The OPS model: A personal goal for Sweden and our common future
Using the OPS model to finance the upgrading of the Malmbanan is not only an expensive and ineffective solution – it is close to a betrayal of Sweden's future. When the state has the power to create the money required for investment, without interest expense at all, it appears incomprehensible to give away the control of our railways to private interests.
A historical mistake repeated
The Social Democrats' support for SD's proposal to upgrade the Malmbanan through a private-public consortium is frighteningly reminiscent of the fiasco we saw with the Arlandabanan. There, the right of use ended up with private actors, which led to expensive station fees and higher ticket prices. The result? Worse accessibility and a distorted system where consumers had to foot the bill while the profit landed with capital owners.
Why pay more when the state can do it cheaper?
The OPS model means that if sat with private actors borrow money, we pay tribute to the private banks. The financing of the Malmbanan will be largely free if the state creates money. It gets really dangerous if the actors borrow money abroad. When the profit interest also becomes controlling, the social benefit is lost. This is not only ineffective but downright harmful. For every penny that goes to private profits and higher interest rates, we lose resources that could have been used to develop our infrastructure and meet the climate goals.
The state can create the money
With Modern Monetary Theory (MMT) we know that the state can finance the necessary investments by creating money. This would not only be cheaper but also give us full control over our resources. Using the OPS model in this situation is like giving away the keys to our home and at the same time paying rent to stay.
A policy for the future
The left party is right: we need to take back control of our infrastructure. Privatizing railways and using the PPP model is not only short-sighted – it is a historic mistake. Sweden needs to invest in its future by using the state's unique opportunities to finance large projects without giving up control or burdening taxpayers with unnecessary costs.
It is time to say no to privatization and yes to a society where we jointly control our resources to build a sustainable and equal future.
How has it turned out in the UK – there are many examples of PPPs there…
### Expensive and controversial public-private partnerships (PPPs) and their disadvantages
**UK:**
1. **Private Finance Initiative (PFI):**
– PFI is a system where private companies finance, build and maintain public projects, such as schools, hospitals and roads, while the state pays back over decades.
– **Example:**
– The construction of new hospitals, where the Royal London Hospital is a well-known PFI deal.
– **Disadvantages:**
– **High costs:** The state often pays many times more than if the project had been publicly financed.
– **Low flexibility:** Contracts can span decades and lack adaptability.
– **Risk transfer:** The claimed benefits of transferring risk to private actors are rarely met.
2. **The Carillion Collapse (2018):**
– Carillion was one of the largest players in PFI projects and collapsed under its debt burden.
– **Disadvantages:**
– Public services were hit hard, with projects delayed or abandoned.
– Taxpayers had to cover the costs.
—
**Sweden:**
1. **New Karolinska Hospital (NKS):**
– This hospital in Stockholm was built under a PPP agreement.
– **Disadvantages:**
– **Scandals:** The cost of the hospital became one of the highest per square meter in the world for healthcare buildings.
– **Poor contract terms:** Maintenance and operation became expensive, with limitations in state control.
– **Quality issues:** Despite enormous costs, problems with patient flows and functionality were reported.
2. **Västlänken in Gothenburg:**
– A tunnel project with parts financed through PPP-like models.
– **Disadvantages:**
– Higher final costs than budgeted.
– Criticism of lack of transparency and economic inefficiency.
—
**Rest of the world:**
1. **Canada:**
– **Highway 407 (Ontario):**
– A toll motorway that was built and operated under a PPP.
– **Disadvantages:**
– Fees have increased sharply, and citizens are paying far more than expected.
– Private actors have received disproportionately large profits.
2. **India:**
– **Airport projects in Delhi and Mumbai:**
– Private actors handle the construction and operation of the airports under PPP models.
– **Disadvantages:**
– High user fees that affect consumers.
– Criticism that private companies receive too large a share of the profits while the risks often remain for the state.
3. **United States:**
– **Chicago Skyway:**
– A private company took over the operation of the highway for 99 years for a large one-time payment.
– **Disadvantages:**
– User fees rose sharply, which created political and social resistance.
—
### Summary of disadvantages:
1. **Increased costs:**
– PPPs often lead to higher costs for taxpayers than traditional public financing.
2. **Long-term commitments:**
– Long contracts (sometimes up to 99 years) make it difficult for the state to adjust the terms to changing needs.
3. **Reduced control:**
– Private actors often gain disproportionate power over critical public services.
4. **Flaws in risk transfer:**
– Theoretically, the risk is transferred to private actors, but in practice, responsibility often falls back on the state in the event of problems.
5. **Social consequences:**
– High fees or degraded services disproportionately affect low- and middle-income earners.
Most PPP projects show significant disadvantages, especially when they are not managed with transparency and long-term societal benefit in mind. If the state has a fiat currency where it can create money itself, it should never choose PPP.