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The efficiency debate
Business File Special Survey No. 56 on the provision of private services June 2005 -- In the immediate aftermath of WWII, generally perceived wisdom was that the state should be the core provider of pensions, health care and higher education. The last two decades, however, have seen a drift to a more mixed system with the state providing the basics and the individual, who wants more, buying the service from private providers. It begs many questions. Are state services sufficient? Are private services better? Are state services efficient? Is it fair that some should get more, simply because they can afford more? Greater prosperity has brought with it higher expectations on the part of Greek citizens. The last PASOK and the present New Democracy governments have sought to fulfil them through a combination of policies that promote wealth generation and, at the same time, reduce taxation. The corollary should be that the state spends less, however, so far, this has not happened. The Greek budget deficit has risen to a level twice that considered compatible with its membership of the Eurozone, with the result that Greece has been placed under surveillance by the budgetary authorities in Brussels. In future, the state will have less to spend on the provision of the improved services that citizens have come to demand. Individuals will have to pay more simply sustain present levels of services and yet again more if they want improvements. The New Democracy government is sympathetic to the notion of a mixed approach but it faces entrenched opposition from citizens who have grown used to the state footing the bill. Then there is the matter of occupational pensions. In Greece at the moment, these are known as auxiliary pensions and they carry a state guarantee. Legislation was introduced in 2002 that allowed the creation of fully funded supplementary schemes in the private sector but the way in which it was couched effectively excluded private insurers from offering their ready-made products. The insurance industry believes that it should get a look in here and, as well, that the state should offer tax relief that would promote the growth of private individual pension plans. The government upgraded a number of state hospitals ahead of the Olympic Games. There are now tentative overtures being made towards private health care companies being allowed to use these against payment of fees which in turn the state could use to further upgrade the services in the public wards. The ND government is also promoting public private partnership schemes in which private investors would finance hospital infrastructure, which the state would lease in which to provide its medical services. Eventually this concept could even extend to private hospital services such as cleaning, maintenance, catering, laundry and, provided the standards were ensured, nurses hired through private agencies. In the sector of education the debate is even more polarised. Greece has world-class academics but universities are the preserve of the state with faculty remunerated as public servants. Pay and working conditions are poor and there is little incentive, except personal, for professors to do any more work than necessary. The law allows for private tertiary education facilities but the degrees they award are not recognised by the state. Some are as good or better than many state institutions. Greece is the only member of the EU-25 without a quality standards mechanism to evaluate its higher educational institutions. The present government has drafted legislation to create one but it, too, has become caught up in another ideological debate as to whether the conservatives truly seek to improve educational standards or simply churn out graduate fodder for industry. These and other issues are discussed in Anything you can do, I can do better. I can do anything better than you, Business File Special Survey No. 56 on private services published in June 2005.
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