Question

Public / Private partnerships are common in public budgeting. On a large scale, a number of cities across the country have supported the construction of pro sports facilities by dedicating various forms of public tax dollars towards construction. On a smaller scale, it's common for municipalities in Illinois to dedicate future sales tax dollars towards the construction of retail centers. In many cases, these are considered debt to the local government entity. Discuss the pros and cons on public - private partnerships. State whether or not you are in favor of these practices. If you favor them, support your position. If you are against them, provide alternative solutions.

Answer 1

There are various pros and cons in the public-private partnership.

Public-private partnership provides better infrastructure and they complete their projects effectively and efficiently. If the project is to be done entirely by private then it must be effective but not efficient because profit is considered to be the priority in private sector. And if the government goes for the project then it must be efficient because here the first priority is public welfare but we are not sure if it will be completed on time.

When two entities work together, the innovative strategy and finance approach presented on the table. The working and execution are mainly transferred to private entities who are more experienced in controlling cost.

Some cons of PPP are:

Costs of government can increase as Public Private Partnership contains risk for private entities and that risk is to be compensated by the government.

The main benefit of PPPs might not be there if there are less number of private firms. Competition gets reduced due to less number of participants in the market which is not god for cost-effective partnership.

When the most of the expertise needed to do the project lies on the private side, the government will be at an inherent disadvantage. The government might not able to evaluate the planned cost of the project.

So, it will be good to make the PPP if the government is able to assess the cost of the project as it will reduce the cost of the government as well as government can concentrate on the other crucial things. The government needs to inspect the work of private sector as they can go for immoral practices to reduce their cost as much as possible. So, it will be good if there is PPP for infrastructure and other projects as the chances of efficient and effective work go higher.