Public-private collaboration: a convenient but distrustful couple

BarcelonaA major burden for the takeoff of public-private collaboration is mutual distrust. Both the public and private sectors admit this, but at the same time, they agree that it will be difficult to reach national goals in such transcendental matters 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 subject 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 "much is said, but little is done." The challenges, he assured, "cannot be achieved by the administration alone." He acknowledged that there have been some years, especially from 2003 to 2009, of "great distrust" between the public and private sectors. It is up to the administration, he said, "to make it easy and recover trust," guaranteeing the confidence of investors. As examples that large works could not be carried out without this partnership, he cited the new Hospital Clínic campuses in Barcelona and the Josep Trueta campus in Girona. "When we join efforts, the effect is multiplicative," 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, Director General of the Cerdà Institute, highlighted some important issues, such as the prohibition on revising prices with inflation, the inability to rebalance contract conditions due to demand deviation, and regulatory instability, among others. Another important point is that the majority of concession files – the main vehicle for public-private collaboration, which only accounts for 4.5% of the tendered amount – are carried out by municipalities and the local sphere, 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 has also been put on the table 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 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 being managed by a third party, they are the owners. In this context, the remunicipalization trend that defends the direct public management of water supply services, for example, is situated. Recoder warned that mistrust 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 to attract investors that costs can be compensated and risks can be distributed. And he recalled the areas in which the public-private partnership will have to act to meet the objectives, which range from housing to defense and security, essential infrastructure, and climate adaptation. Budget is needed, but also to take into account the urgency and necessity of executing projects, he said.

The lack of trust has been one of the most repeated elements, and the CEO of Vertix, Elena Massot, has insisted that it must be overcome. Anna Gener, CEO of Savills in Barcelona, also stressed this point. These long-term contracts must provide a return that, while limited, must also be low-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 living standards 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 different governments.