Public loss, private gain?

The so called public-private partnership agreement on the St Luke’s, Karen Grech and the Gozo Hospitals, as with loads of other agreements, is shrouded in secrecy.

It is understandable that during the negotiation phase things are kept under wraps until a final agreement is settled. However, the public is owed an explanation of the deal and its ramifications.

What interests me is the concept of so-called ‘public-private partnerships’. A few years ago some local councils, pushed by the Nationalist government, entered into public-private partnerships to rebuild residential roads. The people who had their roads done up were presumably happy. The fact of the matter was that government offloaded its responsibility on local councils.

Despite the general perception, it is government which is actually responsible for building and resurfacing roads, while councils are only supposed to take care of minor maintenance works. The story ended up with costs spiralling out of control, insufficient funds and some councils with hundreds of thousands, even millions in the red. It was an example of a ‘partnership’ where the risks and unforeseen costs are borne by the public. Public loss and private gain.

The only information about the recent agreement on the hospitals comes from newspaper reports, often reports of press conferences or government press releases. The questions are obvious. Why didn’t the government just lease parts of the properties that are not needed? Wouldn’t buying services on an ‘as need’ basis have been enough? Is government carrying all the risks – such as by guaranteeing the hundreds of millions in borrowing from banks? Why is government going to carry the costs of salaries of staff working at the hospitals and at the same time paying again for the beds used? Is the government subsidizing the cost of private patients by paying the staff’s salaries?

Last year in the UK an NSH Hospital managed by a private company had to be bailed out on being handed back to the public sector. The contract put a cap of £5 million on losses, which meant that £5 million had to be forked out by the public. Again, public loss and private gain.

Public-private partnerships do not have a good track record. The profit motive and public healthcare do not go hand in hand. Offloading public healthcare responsibility onto the private sector is a way to avoid political responsibility, cite confidentiality and blame the contractor and the terms of the contractual agreement when things go wrong.

Public-private partnerships are also a way to hide government borrowing since any guarantees undertaken by the state do not show up on public accounts. According to a report by David Hall from Public Service International and formerly from the University of Greenwich, these so called ‘partnerships’ provide long-term state guarantees for profits to private companies. Private sector companies must maximise profits if they are to survive. This is fundamentally incompatible with ensuring universal access to quality public services. It is an accounting trick which hides the real state of public finances and the state’s inability to provide good public services.

Will government bother setting the record straight and give the public some clear answers? What’s different in the hospitals’ agreement? Who is carrying the risks? We need clarity. Is this contract for 30 years, or can it be prolonged to 99 years, with the private company deciding what to do?