The evolution of public–private partnership in Ireland: a sustainable pathway?
| Author | Matthias Beck,Gail Sheppard |
| DOI | 10.1177/0020852316641494 |
| Published date | 01 September 2018 |
| Date | 01 September 2018 |
| Subject Matter | Articles |
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International Review of
Administrative Sciences
2018, Vol. 84(3) 579–595
The evolution of public–private
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partnership in Ireland: a
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DOI: 10.1177/0020852316641494
sustainable pathway?
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Gail Sheppard
Queen’s University Belfast, UK
Matthias Beck
Queen’s University Belfast, UK
Abstract
Ireland is a latecomer to public–private partnerships, having only adopted them in 1998.
Prior to the credit crisis, Ireland followed the UK model, with public–private partner-
ships being implemented in transport, education, housing/urban regeneration and
water/wastewater. Having stalled during the credit crisis, public–private partnerships
have recently been reactivated with the domestic infrastructure stimulus programme.
The focus of this article is on Ireland as a younger participant in public–private
partnerships and the nexus between adoption patterns and the sustainability charac-
teristics of Irish public–private partnerships. Using document analysis and exploratory
interviews, the article examines the reasons for Ireland’s interest in public–private
partnerships, which cannot be attributed to economic rationales alone. We consider
three explanations: voluntary adoption – where the UK model was closely followed as
part of a domestic modernisation agenda; coercive adoption – where public–private
partnership policy was forced upon public sector organisations; and institutional
isomorphism – where institutional creation and change around public–private partner-
ships were promoted to help public sector organisations gain institutional legitimacy.
We find evidence of all three patterns, with coercive adoption becoming more relevant
in recent years, which is likely to adversely affect sustainability unless incentives for
voluntary adoption are strengthened and institutional capacity building is boosted.
Points for practitioners
There are many reasons why public sector organisations procure via public–private
partnerships, and motivations can change over time. In Ireland, public–private partner-
ship adoption changed from being largely voluntary to increasingly coercive. Irrespective
of motives, public–private partnership procurement must be underpinned by incentives
Corresponding author:
Gail Sheppard, Department for Accountancy and Professional Studies, IT Tallaght, Belgard Road, Dublin 24,
Republic of Ireland.
Email: gail.sheppard@ittdublin.ie
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International Review of Administrative Sciences 84(3)
and institutional enabling mechanisms, which should be strengthened to make Ireland’s
public–private partnership strategy sustainable.
Keywords
commercial sensitivity, isomorphism, New Public Management, policy transfer,
public–private partnership, transparency
Introduction
The extensive use of public–private partnerships (PPPs) in Europe has been iden-
tified as contributing to fiscal instability (Budina et al., 2007; Corbacho et al.,
2008). Typically, it is assumed that government decisions to introduce PPPs have
been based on a need to develop infrastructure in the absence of adequate fiscal
resources. Using the example of Ireland, this article suggests that the decision to
implement PPPs can follow other than economic or pragmatic rationales.
Ireland can be considered a late adopter of PPPs, and this relates to its moderate
uptake of New Public Management (NPM) more generally, with it being classified
as a middle-intensity adopter. Although the link between PPPs/private finance
initiatives (PFIs) and NPM is not absolute, with some research identifying them
as ‘defining characteristics of third way governments’ (Hodge, 2004: 37), PPP pro-
curement mechanisms lend themselves to NPM concepts, such as ‘re-engineering’
and ‘modernisation’ (Massey, 2010), in that they draw on private sector practices in
public service delivery (Broadbent and Lauchlin, 2004, 2005). By mid-2009, Ireland
had only six PPP projects in operation (Reeves, 2013b), representing less than 0.5%
of all EU PPP contracts signed from 1990 to 2009. Although a late PPP adopter,
Ireland is a ‘rapid follower’ of the UK model and increasingly a leading practi-
tioner in transport, education, housing/urban regeneration and water/wastewater
(Northoff, 2008). This is striking since, as a wealthy late adopter, Ireland had
alternative options. Rather than implementing PPPs via the application of the
UK model, it could have modified PPP policy to maximise responsiveness to
local needs and preferences. This article discusses Ireland’s decision to follow the
UK model and the implications in terms of policy transfer, institutional develop-
ments and sustainability.
