The public rational theory is one of the major theories which are being applied in the public private partnerships. The theory is founded on the assumptions that self interest overrides the human behavior. The theory makes conclusions that term defines humans as rational beings that seek to maximize their utility, and therefore tend to be inherently selfish. The theory describes the behaviors which relates to the bureaucrats, interest groups and the politicians.
In that respect, the proponents of the public choice theory argue that the government bodies are larger than they are expected to be. The idea which detracts from the need to achieve efficiency as the government’s resources are directed to the sectors, where they are not warranted and such resources will end up being misused. Considering the fact that public choice theory asserts any forms of failure by the government, it is difficult to see that it describes the shift of the government’s core functions to the private sector of the economy (Hodge et al 2005, pp, 36-89).
The ideas highlighted in this theory have in most part been increasingly influential in providing support to the legal frameworks, and provide a kind of intellectual support to the political reforms. The effects of such connotations are that the functions of the government should be cut down. This should be the case whereby the management functions of the government such as regulation and service delivery as well as policy advice, should be carried out separately and the aspect of service delivery should by all means be privatized by contracting it out.
The main criticisms raised against the public choice theory relates to behavior of consumption of the consumer, which supports the idea (Hodge et al 2005, pp, 36-89). In most applications, the ideas of the new public management have been viewed as theoretical as well as the practical efforts. These efforts are made to improve on the efficiency as well as the effectiveness of the government’s operations, through the establishment of the reforms, which are initiated by the neoclassical economics.
The acts of privatization of the public sector account for the various characteristics displayed by the new public management concept, and are empirically part of the new public management. The acts of privatization of the public sector are inline with the neoclassical economic theory. If the concepts of contracting as well as that of public private partnerships are to be taken up together as acts of privatization, their position forms part of the new management policy. This policy can be described in terms of political as well as economic terms (Australia Dept. of Finance and Administration, 2005, pp, 21-96).
Accountability, transparency and risk transfer Some of the common issues which have come as a result of the latest decade encounters with privatization measures, as well as public private partnerships are based in the aspect of establishing the most suitable means of governance. There are also issues in transparency as well as accountability of information. In some situations where the governments have resulted to exchange the financing of different public infrastructures, as well as project risk, they have established contracts which seem to reflect the shift in risk structure.
In such occasions the government only to come to terms that the public, via the media sources are not in agreement with the ideas of transfers. In such situations, efforts to finance public structures have led to some forms of expensive infrastructures. This is in considering the fact the private contractor will have been paid the premium for undertaking risks. In some other situations, the financial risk which is involved in the projects will be retransferred by utilizing contracts, which enable for some form of effective government underwriting for their cash flows (Grahovac, 2004, pp, 23-100).
The persons involved in the scrutinizing of these transactions will encounter difficulties to establish the accurate accountability arrangements, or even be with a different view on how such kind of arrangements ought to be. In such situations it can be concluded that the situation is exacerbated, by the existence of the commercial kind of confidence of the various contractual deals. The deficit in transparency strains those persons who are of the view that the government should at all times be held responsible, as far as the public funds are concerned.
The level of confidence can be understood from the angle of the private sector organizations, which are incorporated in establishing accountability arrangements as well as subject to competition (Hodge et al 2005, pp, 36-89). Problems in accountability in South Africa have come up in situations where the services are contracted by the government to the non profit sector, where the regulations governing the provision of services differ from the traditional settings of the public as well as the private sector arrangements.
The constraints then which arise between the various organizational forms, as well as operational and governance structures in the various sectors continue to imply that any forms of accountability could result. These problems have resulted to most government agencies seeming to sideline the simpler ways of conducting bilateral contracts, as well as the structuring of the lead companies in the non profit sector of the economy.
Given that partnerships in the side of networking as well as collaborations comes up as a means of topping up the resources to the general society, the form of traditional legal framework of contracting tend to be insufficient in meeting the intended needs (Hodge et al 2005, pp, 36-89). As pointed out in (Staff et al 2006, pp, 12-99) these forms of arrangements demands that they are carried out after a careful assessment is made on the interests of the various organizations involved.