The management of urban services - SAGE Journals

SERVICE PROVISION IN CITIES

The management of urban services in the city of Buenos Aires Pedro Pírez Dr. Pírez is a researcher with CONICET – Consejo Nacional de Investigaciones Científicas y Técnicas (the National Council for Scientific and Technical Research) and also with the Centro de Estudios Avanzados de la Universidad de Buenos Aires (CEA-UBA). Address: Billinghurst 897, 3ºA, (1174) Buenos Aires, Argentina; tel/fax: (54) 1 862 3336; e-mail: [email protected]

SUMMARY: This paper reviews the changes in the management of urban services in Buenos Aires over the last 100 years and discusses their implications for the quality of service provision in recent decades and for the future. It identifies three distinct stages. The first, decentralized private management, was evident in the late nineteenth century when provision for infrastructure and services was of a quality comparable to cities in Europe at that time. But, over time, municipal regulation and control of private enterprises became instruments in the partisan struggle for power. A crisis in service provision and an increasingly interventionist government led to the second stage, centralized public sector management, but this created a growing gap between local users and federally controlled utilities. When this coincided with economic decline, it led to poorer quality services and increasing numbers of unserved inhabitants. The third stage, introduced in 1989, was the centralized private management model but this failed to address a weakness of the earlier models, namely the lack of political influence and representation for users. In addition, the companies responsible for service provision assumed no responsibility for those people who were unable to afford the prices they charged.

I. URBAN SERVICES AND THE QUALITY OF LIFE IN METROPOLITAN BUENOS AIRES

1. In the last census of the nineteenth century held in 1895, the city’s population was 663,854. 2. The 1994 reform of the National Constitution paved the way for the formation of an autonomous government for the Federal Capital, which became operational in 1996 with the election of the head of the city government.

FOUNDED IN THE sixteenth century, Buenos Aires experienced a rapid and sustained growth in its population during the nineteenth century, fuelled by European migrations. By the end of the century, the city had expanded to cover more than 200 square kilometres with a population of 700,000.(1) The city was established as Argentina’s Federal Capital in 1880 and its administration has been dependent on the federal executive ever since.(2) At this time, the city served as a commercial and administrative centre, and as the seat of power for the owners of the country’s natural assets (the productive lands of the Pampa Húmeda) and incipient industries. The emergence of Buenos Aires as a prominent city began on the basis of its demographic and territorial expansion, and of the quality and extensive coverage of its infrastructure and services. As the city’s population reached 1 million at the beginning of

Environment and Urbanization, Vol. 10, No. 2, October 1998 209

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3. These municipalities – 19 in total at the end of 1996, and 24 today – are referred to as the Gran Buenos Aires (GBA).

4. Initially, these were taxicolectivos which had fixed routes and fares. They were subsequently replaced by the characteristic small buses of Buenos Aires. 5. Pírez, Pedro (1994), Buenos Aires metropolitana. Política y gestión de la ciudad, Centro Editor de América Latina- CENTRO, Buenos Aires, page 16.

