Building Competence. Crossing Borders.

Elective Public Management – Week 7

Privatisation

Prof. Dr. Andreas Bergmann

Institute of Public Management

andreas.bergmann@zhaw.ch

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Privatisation

Legal forms• Administration unit

• Department

• Dependent agency (without an own legal identity)

• Independent agency (with own legal identity)

• Incorporated company under public law

• Incorporated company (limited company, companionship, foundation) under private law

• Incorporated company in private ownership

„spin-off“ (Verse

lbständigung)

Privatisation

„pretentious privatisation“

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Privatisation

Examples of „real“ privatisations

• classical case: British Airways

- Preparation from 1981: „turn-around“, i.e.- new management (Sir John King, Colin Marshall)- cut back of 23,000 positions- cut back of routes and fleet - unchanged: „grandfather rights“ at Heathrow airport- new image: „The World‘s Favourite Airline“

- Privatisation only in 1987 (together with British Airports Authority)- IPO of all shares (100%)

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Privatisation

Examples of „real“ privatisations

• More international examples

- British Telecom (1984, IPO, successful)

- British Rail (1994, break up into 30 entities, very controversial, in some parts clearly failed, e.g. Railtrack)

- Deutsche Telecom (1996, IPO, government still holds about 15%, successful)

- Air NewZealand (1989, sale to an investor, government holds one „golden share“; initially successful, but had to be rescued by government in 2001, currently about 80% government owned, to be sold)

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Privatisation

Examples of „real“ privatisations

• In Switzerland

- Ausserrhoder Kantonalbank (1997 sold to UBS as part of financial restructuring)

- Solothurner Kantonalbank (1995 privatised, in the mean time taken over by Bâloise Group)

- Swiss (2005 sold to Lufthansa)

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Privatisation

Examples of „pretentious“ privatisations

• In Switzerland

- Swisscom (IPO of minority 1998, government still holds about 56% of the shares, to be sold down to 51%)

- Post (no private shareholders, still agency)

- SBB (like Post)

- RUAG Aerospace Defense Technology

- Skyguide

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Privatisation

Goals of privatisation

• Efficiency gains

• Competitiveness in conjuction with market liberalisation

• Restriction of political influence

• …

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Privatisation

Four circle model of Swiss federal government

• Report „über die Aufsicht bei ausgelagertenVerwaltungsbereichen und rechtlich verselbständigtenBetrieben“ published on 25 June 1997

• Corporate principle

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Privatisation

Four circle model (2)

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Privatisation

Scientific position

• Market liberalisation and privatisation should be symmetrical

- Strongly regulated industries political control

- No regulation full privatisation; if any regulation left (e.g. telecom) government as regulator

• Intense preparation needed

• Difficulties arise from asymmetries

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References

BERGMANN, A.: Erfolgsfaktoren im öffentlichen und privaten Sektor. In: Bergmann, A./Hofmeister, A. (Hrsg.): Privatisierung – schlägt das Pendel zurück. SGVW-Schriftenreihe Nr. 44. Bern: 2004. 9-14.

SCHEDLER, K./PROELLER, I.: New Public Management. 3. Auflage. UTB, 2002. 163-182.

MÜLLER, G.: Zur Verantwortlichkeit bei ausgelagerten Bundesaufgaben. In: NZZ, 10. Juni 2004.

VICKERS, J./YARROW, G.: Privatization: An Economic Analysis, MIT Press, Cambridge, Mass, 1988