Public private partnerships in the Hong Kong public sector: a right approach?

Journal of the Academy of Business and Economics, Jan, 2004 by Jermain T.M. Lam

Another element that the PPPs model should incorporate is political costs. The emergence of a "contract state" produced a number of radical departures from established forms of political accountability (Elcock, 1998; Hood, 1995). First, PPPs reduce the degree of political accountability as elected representatives cannot directly control the decisions and actions of the private companies that finance and provide public services. Elected representatives can therefore no longer effectively protect the collective public interest. Second, the government is held less accountable to the legislature because it shifts the burden of responsibility to private companies in the provision of public services. In sum, public opportunities for participation in government decision-making are reduced because public services have been transferred to the private sector. The political costs are so great that public confidence and trust in the government will be undermined. PPPs will be counterproductive if it is not operated with a refined political accountable framework.

The third element that the PPPs model should incorporate is the personnel costs. PPPs will erode the commitment of civil servants in the public service in three dimensions. First, the adoption of business principles and practices in the public service tends to undermine the substance of the public sector ethos which emphasize on social benevolence, fairness, and faith. Second, civil servants under PPPs will be de-motivated by the reduction of extrinsic factors such as job security, salary, and benefits in the context of pro-market reforms and partnerships. Third, as close working relations between civil servants and private sector employees are inevitable under PPPs, civil servants may find themselves difficult to adapt to private business styles. All these may create bad feelings, dissatisfaction, conflicts, and alienation among civil servants, which ultimately affects loyalty and performance. The Hong Kong PPPs model did not suggest any measures to sustain or to promote the morale of civil servants under the new partnership relationship.

4. IMPLICATIONS

PPPs suggest a right approach to integrate the strengths of both the public and private sectors. Nevertheless, the application of PPPs in Hong Kong highlights its theoretical deficiencies of balancing social and economic values, maintaining political accountability, and sustaining civil service morale. Three important implications are worth mentioning. First, PPPs may not be suitable in weak economies whose populations are not able to afford market-based public services. Hong Kong was hit by the Asian financial crisis and economic mismanagement, resulting in a high percentage (8%) of unemployment and deflation (2.0%). Market-based public services will create further economic burden on citizens. Second, the practice of PPPs in undemocratic countries will encounter difficulties in ensuring a high degree of political accountability. Hong Kong is not a democracy and its Chief Executive enjoys tremendous political power. The Legislative Council finds it extremely difficult to monitor PPPs projects which by nature reduce the degree of political accountability. Third, those countries with conservative civil service ethos will have difficulties to promote PPPs projects as civil servants are demoralized and reluctant to implement PPPs. Hong Kong civil servants are trained and structured by the Weberian mould. They are alienated against turning into business managers. In short, PPPs is a right approach to enhance public productivity. Nevertheless, the framework has to be further refined especially when it is implemented in developing, undemocratic, and conservative states. This echoed Wettenhall (2003)'s observation that little attention has been paid to a systematic evaluation of PPPs for continuous improvement.