6. See reference 5, page 36.

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the twentieth century, its geographic expansion exceeded the territorial boundaries of the Federal Capital and spread into the municipalities of the province of Buenos Aires.(3) By the mid1920s, the population of the emerging metropolis was over 2 million (see Table 1). At the end of the 1940s, the population of the Federal Capital had stabilized just below its present level of 3 million. With around 2 million people living in municipalities surrounding the Federal Capital, a total of 5 million people inhabited the metropolitan area. The population of Buenos Aires that was outside the Federal Capital maintained a high rate of growth and, by the beginning of the 1960s, a third of Argentina’s total population lived within Greater Buenos Aires. By 1991, the Buenos Aires Metropolitan Area had a population of 11 million. In its modern conformation (post-1880), the level of infrastructure and services offered in Buenos Aires was of comparable quality to that in the major cities of the then developed world. The first public gas utility was established in 1856 and, by 1910, it was serving most of the Federal Capital. In 1887, electricity generation was established. In 1907, the Compañía Alemana Transatlántica de Electricidad (the German Transatlantic Electricity Company), obtained a 50-year concession from the municipality. From 1898 onwards, electric trams began replacing animal-drawn vehicles. In the second half of the nineteenth century, the railway network for the future metropolitan city was laid down almost in its entirety. The first underground train line took three years to build, starting in 1911. Buses began running in the mid-1920s and, by 1928, they were already facing competition from the colectivos.(4) In 1878, telephones were introduced and a decade later they had expanded into a modestly sized network. In 1905, 72.5 per cent of the population had access to drinking water and, by 1938, the state run Obras Sanitarias de la Nación (Sanitary Works of the Nation) was fully operational throughout the city, supplying 2.4 million inhabitants with 400 litres of water per head, per day.(5) The city’s major construction works – the buildings of the municipality of Buenos Aires, the National Congress and the Palace of Justice, the port of Madero, the Abasto Market, the Avenida de Mayo, the Zoological Gardens, the Botánico and the Colón Theatre – were also built during this period. After 1960, however, census data indicate that the provision of infrastructure and services failed to keep up with the city’s growth rate, particularly in relation to its territorial expansion. A useful indicator is the distribution of water and connections to the sewage system. In 1975, all the inhabitants of the Federal Capital, and of one or two neighbouring municipalities, were connected to the water network. However, the network did not serve more than a third of the metropolitan population. In the case of the sewage system, two-thirds of the metropolitan population did not have connections.(6) By the mid-1970s, about 90,000 inhabitants of the Federal Capital, and as many as 500,000 in the whole metropolitan region, lived in shanty accommodation. Despite successive eradication programmes, there were between 450,000 and, according to some estimates, as

Environment and Urbanization, Vol. 10, No. 2, October 1998

91,725

781,617

TOTAL (CMBA)

20

SOURCE: Censos de Población y Vivienda, INDEC.

Percent of national population in CMBA

3,954,911

663,854

Capital Federal

Total for Argentina

117,763

Gran Buenos Aires

26

7,885,237

2,034,814

1,576,597

458,217

30

15,893,827

4,723,918

2,982,580

1,741,338

34

20,013,793

6,739,045

2,966,634

3,772,411

247,656

149,958

58,348

188,065

92,302

317,783

341,920

59,338

100,146

272,116

449,824

401,738

167,160

263,391 12,100

16,691

90,086

44,666

123,132

110,344

15,101

19,865

127,880

375,428

98,471

46,413

Vicente Lopez

8,978

Tigre

19,092

24,660

38,783

24,624

4,836

6,990

59,874

244,473

17,935

12,726

41,707 278,751

Tres de Febrero

9,912

11,324

San Fernando

San Isidro

7,880

12,048

Quilmes

3,278

Moreno

Moron

3,595

Merlo

Lomas de Zamora

17,232

4,498

La Matanza

Lanus

5,168

General Sarmiento

269,514

10,480

36

23,364,431

8,352,900

2,972,453

5,380,447

285,178

313,460

152,335

250,008

119,565

355,265

485,983

114,041

188,868

410,806

466,960

659,193

315,457

360,573

98,446

5,174

7,047

General San Martin

50,852

2,491

Florencio Varela

69,730

337,538 111,150

19,068

326,531

1970 245,017

5,047

273,839

1960 136,924

Esteban Echeverria

144,739

39,700

1947

Number of inhabitants for these different years

127,740

8,574

Avellaneda

14,094

1914

Berazategui

5,738

1895

Almirante Brown

Municipality

Table 1: Changes in the Population of Buenos Aires Metropolis, 1895-1991 1980

36

27,064,000

9,746,004

2,922,829

6,823,175

291,072

345,424

206,349

289,170

133,624

446,587

598,420

194,440

292,587

510,130

465,454

949,566

502,926

365,625

173,452

188,923

201,862

334,145

331,913

1991

34

32,370,298

10,881,381

2,955,002

7,926,379

289,005

349,221

255,041

298,540

142,925

509,449

641,416

287,295

385,821

572,318

1,120,225

650,285

403,515

255,462

273,779

244,796

338,581

443,251



FEEDBACK 7. See reference 5, page 27.

