Public transport enterprises in transition

Abstract

Since the mid-1970s many western governments have felt that liberalization of market forces through deregulation and better control or privatization of public enterprises would raise productivity and reduce inflation and government deficits. This paper reviews the recent literature on public enterprise and draws on the Canadian experience. It discusses the rationale for and concept of public enterprise and focuses on two reform proposals, accountability and privatization. To increase the degree of accountability would require, on the one hand, that the government establish a formal mandate and role for the enterprise and periodically provide formal government directives, and on the other hand, provide an appropriate evaluation framework. Government compensation for imposed public duties is addressed. Full or partial privatization should be pursued when the rationale for a public enterprise has been significantly altered. This applies particularly to public transport enterprises which are in competition with the private sector.