مثالی از حسابداری خلاق در بخش دولتی : تامین مالی خصوصی زیرساخت ها در اسپانیا

This paper analyses some proposals for private financing of public works having emerged in Spain in recent years. We show that all the new financing methods assessed are incorrectly named as “private”, for the payments are finally made by the Government by means of its budgetary resources. A deferral of accounting and budgetary recognition of these transactions, together with a false disclosure in financial statements of the debt connected with the projects, are the main reporting consequences of the new funding methods. In short, it is a clear example of “creative accounting” with the aim of meeting the convergence criteria imposed by the European Union.

Most of infrastructures have been financed in Spain through the public budget until the middle of the nineties. Concessions and private financing have been scarcely used. However, private financing of new infrastructures (private finance initiative, PFI, or more recently named also as public–private partnership, PPP) is growing in recent years. These are the main reasons for reducing the use of budgetary resources: • European Monetary Union (EMU) requirements concerning government deficit and debt limit the amounts that public entities can borrow to finance capital assets. According to the 1996 Stability and Growth Agreement, European Governments must reach a balanced budget in 2001, namely, a zero deficit. This target must be achieved in spite of the social pressure for more and best public services and benefits, making almost impossible for the public sector to reduce current expenses and thus generate savings. • Important investment funds are searching in the financial markets for safe and steady investments. • Rigidity of traditional Public Administration brings about high management inefficiencies. • Financial earnings are normally improved by companies’ flexibility and management skills. Investment priorities, as well as verification of public works profitability and feasibility can be enhanced through the private business requirements if enough financial rate of return is achieved. Furthermore, the infrastructures still remain in Spain quite below the most advanced countries’ equipments in the European Union (EU). It is generally known that endowment for infrastructures is one of the most important conditions for economic growth in any country. For example, the 2005–2020 Infrastructures and Transports Strategic Plan of the Spanish Ministry of Development highlights that, according to recent studies, the cumulative marginal productivity of the public capital is almost of 1.5, i.e., an increase of €1 in public capital investment leads, in the long term, to a GDP increase of almost €1.5. All the arguments set out here lead to the conclusion that lots of imagination are required when searching for new methods to fund public investments. On the one hand, a high quality in public services must be accomplished, and on the other hand, a rigid budgetary discipline has to be achieved. Accordingly, new funding methods have appeared in which private partners are involved in the development of public investment projects (PFI). Our main hypothesis is that many countries have used PFIs to defer payment and this way control their deficits and debt without cutting investments in infrastructures and public services. Lack of a clear accounting standards on how to report PFIs has allowed governments to do it. The following pages analyse some proposals for private financing of public works having emerged in Spain in recent years. After assessing all the new financing methods, we find that they are incorrectly named as “private”, for the payments are finally made by the Government by means of its budgetary resources. A deferral of accounting and budgetary recognition of these transactions and a wrong disclosure in financial statements of the debt connected with the projects are the main reporting consequences of the new funding methods. In short, it is a clear example of “creative accounting” with the aim of meeting the convergence criteria imposed by the EU. The remaining of the paper is organized as follows. Section 2 presents the theoretical background. Section 3 describes the main PPP contracts’ characteristics. Section 4 shows the opportunities for using new financing methods of public works in Spain. In Section 5 we analyse different forms of private financing of infrastructures and their implications for government deficit and debt. Section 6 summarizes and presents conclusions.