8. See reference 5.

9. See Brunstein, Fernando et al. (1988), “Saneamiento hídrico en el Gran Buenos Aires. Límite de la precariedad” in Brunstein, Fernando et al. (1988), Crisis y servicios públicos, CEUR, Buenos Aires, pages 13 and 16. 10. Between the mid-1970s and 1993, there was a decline in GDP per person in the level of investment and salaries – see Azpiazu, Daniel and Hugo Nochteff (1994),”Subdesarrollo y hegemonía neoconservadora. Veinte años no es nada?” in Azpiazu, Daniel and Hugo Nochteff (editors), El desarrollo ausente, Tesis-Norma, Buenos Aires. 11. See reference 5, chapter 6.

many as 700,000 shanty town inhabitants in 1970.(7) Having got to the stage, by the middle of the twentieth century, where Buenos Aires had much to offer in terms of urban advantages, it appears that the city experienced a loss of momentum before falling into decline in the following decades. During the 1980s, the breakdown of urban infrastructure and services, in terms of coverage but particularly in terms of quality, brought the city to the verge of an urban crisis.(8) The decline of the metropolitan region was more acute, paradoxically, than across the rest of national society. For example, the proportion of the national population who did not have access to water and sewage networks (34 per cent and 63 per cent, respectively) was lower than among the city dwellers (between 4045 per cent and 65-70 per cent, respectively).(9) There is no doubt that a correlation can be found between the state of the national economy and the origins of this decline. The country’s economy as a whole had been in decline, particularly since the mid-1970s when the situation had become considerably exacerbated.(10) Even prior to the 1970s, the city’s public output reflected the state of the national economy and the absence of policies of intervention (as shown in the literature on the populations of shanty towns). However, this does not explain why the city suffered a more rapid decline than the rest of the country and, in particular, the country’s other main cities. One possible hypothesis for this could have been the absence of any public employee with overall responsibility for the city; at the metropolitan level, there was a lack of authority or coordination (except for the management of solid waste collection).(11) Within the Federal Capital, at the heart of the metropolitan region, the local executive was contingent on the federal government which, up to 1996, resulted in the subordination of urban management to the priorities and visions of the central government. At a very general level, this hypothesis offers a possible interpretation of the unfolding process in Buenos Aires. However, it does not explain it. It is the aim of this paper, therefore, to provide a more useful interpretation of these events by focusing, in particular, on the management of the principal urban services.

II. URBAN SERVICES IN BUENOS AIRES FROM AN HISTORICAL perspective, the analysis of urban utilities in Buenos Aires reveals three predominant models of management. In each case there were two determining factors: the degree of formal responsibility and intervention by the state (central or decentralized), and its public or private orientation.

a. Decentralized-Private Management Towards the end of the nineteenth century, service providers in Buenos Aires were productive enterprises run by private, mainly foreign owned, companies under municipal jurisdiction.

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SERVICE PROVISION IN CITIES 12. Bastos, Carlos M. and Manuel A. Abdala (1993), Transformación del sector eléctrico argentino, Editorial Atlantica, Santiago de Chile; also Cafasse, José and Enrique Recchi (1976), Economía energética argentina, Don Bosco, Buenos Aires; Spinadel, E. (1992), “Generación y distribución de la energía eléctrica en el Area Metropolitana de Buenos Aires” and Miganne, Victor O., (1992), “El servicio público de gas en el Area Metropolitana de Buenos Aires” in Proceedings of the Metropolitan Areas: network dynamics and sustainable development, Universidad de Buenos Aires, Buenos Aires; and García Heras, Raúl (1994), Transportes, negocios y política. La Companía Anglo Argentina de Tranvías. 1876-1981, Sudamericana, Buenos Aires. 13. Pírez, Pedro (1995), “Actores sociales y gestión de la ciudad” in Ciudades, Red Nacional de Investigación Urbana Vol.7, No.28, October-December, México. 14. See reference 12, Cafasse and Recchi (1976). 15. The popularly elected municipal assembly was not always operational. In the 114 years between the time when the first assembly was held, when the city was established as the federal capital, and 1997, the elected assembly only ran for 61 years (1883-1901, 1908-1915, 19191941, 1958-1966, 1973-1976 and 1983-1997). The other years either had designated commissions or military governments. 16. See the analysis of relations between the Anglo Argentina de Tranvías company and the municipality of Buenos Aires in García Heras (1994) (see reference 12). 17. See Luna, F. (1986), Alvear, Hyspamérica, Buenos Aires; see also reference 12, García Heras (1994).

