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.