Untitled Notes

Understand the features of public corporations.
Understand the ownership, control, sources of finance, and use of profits for public corporations.
Understand the reasons for and against public ownership.
Understand the nature of, and reasons for, privatisation.

In many countries, certain business activities are managed by government-controlled organizations.
These organizations differ from privately owned firms and often serve public interests rather than profit maximization, providing services such as healthcare, transport, and education.
Public corporations can provide both public services (like the NHS in the UK) and commercial goods (like banking and energy).

Productivity: Rate at which goods are produced and the amount produced, especially concerning the work, time, and money needed to produce them.

The NWSC is 100% owned by the Ugandan government and aims to provide cost-effective, quality water and sewerage services.
Mission: "To sustainably and equitably provide cost-effective quality water and sewerage services to the delight of all stakeholders while conserving the environment."
Operation: Governed by a board accountable to a government minister.
Performance:
- Turnover in 2017: UGX 320 billion.
- Service Expansion: Increased coverage from 24 towns in 2011 to 218 towns currently.
- Growth in Account Holders: From 58,260 in 1998 to 530,000 in 2017.
- Employment: Over 2800 workers with improved productivity (from 36 to 6 staff required for 1000 connections).
Customer Service Standards: Commitment to quality service with 78% coverage and 90% customer satisfaction ratings from annual surveys.

Public Corporations: Business organizations owned and controlled by the state/government.

State-owned:
- The government owns public corporations and appoints their management, usually a board of directors.
- Government is also responsible for the policies of these corporations.
Created by Law:
- Public corporations originate from parliamentary acts defining their powers, duties, and governance clearly.
Incorporation:
- Public corporations are considered incorporated businesses, giving them a separate legal identity, allowing them to sue, be sued, and enter contracts under their own name.
State-funded:
- Funded primarily by taxpayers' money, government provides the necessary capital for public corporations.
- Assets and liabilities belong to the state, but corporations can also take loans and reuse revenue.
Public Services:
- Majority aim not for profit but for providing essential public services (examples include NHS, Air India).
Public Accountability:
- Required to submit annual reports to the government minister overseeing them and ultimately accountable to taxpayers.
- Profits, when made, are reinvested in the business or returned to the government.

Many public corporations have partial private ownership. For instance, the State Bank of India is roughly 60% government-owned.

The SNCF Group is France’s main passenger and freight transport provider, consisting of three enterprises.
SNCF Réseau: Government-owned railway company focused on maintaining the railway infrastructure.
Economic Performance: Revenues of €32,273 million in 2016 (up 2.8%) and a net profit of €567 million after an earlier net loss of €12,228 million.
Goals for Improvement: Initiatives include punctuality enhancements, fare clarity, and better accessibility for disabled users.

Avoid Wasteful Duplication:
- In industries like rail transport and utilities, having one service provider (natural monopoly) is more resource-efficient.
Control of Strategic Industries:
- Government control is essential for sectors vital for national security (e.g., energy and water supply).
Job Preservation:
- Public ownership can save jobs during company crises (e.g., Prestwick Airport’s acquisition saved numerous jobs).
Filling Market Gaps:
- Public corporations can provide services in areas with insufficient private sector engagement (e.g., education).
Serving Unprofitable Regions:
- Meeting the needs of remote or unprofitable areas where private sectors would not operate.

Cost to Government:
- Some public corporations report losses, leading to a taxpayer burden (e.g., SNCF’s losses).
Inefficiency:
- Often criticized for low productivity and poor service due to lack of competition and profit motivation.
Political Interference:
- Frequent changes in government policy can disrupt operations and planning.
Difficulties in Management:
- Large public corporations pose challenges in coordination and management due to their size and complexity.

Privatisation: Process of transferring public sector resources to the private sector.

Forms of Privatisation:
- Sale of public corporations (e.g., Telstra in Australia).
- Deregulation to foster private competition (e.g., UK communications market).
- Contracting out services to private firms.
- Selling government property.

Income Generation: Sale of assets enhances government revenue.
Efficiency Improvement: Private enterprises often improve efficiency through profit incentives.
Reduction of Political Influence: Private sector organizations are less susceptible to governmental political objectives.

Increasing trend toward airport privatisation (with examples from India and Brazil).
Efficiency Argument: Privatisation is expected to spur productivity and innovations in operations.

Involves extraction of raw materials (e.g., agriculture, fishing, forestry, mining).

Involves conversion of raw materials into finished goods (e.g., manufacturing, processing, construction).

Different sectors are interconnected, e.g., primary sector farming provides raw materials (grains) for bakers in secondary.

Significant shifts have occurred from the primary and secondary sectors toward tertiary over the past several decades, mainly due to advancements in technology and globalization.