The Political Economy of Public-Private Partnership in Social Welfare: The Case of Hong Kong

After the 1970's Energy Crisis, the New Right ideology, which was composed of neo-liberalism and neo-conservatism, was widely accepted in the western welfare state to downsize the scope of state and reallocate the welfare responsibility among state, society, family and individual. Public Private Partnerships, or PPP, has become a crucial issue in welfare governance. State has transformed to an enabler rather than a provider in welfare provision. It purchases welfare services from NGOs to serve citizens within the new financial arrangement and regulatory framework in accordance with the theory of New Public Management.

Hong Kong is a typical case of use of PPP in welfare services. Since 1970s, more than 90% of welfare services have been delivered by NGOs with substantial financial support of government. Given annual substantial public expenditure invested in NGOs, colonial Hong Kong government has repeatedly emphasized the importance of accountability in its White Papers on Social Welfare.

In the face of several political-economic problems, the colonial government of Hong Kong launched social welfare subvention reform in the mid-1990s based on the tenets of New Public Management. Accountability and customer-oriented services are the focus of new Lump Sum Grant Subvention System, comprising Lump Sum Grant Subvention, Competitive Bidding, and Service Performance Monitoring System. It is the first time that government formulates a policy framework to carry out accountability in PPP in Hong Kong social welfare.

Employing the political economy theoretical framework, this study critically analyze the PPP in Hong Kong social welfare service under New Public Management welfare governance model by examining how NGOs' access to power and resource for survival and development as well as playing their roles in the new subvention system. The study reveals that in current PPP in Hong Kong social welfare, the power is not being shared equally. Government possesses power over resource allocation, service standard setting, and so on. The existing accountability arrangement in PPP is partial and incomplete. NGOs and social workers are being kept constantly on the run due to shirking resources and increasing accountability expectation.