This House believes that public services are

best run by private companies

WIKI DEFINITION: Public services is a term usually used to mean services provided by government to
its citizens, either directly (through the public sector) or by financing private provision of services. The
term is associated with a social consensus (usually expressed through democratic elections) that certain
services should be available to all, regardless of income. Even where public services are neither publicly
provided nor publicly financed, for social and political reasons they are usually subject to regulation
going beyond that applying to most economic sectors.
OTHER DEF: Non-rivalrous and non-excludable
Health and education are considered to be the main public services.
Plan: Privatising public services
Philosophy: There is a social consensus that certain services should be available to all, regardless of
income and thus the government either runs the services itself or holds a decisive power concerning
those services. We feel that the services are not run to sufficiently high standards at the moment; it is
common knowledge that a pizza may arrive quicker than an ambulance. The inability of states to
improve those services is shown by the citizens of the UK, who after an unsuccessful spending spree
have lost trust in the government to spend the taxpayers money on improving the quality of public
services.
In 2000 an international poll for The Economist found that Britain was alone among 17 countries
in having a majority of people prepared to pay more taxes to finance more spending on public services.
By 2008 that generosity had vanished, as a rising tax burden had squeezed incomes and as it became
clear that public services had failed to improve that much despite the spending spree.
Problem: The level of public services is not good enough.
QUALITY investments, welfare of the workforce and desire for profit
For
Point:
a)Profit motivates
What makes a private company better than the government? Simple, it is the drive for success. When
the government has to provide these services and just get it over with, the private companies want to do
it well. Private companies exist to generate profits for their shareholders. Private corporations typically
profit more if they serve the needs of their clients well. A company with good corporate governance will
therefore be incentivized to meet the needs of its customers efficiently.
Efficiency, defined as real (inflation adjusted) sales per employee, increases from an average of
96.9 percent in the year of privatization to an average level of 123.3 percent in the post-privatization
period---[Megginson and Netter (2001)] [Sheshinski and Lopez-Calvas (1998)] "privatized firms
improve profitability after sale irrespective of market structure" Boubakri and Cossett (1998)significant
increases in profitability (up on average by 124 percent after privatization), operating efficiency (real
sales per employee up by 25 percent on average and net income per employee up by 63 percent),
capital investment spending (up 126 percent), and employment (up 1.3 percent)[1]
JNR increased productivity about 20% after being restructured for privatisation (Tasub veel uurida,
sest link privatisationiga on segane)[2]
BR Privatisation brought with itself an increase in both freight and passenger train traffic. Also the
service has experienced an increase in the level of safety and considerable amounts of investment,
especially for the major lines, improving the quality of railway service.[3]
CN (basically Canadian railway) increased its operating ratio from an industry average when in
public ownership, to an industry leading figure by 2005. (tasub jllegi veel uurida, sest operating ratio on
suhteliselt tihedalt seotud kasumiga ja vib lihtsalt thendada, et firma hoiab mingi thtsa asja pealt
kokku)
After UK bus services were privatised, the more efficient economic management of the private
companies meant that it was possible to enhance the quality of the service, for example, the frequency
etc.
b) InvestmentsRight now, in the states that have decided that public services are best provided by the
government, we can see that the governments are often struggling to invest enough into the
development of public services. The government has a limited amount of funds to invest in the public
services, thus in order to improve and enhance them, it is necessary to up to some point privatise them
to ensure the cash flow necessary for development. The state has a certain responsibility to ensure that
the public services are provided on a good level and if it cannot provide them itself, then it is its duty to
delegate the responsibility to the private sector
A good example is Thames water, which failed to reach the targets for reducing leakage rates
from 2000-2006, after which it announced a 1 million investment to replace pipeline. This resulted in
Thames Water meeting and exceeding the targets in 2007 and 2008.[4]
c) Workforce and motivation to strive for successPeople tend to put more effort into their work when
they can do it in favourable conditions. Collocating workforce with similar qualifications to create
competition will improve the overall level of public services.
Counterpoint:
Profit may be a motivator but it does not necessarily mean profit making companies are more efficient
as shown by the US Healthcare system and UKs water. USAs commercialised system costs 13.6% of
GDP, while the UKs national health system costs only 6.7% of GDP yet the infant mortality rate in the
USA is worse than any other OECD country. One reason is that up to a quarter of health spending in the
USA goes on the bureaucracy of payments and billing.[6]
Thames water may have been investing but only as a result of complaints and it is put to shame by
public sector equivilents; the water authority in Lilongwe, Malawi, reduced its leakage rate to 17% in the
1990s (better than Thames Water managed in the UK in 2001).[7]
In electricity, a worldwide comparison of public and private companies found that the ownership made
little difference.[8]
Even the party that authorised the privatisation of Britains railways, the Conservatives, have stated that
they made a mistake. They are supported in this by Railtrack, the company that deals with the
maintenance of the tracks.[12]
Stability i.e. public services as a political tool, the changing of policies
and officials
For
Point:
As a government controlled businesses it is not unusual for the public services to become political tools.
If we consider public services to be somewhat of egalitarian tools, then if the ruling party changes from
e.g. left wing to right wing, then the funding and development of these might be halted. Every change in
the government is bound to be reflected in these establishments, even if the economic ideology does
not change. We feel that this prevents the services from having long term development schemes for
public services, which halts the progress made in the price and quality of the public services.
Also, key decisions concerning the running of the company are not up to the management to make, but
are rather decided by the government. (fares, wages and investment planning)
