of each
outsourced contract, Barcelona in Comu established ethical, social and
environmental goals for the municipal services.
Finance is also,
of course, taken into consideration. How much will it cost to bring the
employees of the waste services into the public sector with its better pay and
working conditions? What are the consequences for the workers? One needs to be
prepared before going into the fight for remunicipalisation. The other side
never intends to give up easily. It was decided that returning the funeral
services back into public ownership would be a priority
services to the public sector is probably not realistic in the short term. Many
small forms of outsourcing are not necessarily a bad thing as long as the
public government retains control of prices and working conditions.
How do unions factor in?
workers are on the frontline of providing services to communities. More often
than not, they are also members of those same communities. It means they can
look at public services from the perspective of both the producer and the user.
Their participation is therefore critically important. Open minded unions can
win big victories by engaging the community in the fight for better public
is never just about working conditions. It is about strengthening the community.
Trade unions need to deliver the message that they are protecting public
services because people need them on a day-
to-day basis. In countries like Canada, Norway,
Italy and Uruguay, trade unions contributed to or even assumed leadership of
remunicipalisation campaigns. In Colo
unions for public water companies voluntarily helping out communities that are
ignored by the state. These dynamics demonstrate that public sector workers and
citizens have shared interests
successful struggles against privatisation were made possible by strong
coalitions between citizens and workers. The remunicipalisation of the water
company in Jakarta, Indonesia and Lagos, Nigeria are cases in point. Victories
like these are well covered by the national media and inspire others. That
said, there are of course huge differences between sectors and countries in
terms of union density, wages and working conditions.
What are the
future plans of TNI?
seem very technical. It
is about ownership structure, finance, labour, information systems and so
forth. But it is never just technical. On the contrary, it can create an
opportunity to renew public values. Many cities in Spain are looking to tender
contracts to local, non-profit organisations instead of profit driven
companies. Citizens and workers want to be part of the solution to design
better, more ambitious and more accountable public services. Technical matters
become exciting when you broaden the discussion to the kind of society we want.
New narratives and experiences on the ground empower more people and
communities when they connect on a theoretical and political level. At TNI, we
are resolved to foster those connections through our research.
This interview is also published on diggitmagazine. Here is the link.