Private-public partnerships in public services sector represent just another instrument for private businesses to get their hands on public funds. BusPlus is a typical example of such business model in Serbia whose downsides have been obvious for years now.
In 2012, a private company named Apex Solution Technology d.o.o., the owner of BusPlus system, took over ticketing in public transport in Belgrade from GSP Belgrade – public company that previously used to be in charge of operating the whole public transport system in the city. The private company invested about twelve million Euros to ‘modernise’ ticket readers in vehicles and it got 8.35% of total revenue from ticket sales in return. This amounts to about 80 millions of pure profit on a monthly basis. It is a public-private partnership (PPP).
The company has not invested any money in improving quality of the city public transport itself, but only in electronic ticket validators, which ensure that there is no fare evasion. That is why one can find the most up-to-date expensive ticket reading equipment in vehicles with no air conditioning and with leaking rooftops. The purpose of the investment has never been to provide better public transport, but to create preconditions for a private company to earn more money from ticketing. Public resources and infrastructure have been used for private interest.
BusPlus is no kind of exception and has nothing to do neither with the current political and economic situation in the country nor with corrupt politicians. Every public-private partnership in the world is tailored to meet investors’ interests, while wider social needs are interests are of little or no importance in such schemes. This is exactly the principal characteristic of PPPs: socialisation of expenditures and privatisation of profit. All the negative effects are transferred to the public sector and citizens, while the capital is protected by contracts that enable it to make profit. In order to understand the way BusPlus works, and how to fight against it, we need to explain the logic behind PPPs and the ways that people around the world have fought against it. Even though experts, managers and so-called economists in Serbia still claim that further privatisation of the public sector is the only way to make it work better, one can notice a different trend gaining strength worldwide. Due to worsening quality of services and increase in their prices in the hands of private businesses, public goods in many countries have been remunicipalised or renationalised. This is especially the case with public transport.
Public-private partnership: a shelter for interests of capital
After neoliberal attacks on welfare state and labour rights in the eighties, the world has seen an expansion of creative solutions that include privatisation or commodification of public goods. Neoliberal lobbyists presented PPPs as successful examples of collaboration between the capital and the public interest. The state was supposedly no longer able to fund certain services within health sector, water services, education, energy and public transport. Thus, the solution was found in ‘cooperation’ with the private sector.
Even though it could have at first seemed like a reasonable and fair thing to do, in reality it was quite the opposite. Since the services were no longer provided to satisfy people’s needs, but served profit making, new providers strived to lower all costs and salaries of their employees as much as possible in order to increase their revenue. Within health care system they provided cheaper, low quality medicines, numbers of vehicles operating within public transport networks were being reduced and fares were getting more expensive, while prices of electricity and water services rocketed and restrictions were introduced. So, ones who could not afford them were simply denied access to those services.
Private sector took over various functions in the domain of public transport. It mostly took over transport services themselves, especially rail, but also public transport in the cities. However, the companies were only interested in profitable routes, while those in remote areas with fewer passengers remained in public ownership, which meant that the states had more losses than they had had before. Moreover, ticket sale is an extremely profitable business, so many private companies decided to engage in it. Consequences of such schemes had been disastrous, so it is not surprising that in the past couple of years there were thirty eight cases of de-privatisation of transport, mostly in France, UK, Austria, Germany and Portugal.1
Only in France were there twenty such cases.2 For example, a private company bought entire city public transport in Toulouse in 2004. The consequences were so catastrophic that only after two years, due to mass actions of dissatisfied citizens and union strikes, it was brought back in-house. Nice, Cannes and Ajaccio are some examples of bigger cities that remunicipalisedcity transport in order to have better financial and political control over it.
The city of London decided to privatise city transport in mid eighties. Private companies competed with each other over profitable routes in the city centre, while people living on the periphery ended up cut off by lack of transport or expensive fares. After transport had gotten back into the hands of the city authorities, the city was able to save each year a billion Pounds that had previously been given to shareholders and private company managers.3 Estonia is another interesting example. It is the only place where public transport in the whole country publicly financed – all citizens, no matter their financial situation, can use public transport for free, without buying tickets.
BusPlus case: easy money with the help of the City of Belgrade
GSP Belgrade owns most of the public transport vehicles in Belgrade, while privately owned buses operate some routes. Citizens often complain about the second being late and the overall quality of service being poor. Private companies are taking over more and more lines, which leads to decreases in GSP revenues. Thus, GSP is getting less and less competitive in comparison to the private companies, because it has less and less money for further investment. Moreover, labour rights of bus drivers working for private companies are much worse, which enables the owners to earn more.
Nevertheless, BusPlus system is present in all vehicles. How is revenue for the private companies guaranteed? How are expenditures and negative effects transferred to the citizens and the City of Belgrade?
There is a contract that enables Apex to sell tickets for ten years. Regardless of the fact that the city authorities are elected every four years and that passengers can become dissatisfied with the service only after a year or two, Apex can keep the business running until the end of 2022. Newly elected politicians can always say that terminating the contract is always too costly because the investors are protected by a penalty scheme.
Moreover, there has been a significant increase in fares after the introduction of BusPlus and many citizens have started to refuse to buy the tickets because the prices are too high. This is why conflicts between ticket inspectors and passengers have become more and more often in the vehicles and the city authorities have been finding new ways to make people pay for the tickets.
For example, one of the main functions of the Communal Police in Belgrade is to overlook public transport and police officers were accompanying ticket inspectors for a long time. So, the city of Belgrade decided to use its own institution, funded from the city budget, to enforce ticket purchase and make it easier for the private company to continue making profits. Furthermore, not only did the city not require from the company to compensate for the losses that the citizens’ boycott incurred to the public city transport, but it also pumped in more public money into it in order to sustain it.
Why does not a private company have to deal with the losses, but the citizens have to take responsibility for it? If the introduction of BusPlus has rendered public transport less sustainable, then the problem lies in the ticketing system.
A much better solution is publicly funded transport, accessible to everyone. It is not difficult to finance such a model. Progressive taxing is a way to make public transport available to all, while it makes such fishy contracts with private companies redundant.
Finally, there is this fake fight for ticket inspectors’ labour rights. The city leaders are pushing for granting them more authority under the excuse of ameliorating their working conditions. In a state where labour rights are violated on a daily basis, where a lot of people work in shockingly poor conditions, this kind of advocating is nothing but hypocrisy. Workers employed to control passengers’ tickets in public transport are usually people from the lowest social strata, who usually do not have many job opportunities. Due to high unemployment rate, people are forced to apply for jobs they would not take if they had a choice – we can hardly believe that someone would willingly agree to harass others in public transport vehicles. On the other hand, the inspectors oppress people who are in a very similar financial situation as they are. In order to earn more bonuses from their employers, they fine people who do not have incomes high enough to regularly pay for the tickets, and they especially target the elderly and women. This is how those who directly benefit from privatisation of ticketing mask their interests by putting the most vulnerable ones in the front line. People who earn a couple of thousands of Euros per month at the expense of public interest and who belong to the intertwined political and economic elites prosper even more from clashes of those working for 250 Euros a month.
Publicly funded public transport is a feasible solution that everyone living in Belgrade would benefit from. Alas, all governing parties and coalitions that have been elected since the creation of multi-party political system have been connected to big businesses that tailor city life according to their own needs. Conclusively, examples from all over the world show that PPPs are catering to investors’ needs alone, for which reason many cities have already decided to reverse privatisation of public transport.
Translation from Serbian: Ivana Anđelković
This article was originally published in Serbian on July 10, 2018.