When PFIs described in this paper are used, it is the Government – and therefore taxpayers – but not users, who finally pay the public works. A common characteristic of PFI is that private corporations construct and they (where appropriate) also operate the public work. Business revenues come either from official aids or from periodical payments for construction, maintenance and operation of infrastructures, the amount of which are linked to its actual use. Deferral of payments and instalment plans, as well as borrowing decentralization, have made possible for Spanish Public Administrations, as well as other European governments, to bid and contract new public works while fitting EMU requirements without a dramatic reduction in public investment. However, PFI implementation has just been, at bottom, a financial make-up. In other words, it has been a clear example of public sector “creative accounting”. As Hart (2003) points out, policy makers argue that PPPs are good because the private sector is a cheaper source of financing than the public sector. This reasoning is strange since it is hard to imagine an agent that is more able to borrow than the Government through its taxation powers. It is important to say, according to PWC (2005), that all these PFIs are, in general, more expensive than traditional debt operations. As Hurst and Reeves (2004) show, PPPs implemented in Ireland have not resulted in significant innovations, failing to provide value for money. PFIs are more complex operations and difficult to analyse, and sometimes they are extremely sophisticated from a legal perspective. However, we must bear in mind that governments must keep on investing on social centres, road infrastructures, water-treatment plants, etc., and therefore the first point must be whether the investment is feasible from a traditional budgetary point of view. In case it is not viable, other alternatives will be considered (price subsidies, refundable advances, syndicated loans, subsidiary loans, exceptional financial aids, among others). These alternatives should have the appropriate budgetary surveillance, so as to accurately control the volume of operations the government is able to finance. In the same way that limits upon future expenses prevent current politicians from imposing excessive financial burdens to future politicians, PFI use should be justified from a budgetary and economic point of view. The theoretical underpinnings of our assessment of PFI is twofold. On the one hand, according to the property rights theory, a key aspect in PFI is the appropriate risk sharing between private and public sector in the contract. If adequate risk is not shifted to the private sector, then projects become quasi public, but with the funding removed from the government's balance sheet. If this is the case, projects become more expensive in the long run, while politicians have been able to present a “good” financial situation in the short run. On the other hand, if we take into account the Public Choice theory, as we said before, taxpayers overestimate benefits of current expenditures and underestimate future tax burden. Thus, PFIs allow incumbents to create infrastructures, with an eye on winning the next elections. However, the sad part of the story is that these PFIs are more expensive in the long run than them being financed through the traditional contracts. In the search for imaginative solutions, we would like to comment on a recent and interesting practice used by the Austrian Government, that could be used by other European public entities. The government establishes a new real estate company (Bundesimmobiliengesellschaft, BIG), which is 100% owned by the federal State. Most of the public buildings (schools, universities, offices, etc.) have been transferred to this company for its management and maintenance. BIG has financed this transfer by issuing securities and contracting loans. Most of the buildings transferred to BIG are subsequently rented back to the government units which previously occupied these buildings, by individual contracts based on market estimates. The BIG continues to employ all State civil servants who previously managed the maintenance of these buildings. Their civil servant status has been maintained. As far as government accounts are concerned, this transfer has raised three questions: (i) whether BIG is an institutional unit in its own right or an ancillary unit of general government, (ii) whether BIG had to be classified in the sector ‘general government’ or in the sector ‘non-financial corporations’, and (iii) whether the property transfer from the government to BIG should be considered as a ‘sale of property’ (improving the deficit) or as ‘other volume changes in financial assets/changes in classification and structure’ (neutral for the measurement of deficit). Eurostat decision is as follows in this respect (see Eurostat 31 January 2002 News Release no. 15/2002): BIG is an institutional unit in its own right, should be classified in the non-financial corporations sector, and BIG debt is not to be considered as part of government debt. Besides, the purpose of the transfer is to improve public management of real estate by rationalisation of buildings use, as well as management costs reduction. Moreover, because of the size of the transaction, it was not possible to organise a normal market sale of the property on the Austrian market. In addition, Austrian State wanted to maintain indirectly the ownership of the transferred property via the State owned company. For these reasons, the transfer of property was arranged bilaterally between the Austrian State and BIG. Considering these aspects, this transfer should not be treated as a market sale of real estate property in the sense of ESA 95. In consequence, the assets transfer to BIG has no impact on government deficit/surplus. To sum up, PPPs are not a miracle solution and need long time to produce visible results. Governments should allocate the risk to the party that is the “least cost avoider”, i.e., the party best suited to control and/or bear the risk. Without this approach, the public sector runs the risk of using PPPs for the wrong reasons, for example to make up public accounts in the short-term while worsening the long-term financial sustainability.