Privatising Local Public Services: Between Industrial Legacy and Political Ambition

Abstract

Since the 1980s, research on the privatisation of local services has analysed the factors affecting government's delivery choices; but this research has not given unanimous results, for reasons connected both to the different methodologies adopted and the dynamic nature of privatisation processes. This article introduces the case of Italian water services reform, drawing attention to the economic and political dynamics that make privatisation an extremely complex choice, in which the preferences of politicians have to be balanced with industrial heritage and the strategies of the utilities. By privileging a historical analysis of the conditions in which such choices take place, it is possible to grasp the changing relations between local governments and utilities and to look at the relative power of firms, citizens and governments in the process of service delivery choice.

Key Words:

• Privatisation
• public services
• water management
• utilities

Acknowledgments

The author would like to express her gratitude to Marco Allegra and to the two anonymous reviewers for their helpful comments and suggestions.

Notes

1 This work is based on PhD research undertaken between 2006 and 2009, focused on a comparison of local modes of governance in Italian water management reform. The research is composed of an analysis of the national decision-making process, a collection of data from the 91 local areas in which the system has been reorganised and an in-depth analysis of three case studies, carried out through document analysis and 21 interviews of local officers and politicians, firms' managers and leaders of local and national movements. The database on the 91 local areas includes twelve variables covering three areas – the management model, the strategies of the utilities and the socio-economic features of the local context – and it was realized by merging several existing databases and analysing documents and data available on the Internet website of the Ambito Territoriale Ottimale (ATOs). See Carrozza (2008) for details on the methodological choices of data collection and of the comparison.

2 Since the term ‘privatisation’ is used in several ways, it must be emphasised that it is used here as an umbrella word, covering different patterns sharing the involvement of private actors in public services delivery (Thynne, 2006: 281).

3 The role of industrial-sector lobbies seems to be relevant as well (see Miralles (2008) for a study focusing on Catalonia), even if this factor is still under-researched.

4 The water system is today composed of 91 ATOs, while there are 110 Provinces in Italy.

5 The Italian north–south divide, the subject of an impressive national and foreign literature (see the ample review presented in Schneider, 1998), finds some confirmation in the water services sector because of the gap in the infrastructural and management background between the two areas. It must be taken into consideration, however, that the increasing differentiation in the realities composing the south and the differences between local political leaderships played a role in reform implementation and the outcomes (see Piattoni (2003) for a critical approach to the traditional narrative about the Italian south).

6 The comparison was realised by comparing each of the 91 ATOs' data on local government's delivery choices and on the firm's strategies; four different ideal types of outputs emerged from this first phase. See note 1.

7 Interview with the council treasurer of the city of Rome.

8 The signing of a shareholders' agreement, the creation of a subsidiary company of ACEA for the management of the ATO, the constitution of an advisory committee to preserve the municipalities' interests.

9 This conclusion emerged from the stenographic reports of the intermunicipal meetings (November 1999–December 2004).

10 Resulting from the analysis of budget reports available on ACEA's website.

11 Interview with the manager of the ATO technical office.

12 Indeed, 8 out of 21 ATOs included in Case d (see Table 1) are from the Lombardy Region.

13 Water sector counted more than 1500 operators in the early 1990s, according to the Italian National Institute of Statistics survey of 1999.

14 Interview with the councillor for the environment of the province of Lodi.

15 Senate of the Italian Republic, Survey on the situation of water supplying with detailed reference to the water agricultural uses and to the water emergency in the municipalities of the Sicily region, session 19 June 2002, stenographic report.

16 As stated in the report of the National Audit Court on water emergency management in Sicily (act no. 8/2004). The report also lists all the authoritative measures taken by the presidency of the Region during the water emergency.

17 The losses rose to 53 per cent according to the Relationship on the state of the environment 2004 made by the province of Caltanissetta.

18 Interview with the manager of the ATO water company.

19 Interview with the councillor for the environment of the province of Caltanissetta.

20 Interview with the manager of the ATO technical office and regional law no. 9/2004 (paragraph 4).