Reforming public services
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According to international experience, governments should take the lead role in providing basic public goods and act as the last guarantee for public service delivery in case of "market malfunction" or "a third party/volunteer malfunction".
The market and private sector are indispensable forces in providing social services because their high efficiency and flexibility mean they can adapt to the huge and varied service demands of the public.
Due to information asymmetry, market malfunction and rising income inequality, market competition mechanisms alone cannot fully safeguard the interests of the general public. Reasonable relations among the government, market, the public and PSUs should be promoted according to the specific socioeconomic environment in which services are provided.
Second, an effective model for the market to provide basic public services should be explored. Government-funded public service providers are apt to form monopolies and they usually do not care for efficiency and public profit. Therefore, parts of the public service functions of the government could be shifted to market players by bidding, purchasing, leasing, franchising and government infusion.
The operational public service market could be opened up and obstacles for the entry of social capital could be removed to create a market environment for all kinds of investors to compete with each other in a fair and orderly manner.
This could not only break the monopoly of public goods providers and mitigate shortages in the supply of public services, but also improve the efficiency of basic public service delivery by applying pressure on the fiscally funded items of the same type of public services.
Third, partnership between public service units and social organizations could be established to provide basic public services.
Currently, social organizations, including charity federations, foundations and non-government and non-enterprise units, cover various sectors, regions and fields. With non-profit as their basic feature and public welfare as their main purpose, they have done a lot of work in alleviating poverty, caring for the old and the young, helping retrenched workers find new jobs, protecting the environment, and in the fields of education and training, public hygiene and healthcare.
In addition, they have played an important role in basic public service delivery wherever government-funded public service units find it difficult to function.
Therefore, through tax and fee reduction and financial transfers, the government could explore more ways to steer and encourage social organizations to participate more extensively in delivering basic public services.
The author is president of the China Institute for Reform and Development.
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