The case of Japanese National Railway(JNR), which was eventually privatised, due to the
companys inability to make key decisions resulting in annual losses of about $ 20 billion. "Inevitably, the
result was interference in the application of resources (i.e., non-economic light density lines) and in the
procurement of goods and services."[5]
These days even the non-political positions in organisations tend to become more and more political, as
the pressure from government increases to be political in their goals rather than economic, which would
be more beneficial to the people because welfare of the society is more important than political hassle.
Counterpoint:
Argentina privatised its railway in the '90s, because it was underachieving, but instead of improving, the
situation got worse. Network of railway lines shrank from about 35000 to 8500 km and the number of
employees from 95000 to 15000. Also the state subsidised the railway in the same amount that it was
previously spending on it. The railway fails in satisfaction polls.[9]
Also, the bus use in UK has declined by more than 20% due to privatisation and the reforms it brought.
Moreover, the investments were not too significant, as the bus fleet aged by 30%, due to the fear of
losing long term sustainability (although this process has started to reverse)[11] With regards to working
conditions - after London bus services were privatised in the late '80s and '90s the pay for workers was
reduced in order to survive in the corporative competition Prior to 1986, bus drivers wages were 7%
above the average for all manual occupations. By 1995 their wages were 13% below that average See
New Earnings Survey Part D Table 54 1990 SOC for Bus and Coach drivers.[10]
Focus
For
Point:
The state can focus more on the services that are left to be provided by it. State as a bureaucratic
monster that cannot be efficient due to the amount of tasks on its hand, isnt the best owner as it lacks
the necessary attention capacity to provide all services on a high-enough level. If we privatise the
companies, we see that the companies that are privatised are taken better care of and their needs can
be met with more precision, but also that the companies that are left to be run by the state are better off.
Not taking every company as an individual establishment but rather a part of the state could lead to
various outcomes, for example in transport, the loss of market share to other means.
The example of JNR, which was too big to understand the regional differences and needs and
design services accordingly. As a result they lost market share to small private operators who were
operating simultaneously to JNR.
Counterpoint:
Focus really means a focus on profit over anything else, and this often comes at the expense of the
workers. A study from British Columbia, showed that privatising health care support would sharply
reduce wages for staff, 85% of whom are women. In a contract awarded to multinational company
Compass in 2003, wage levels for health care housekeeping staff were reduced to 1984 levels.
Professor Baldry's evidence to the Ladbroke Grove Inquiry on the effect on the railway industry of 'work
intensification': "If you are bidding for a contract on what is essentially a labour-intensive process, the
only way or one of the major ways you are more likely to win the contract is through offering to do it with
reduced labour costs, that is either to do the work with a smaller number of people or in a shorter
timeframe."
Security
Against
Point:
A) The essence of public services
People expect certain services from the state, that should The public services are connected to a
persons basic rights or enforcing them, thus the government cannot let private companies provide the
services, because it would reduce the security of providing these services.
Up to a point it is an egalitarian tool, thus giving it to private companies would ruin the point because
their goal is to generate profit not to generate common good and security. Security is essential to the
poorest layers of the society, who are not very appealing to profit-seeking companies, thus we see that
only the government has the incentive to provide public services on an acceptable level to all.
Latinobarmetro states that the majority of citizens in South America believe that public services
are best provided by the state[13]
B) Responsibility
MNCs have a primary responsibility to their shareholders rather than the public they are offering the
service to. This can lead to the company withdrawing when the profits fall and leaving the public service
unattended, which can lead to the provision of the service being disrupted bringing down the living
conditions of the citizens.
A recent example is the policy announced by Suez to withdraw from one-third of its investments in
developing countries, and the announcement by their subsidiary in Manila to withdraw from a water
concession in the Philippines which still had many years to run.Energy giant AES (4.2.5.1) (August 2003,
AES walked away from Drax [UK's largest power station, generating about 8% of the country's energy
needs], the same month it abandoned a hydroelectric project in Uganda, 1999 did the same in India,
Orissa)[14]
C) Supervision
The usual reasons for privatising are wrong
Against
Point:
Governments usually privatise the public services due to economic concerns. If this is the case then the
public services are the wrong thing to cut back on. We feel that the only reason, why a government
should even consider privatising the public services would be an improvement in the services.
Privatising as a cost-cutting measure is flawed, as the citizens' welfare is not kept in mind. Also, as
examples show, it is not even financially wise. The private companies manage to frequently do
something wrong or just claim to the government that the service is not profitable enough, due to which
cross-subsidies have shown tendencies of doubling or tripling compared to the pre-privatisation levels.
Pre-privatisation subsidy levels averaged around 1 billion per year, but the gross subsidy
almost doubled following BRs restructuring in 1994 (net subsidy did not increase substantially until all of
BRs successor companies had been sold and their profits were transferred to the private sector).
(Shaw 2003)[15]
The other reason in developing countries is the pressure from various supra-national organisations. This
is done to promote a certain political view and promoting various MNCs without considering the local
conditions or the effects of the process. It is visible throughout the continent of Africa, how the public
services are not provided on a good-enough level.
(Ghana's water system privatisation - Shortage of supply March 2008)[16]
As we see in Ghanas case, private operators are not reliable enough as disruptions in essential
services occur.
The assets of British Rail were disposed of way below their market price between 1993 and 1995. State
subsidy to the privatised railway industry today is more than double that pre-privatisation
fundamental human rights (such as the right to water)

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