Public Corporations Flashcards

Flashcards about Public Corporations, Ownership, and Privatization

Public Corporations

Business organizations owned and controlled by the state/government.

State Owned

The government appoints the people who run the organisation, often a group of directors.

Created by Law

Created by an act of parliament – powers and duties of each organisation are clearly specified in the act.

Incorporation

Businesses have a separate legal identity. They can sue, be sued and enter into contracts under their own name.

State-funded

Government provides the capital needed to run the company – comes from tax. All equipment belongs to the government.

Provide Public Services

Objective is to provide a public service.

Public Accountability

Must produce annual reports – submitted to government minister in charge – accountable to the taxpayers – the public.

SNCF Group

A global company that provides passenger and freight transport services.

SNCF Réseau

France's state-owned railway company.

Maintain Control of Strategic Industries

To prevent outsiders owning them and exploiting the nation.

Strategic Industries

Industries vital to a nation's security e.g. energy and water.

Save Jobs

Government will take control of a failing business to stop job losses.

Fill the Gaps Left by the Private Sector

Fills in the gaps where the private sector cannot fill.

Serve Unprofitable Regions

Provide important services that the private sector won’t as it is too expensive.

Cost to Government

Have to be met by the tax payer.

Inefficiency

Are often criticised for their low productivity and inefficiency.

Political Interference

Too much government interference.

Difficult to Control

Can be too large and employ thousands of employees across a wide region and own too many assets.

Privatisation

The transfer of public sector resources to the private sector.

Sale of Public Corporations

Sell shares in the business to anyone who wants them.

Deregulation

Lift legal restrictions that prevented private sector competition.

Contracting Out

Government and local authority services ‘contracted out’ to private sector businesses.

Sale of Land and Property

Sale of council owned properties to tenants.

To Generate Income

Sale of assets generates income for the government.

To Reduce Inefficiency in the Public Sector

Public corporations often made losses, in the private sector they would have to cut costs, improve services and return profits for shareholders.

As a Result of Deregulation

Legal barriers removed that allowed businesses in some markets

To Reduce Political Interference

In private sector, government can’t use these organisations for political aims, free to choose own investment levels, prices, product ranges and growth rates.

Public Corporations

Owned and controlled by the state/government.

Services Provided

Provide essential services like healthcare, transport, and education.

Government's Role

Appoints directors to run the organization.

Defined by Law

Powers and duties are specified in an act.

Legal Identity

Separate legal entity; can sue and be sued.

Source of Funding

Funded by government with tax money.

Primary Objective

Focus is on providing a service to the public.

Accountability

Submits annual reports to the government and is accountable to taxpayers.

SNCF Group's Role

Provides passenger and freight transport services.

SNCF Réseau

State-owned railway company in France.

Strategic Control

Prevents foreign control of vital industries.

Strategic Industries Examples

Industries vital to national security, such as energy and water.

Job Preservation

Protects employment during business failures.

Filling Service Gaps

Offers services not provided by the private sector, ensuring equal access.

Serving Unprofitable Areas

Supplies services even in less profitable areas.

Government Expense

Financial burden falls on taxpayers.

Efficiency Issues

May suffer from lack of competition which can lead to low productivity and inefficiency

Political Influence

Subject to changing government policies.

Control Challenges

Coordination can be difficult; potentially vast operations.

Privatization Defined

Transferring public entities to private ownership.

Forms of Privatization: Share Sale

Selling company shares to private investors.

Forms of Privatization: Deregulation

Eliminating limitations on private sector competition.

Forms of Privatization: Contracting

Outsourcing government tasks to private companies.

Forms of Privatization: Property Sales

Discounts given to tenants purchasing council homes.

Motivations for Privatization: Revenue

Generates funds for the government through asset sales.

Motivations for Privatization: Efficiency

Private sector applies cost-cutting and efficiency measures.

Motivations for Privatization: Deregulation Effects

Promotes new market entrants after deregulation.

Motivations for Privatization: Political Independence

Removes political motives, allowing for independent business strategies.

Natural Monopoly

When it is more efficient to have one business providing a service.

Industries vital to a nations security

owned by governments to prevent outsiders owning them and exploiting the nation.

Strategic Industries

Industries vital to a nations security e.g. energy and water

Save jobs

Might be preferable to let the business lose money rather than lose employees

Contracting Out

Private sector given a chance to bid for services previously supplied by the public sector.

Generate Income

Sale of assets generates income for the government

Reduce Inefficiency

Public corporations often made losses, in the private sector they would have to cut costs, improve services and return profits for shareholders

Plenary

Complete the sentences below.