Experiences of the Liberalisation of Public Services in Sweden

A short overview

What the presentation will cover

• Liberalisation of state services• Responsibilities of local authorities and

regions in Sweden• ”Liberalisation” of local and regional

services

» Liberalisation or market use?

» Facts and figures

» Development

» Debate

Liberalisation* of markets in Sweden

Network industries

Railways (partly) 1988

Domestic aviation 1992

Postal market 1993

Telecom market 1993

Production and saleof electricity 1996

*Markets are deregulated or more precisely regulations that promote competition are imposed.

Some effects of the liberalisation

• Prices has decreased where new competition has managed to get a sizable market shares.

• Prices has gone up where the previous state monopoly company maintans a dominant market share.

Some effects of the liberalisation• Telecom

» Lower prices and more and better services.• Postal services

» Higher cost for letters, lower cost for packages.

» Restructuring of state postal service that improved accessibility and service.

• Energy market

» Lower prices when tax and production costs are deducted.

Responsibilities of local authorities and regions

Compulsary

• Social services

• Care for the elderly and disabled

• Kindergarten, nurseries

• Primary and secondary schools

• Town and country planning

• Waste management

• Rescue services

• Crisis management/readiness

Volontary

• Leisure and sport

• Culture

• Housing

• Energy

• Business promotion

County Councils

• Health care

Economy

• 20% of GNP

The law and external provision of services- anything but exercise of authority

Local Government Act, 3:16

Municipalities and county councils may... transfer the management of a local government concern, for the conduct of which no special procedure has been prescribed, to a limited company, a trading partnership, an incorporated association, a non-profit association, a foundation or a private individual.

… however, the management of a concern which includes the exercise of authority may only be transferred if there is statutory support for so doing….”

Privatisation or Market Use?

Public financing Private financing

Public

production

1

Publicly managed

2

e.g. waste

collection

Private

production

3

Procured services

”outsourcing”

4

Privatised

e.g. electriciy

company is sold

Public control and private providers

Democraticcontrol

Local/regional authority

Private company

Citizens

Control and financing

Service provision

How much is provided by private service providers?

0,0%

2,0%

4,0%

6,0%

8,0%

10,0%

12,0%

14,0%

16,0%

18,0%

20,0%

1

Infrastructure

Culture and leisure

Schools andnurserysHealth care, carefor elderlyDirected measures

Business activity

Total

Camparison betweenSundsvall and Solna Towns- Care for the elderly in private hands

0

10

20

30

40

50

60

70

1998 1999 2000 2001 2002 2003

Percentage

Sundsvall

Solna

Solna: 59.000 inh.Sundsvall: 93.000 inh.

Solna Town – external providers- Child care

Solna Town – external providers-Infrastructure

Why outsourcing?

Reasons in the beginning•Need to save money•Ideology

What are the effects?

• Initially costs where reduced.

• In the long run, costs increase to previous levels.

• Demands on the quality of services rise.

• Management, cost and quality control is improved.

• Effectiveness is improved.

• Better management of internal operation.

• Spill over effect from the control of external activities.

Current development

From strategy for rationalization…

…to strategy of development.

From shortsighted cost chasing…

…to a long term focus on sustainable quality.

The challenge

To guarantee the citizens good quality.

To ensure development of services.

To ensure long term solutions.

Current debate

•Costs will increase due to aging population.

•There are rising demands on quality.

•Near consensus on public financing of services.

•Public services must be more effective…

•…and private providers will play an important role.

•Profit making hospitals? (County councils)

• Controversial issue.

• ”Stop law” issued – under legal review.

Summary:Local and regional public services and the private market in Sweden• Freedom to choose how to provide

services.• Public services are not privatised, they

are outsourced through public procurement.

• 15% of services are outsourced today.• Large difference between authorities.• Outsourcing not a clear ”left-right” issue.• Focus on developing both in-house and

outsourced services.