Points de vue et contributions

Day of synthesis of the work of the seminar Services of General Interest and Globalisation
Saturday, March 11th 2000

Europe, the future of Public Services?   Public Services, the future of Europe?

Synthesis and conclusions

R. SIMPSON - During the last conference I attended in Paris, I said  "Messieurs les Anglais; tirez les derniers" ("will our English adversaries be so kind as to shoot last"). As a humble geographer I am out of my depth in these debates. You are better informed than I am on the great anglophone economists. Lofty philosophical principles such as "absolute selfishness is not the only possible expression of individual rationality" are well above my head. I don't see the link with the public service but I will question my postman about this on Monday morning.
I was expecting practical debates on jobs, prices of kilowatts, water leaks, the evolution of rates for telecommunication, etc. We did not go into what matters and I think we have to. On the subject of globalisation I only heard about the EU and the United States which together represent 13% of the world population. For the remaining 87% the EU is a very powerful organisation.
My presentation will show that in discussing the global ogres, it is we who are ogres. I refer to general, British, European and world levels. I will end with an observation on France.
I agree with our Swiss colleague that liberalisation and privatisation are two different things. You can have one without the other. Privatisation without liberalisation is the  worst and is what happened in Peru in telecommunications. The catastrophic outcome is private monopoly without regulation.

- You can have a State system which profits from monopolistic rents and which confiscates the profits generated by the services. That was the case in the United Kingdom before privatisation. At that time, profits generated by public services were confiscated and not re-invested in the service. Services deteriorated and that was a gift to Mrs Thatcher who had no problem privatising them. So a State system can fiddle the public interest.

- You can also have a very regulated privatised system as in the USA. The Chicago School of thought has exported to third world countries a liberal model which has never been applied in the United States. The American public would turn down such a system. 

- You can also have a system capable of being regulated in the interests of consumers. This is what is happening in the United Kingdom. The system is more regulated than it used to be.

- Price fluctuations. As early as 1984, gas prices have gone down in the United Kingdom because at world level, prices for the raw material have decreased: minus 4% (below the level of inflation ) per year. In telecommunications, domestic prices increased after privatisation in 1986 and quickly decreased after 1993 due to the insistence of the regulator. In the electricity sector there was a small increase after privatisation then a decrease after 1995 due to public protest when companies' huge profits became known. Because of the European legislation on the environment, water companies immediately made consumers pay for the price of infrastructure improvements. Instead of absorbing these over 50 years we paid two thirds of the bill in the three years following privatisation. Now prices are going to go down. All price decreases are due to intervention by the regulator and not to liberalisation.

- We can have privatisation which works in the interest of consumers. The question of natural  monopolies (at what level should the State intervene?) has not been sufficiently considered today. The answer is related to the degree of natural monopoly in non-competitive sectors (water and sewerage, electricity transmission and distribution, transport of gas). Competitive or potentially competitive sectors are: long distance telecommunications, electricity generation. Transitional sectors are local telecommunications, electricity and gas sales ( billing, consumption estimates). The latter  only come to 6% of the total costs of electricity which means that these sectors are not worth liberalising. This nonsense is practised in the United Kingdom in the sale of electricity.

At European level I agree with some of the distrust expressed today. Naïve enthusiasm for liberalisation (particularly in the South) may drive us from one extreme to the other. We may end up with the worst: private monopolies without regulation.
What role does the EU play in third world countries? Last year, the tender for the contract for the city of Bucharest to manage water services and water mains received nine bids, not a single one from Romania (3 from the USA, 2 from France, 2 from the United Kingdom and 2 from Germany). In Jamaica, [Cable & Wireless] make a 20% profit each year. We are the giants and profit rates reach grotesque levels. In Brazil the Rio electricity company (Rioluz) was privatised and purchased by a consortium of two companies ( from Texas and from France) for a derisory sum. The loser is the Brazilian taxpayer. The director general who did not speak Portuguese decided on an increase in prices and the result was electricity cuts in the favelas. Jobs were reduced by 40% (including those of engineers). The system broke down and during the summer of 1997/ 1988, the city of Rio was without electricity. The company in question is EDF. Does the French public know about this? 

I find the French too pessimistic on internal affairs and too obsessed by other liberals and by the Americans. You have internal problems but France and the EU are immensely wealthy. We are capable of solving our internal problems. It is a matter of control of the structure of companies, of the setting up of systems of regulation to protect the public. Seen from the outside, you are powerful and your companies are very powerful. The Lyonnaise des Eaux and Vivendi are all over the world. They have bought the water company of the North East of England. Electricity in London was "re-nationalised", because it is owned by EDF, therefore by the French State. 
 

Alain de TOLÉDO - There are two areas in which we French should not vie with our British friends: rugby where they have beaten us as usual and humour where I could not hope to compete. On the other hand, our public services we are the best. A friend who could not be here today has given me a text to read to you. Here is an extract: "Weather patterns at the end of 1999 have proved without doubt the need for public services run by companies with a general interest vocation. What would have happened if electricity, telephone and railways were run British style as the EU urges us to do? Fortunately for you lot , the storm hit France. Without EDF, France Telecom and the SNCF, I don't know what you would have done".

I would like to propose a fifteen-nation tournament of public services. We have an assessment at European level, we decide on a referee, on a judges panel (the US for example). We could evaluate democratically and pluralistically all public services. The first prize would be in Euros.
I will not go back on discussions. They have been numerous. I would like to situate myself in the light of the works of the SIGEM that started two years ago through the initiative of two associations Réseaux Services Publics and AITEC. These two groups wanted to confront people with a practical experience of public services with university professors with a more theoretical view of things and the ability to shed a light on some problems. Today marks the outcome of some of the quite important work we have done together. The fact that people have sacrificed a Saturday to come to a distant university indicates that these works find a certain echo. The main question now is what we are going to do with all the questions raised at the conference. There have been more questions than answers and we need to do extra work to find these answers. The main question is how we are going to work. Some people have suggested the possibility in a relatively short while for a conference where we could work on these questions over two or three days. If we want to progress we need to think of the way in which we are going to work. The presence of European friends is a very positive element. These encounters are very important to us, to help us out of our internal French problems. Thank you Robin for reminding us that we make mountains out of molehills. We must stress the European dimension and invite to our meetings university researchers, representatives and trade- unionists from other European countries. This type of work should also be noticed in other countries: Why not fifteen SIGEMs in our countries? The multidisciplinary dimension must be valued. The legal dimension has been neglected. We have done a lot of work on public utilities. There are other areas such as education and health which we should consider more thoroughly. We will have to think about the way we work. This conference is headed by a committee of eight to ten members and it should look into the way we work. Large meetings are useful to raise a large number of questions. To go deeper, it would be useful to have a number of small workshops where specific questions would be looked into. We are going to send a transcript of the day to all participants and possibly publish the minutes of this conference. It would be a pity if there was no follow-up to a day so rich in reflection.