Public-private collaboration: a convenient but distrustful couple

BarcelonaA major burden for the take-off of public-private collaboration is mutual distrust. Both the public and private sides admit this, but at the same time they agree that it will be difficult to reach national goals in such transcendental areas as housing, the energy and digital transition, and infrastructure, without the sum of both parts. All of this was confirmed during a conference on this matter organized by the Economy and Business Foundation, of the Association of Economists, and the Cerdà Institute.

The Secretary General of the Ministry of Economy and Finance, Juli Fernández, has admitted that this is an issue about which "there is much talk, but little action". The challenges, he assured, "cannot be achieved by the administration alone". He recognized that there have been some years, especially from 2003 to 2009, of "great distrust" between the public and private sectors. The administration, he said, "must make it easy and recover trust", ensuring the confidence of investors. As examples that without this partnership great works could not be carried out, he pointed to the new campuses of the Hospital Clínic in Barcelona and the Josep Trueta in Girona. "When we join efforts, the effect is multiplying", he concluded.

Legal security and stability are fundamental aspects. In fact, he added, some constant normative and regulatory changes have caused many tenders to remain deserted. Miguel Hernández, General Director of the Cerdà Institute, highlighted some important issues, such as the prohibition of reviewing prices with inflation, the inability to rebalance contract conditions due to demand deviation, and regulatory instability, among others. Another important point is that most concession files –the main vehicle for public-private collaboration– are carried out by city councils and the local world, which need support because in most cases they do not have the capabilities and resources to supervise 25 or 30-year contracts.

The former Minister of Economy Jaume Giró also sees in the lack of strength of public-private collaboration the ideology and the identification of this formula with privatizations. An alert that was also raised by the former Minister of Territorial Policy, former mayor of Sant Cugat and president of the board of trustees of the Ramon Llull University, Lluís Recoder. And to this, according to the latter, who participated in the failed privatization of the former Aigües Ter Llobregat (ATLL) –today public again as ATL–, is added the fact that many administrations, once they outsource a service, stop worrying about it.

Bad experiences

This, he added, has led to bad experiences, for which both the private sector and the public sector are responsible for not controlling assets or services of which, despite management by a third party, they are the owners. In this context, the remunicipalization trend is situated, which defends direct public management of water supply services, for example. Recoder has warned that distrust has led to an excess of bureaucracy or "preventive bureaucracy," so that civil servants want to play it safe and prolong procedures.

Hernández said that it is essential for attracting investors that costs can be offset and that risks can be distributed. And he recalled the areas in which the public-private partnership will have to act to be able to meet the objectives, which range from housing to defense and security, essential infrastructure, and climate adaptation. Budget is needed, but also taking into account the urgency and necessity of executing the projects, he said.

The lack of trust has been one of the most reiterated elements, and the CEO of Vertix, Elena Massot, has insisted that it must be overcome. Anna Gener, CEO of Savills in Barcelona, also touched on this line. These long-term contracts must provide a profitability that, while limited, must also have limited risk. And for this, "stable regulatory frameworks are needed, and an understanding that the private world needs a return, which can be limited or audited and must be transparent."

All participants agreed that the most competitive countries with the best standards of living are those where there is more public-private collaboration. The Secretary General of Economy has assured that the current Generalitat is convinced of the formula and that the stability and regulatory security that regulates it should not change with the governments.