Specifically we: define PPPs; examine the background to the approach adopted
in Ireland; outline the theoretical framework and discuss how policy transfer
theory and institutional theory are used to frame this research; discuss our meth-
odology; apply the theoretical framework to our document analysis and explora-
tory interviews; discuss findings; and set out the conclusions.
Defining PPPs
PPPs can be described as ‘competitive business ventures’ between the public and
private sectors (Teicher et al., 2006) and as providing ‘PFIs’ for infrastructure
Sheppard and Beck
581
projects (Leinhard, 2006). There is no single definition of PPPs. The UK views
PPPs as a procurement approach that brings public and private sectors together in
long-term partnerships for mutual benefit (Akintoye et al., 2003). The Irish gov-
ernment defines PPPs as a public services/infrastructure procurement method that
emphasises value for money and delivering quality public services.1 Two general
PPP arrangements can be identified. One emphasises the use of private finance; the
other is service delivery by the public sector (Abdel Aziz, 2007). Both types are used
in Ireland. More recent definitions describe PPPs as ‘a set of governance tools as
well as a set of language games’, with both having ‘long historical pedigrees’
(Hodge and Greve, 2009: 33), which encompass at least five families of
governance arrangements, including long-term infrastructure contract-type PPPs
(Hodge and Greve, 2010). Although this strand of PPPs covers several arrange-
ments, it typically specifies outputs based on long-term contracts (Hodge and
Greve, 2010). Our analysis focuses on this type of PPPs, which, following the
UK PFI model, are largely privately funded (Hodge and Greve, 2010).
Background
There is a history of private sector involvement in service and infrastructure deliv-
ery in Ireland. Religious institutions have run schools and hospitals (Connolly and
Wall, 2009), and in the 1980s and 1990s, toll bridges in Dublin were built with
private sector involvement and refuse collection was privatised (Reeves, 2003).
PPPs were formally introduced following the Report to the Inter-Departmental
Group in Relation to Public Private Partnerships (Farrell Grant Sparks and
Goodbody Economic Consultants, 1998). There was little justification for why
the Irish government should adopt these policies (Hearne, 2009). The motivation
appears to have been to fill the so-called infrastructure gap that arose from the
curtailment of capital spending in the 1980s and early 1990s (NESC, 1999).
Subsequently, investment relied heavily on European Union (EU) fiscal transfers
(Reeves, 2003). Between 1993 and 2000, European transfers became less important
as economic growth made Ireland the fastest-growing Organisation for Economic
Co-operation and Development (OECD) economy by 2000 (Reeves, 2003).
The Maastricht Treaty convergence criteria meant that Irish budget deficits
could not exceed 3%, nor could the gross government debt to gross domestic
product (GDP) ratio exceed 60%. Ireland’s budget deficit never went above 3%
during the 1990s and the ratio of gross government debt fell below 60% in 1998
until 2008. There was no pressing need to finance infrastructure through PPPs, so
why did a fiscally healthy Ireland engage in PPPs?
The National Economic and Social Council stated that PPPs brought efficiency
gains to the public sector (NESC, 1999). PPPs were not the only vehicle through
which such benefits could be acquired. Hodge and Greve (2007) correctly suggest
that PPPs enjoyed popularity among governments eager to please markets and
unwilling to raise tax rates. Additional explanations for the adoption of PPPs
arise from the literature on policy transfer and institutional isomorphism.
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International Review of Administrative Sciences 84(3)
Theoretical framework: policy transfer theory and
institutional theory
The study of policy transfer draws on policy diffusion studies, which is a subset of
the comparative politics literature (Dolowitz and Marsh, 1996; Evans, 2009).
Policy transfer can be defined as ‘a process in which knowledge about policies,
administrative arrangements, institutions etc in one time and/or place is used . . . in
another time and/or place’ (Dolowitz and Marsh, 1996: 344). Policy transfer causes
organisations to mimic others (Dolowitz and Marsh, 1996). It can increase the
effectiveness of government operations (Marsh and Sharman, 2009) and help legit-
imise organisations (Connolly et al., 2009). Early transfer studies relate to volun-
tary transfer, which can occur due to dissatisfaction with the status quo. More
recent studies explore direct coercive transfer, which occurs when supranational
institutions, such as the International Monetary Fund (IMF), force the adoption of
a policy,...
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