Over time, these activities were increasingly regulated as municipal concessions. This was the case, for example, for the public transport services (trams, trains, the underground and omnibuses), electricity and gas.(12) A notable exception was the distribution of water, for which the federal government assumed responsibility after 1880. This model of service management may be described as decentralized-private: the municipal government of the Federal Capital had overall responsibility for the services, and production was achieved by private capitalist companies. The three exponents of this model were the municipal government, the service providers and the service users. Each can be identified with the principles underpinning the construction and growth of the city: power, profit and necessity.(13) Relations between them were regulated by municipal norms, such as the 1907 decree concerning the electricity concession to the Companía Alemana Transatlantica de Electricidad (German Transatlantic Electricity Company).(14) The municipality, which conceded the management of services to private enterprise, acquired a complex role based on a heterogeneous alliance of individuals and institutions: the municipal executive; the collective institution of local political representation (the municipal assembly)(15) and its individual members (the city councillors) who were occasionally grouped together in special committees to address particular issues; and the locally based technical institutions (the municipal bureaucracy and other specially convened committees). Various political roles were defined at each level, as well as the techniques of regulation and control. These were matters in which the executive and the local assembly participated in equal measure. The enforcement of regulation was based on municipal by-laws, as was the case, for example, with the modification of tariffs.(16) As service concessionaires, private companies were responsible for the construction of infrastructure and the management of services, from planning and investment to customer service. Service users were the companies’ clients, both as consumers and local citizens. As such, the logic of necessity manifested itself on two fronts: as commercial relations with the companies, with which they had direct links (market demand), and indirectly as citizens in relation to the local government which regulated and controlled the companies (political demand). Users were politically bound as inhabitants and voters of the city (citizen-users). Companies had direct links with the municipal government. They also had links with the municipal executive through their relations with the federal government. The electricity and transport companies, for example, are known to have had links of this kind, as well as being subject to lobbying pressures from foreign governments (notably Great Britain) which favoured their own companies.(17) Companies also had direct links with the municipal assembly although, in general, the assembly tended to have control over them and was in charge of the interests of the users. Local citizenship could be fully exercised by the inhabitants


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18. See reference 12, García Herras (1994). 19. On relations of accumulation and representation see Pírez, Pedro (1991), Municipio, necesidades sociales y política local, Grupo Editor de América Latina, Buenos Aires; also reference 13. 20. See reference 12, Cafasse and Recchi (1976); also reference 17, Luna (1986). 21. Agreement was reached with the sanction of ordinances 8028 and 8029 of 1936. 22. According to Passalaqua: “This affair became paradigmatic and municipal government became synonymous with corruption” - see Passalaqua, E. (1988), “Notas sobre participación política y partidos políticos en el municipio” in Herzer, H. and P.Pírez (editors) Gobierno de la ciudad y crisis en la Argentina, GEL, Buenos Aires, page 68. Something similar occurred at the beginning of the 1990s when the council renewed the contract of one of the waste collection companies.

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of the city in relation to the services to which they had access. These were local matters for which the municipal government had responsibility. Political parties participated in them as arbitrators or channels of local political representation (in the municipal assembly). One of the purposes of this form of political representation was to enhance conditions of equality between the companies and users, and compensate for the social and economic disparity which, until then, had prevailed between them. The inhabitants of the city were user-citizens in relation to the companies and the state. As such, they were seen not only as consumers but as political actors. Their interests and needs were formally upheld and they were not merely treated as holders of institutionally defined rights and obligations. Hence, it was possible to incorporate “the general interest” into local citizenship. During the 1920s and 1930s, for example, the municipal assemblies, acting under pressure from opposition parties, played a decisive role in controlling companies and restricting their freedom of action, in spite of the decisions of the local exe c u t i v e . (18) The nature of these political relations, however, transformed services from the components of a representative relationship into the pre-conditions for the political accumulation of power.(19) Hence, service management was at risk of being subordinated to the divisive logic of partisan politics. Depending on the circumstances, this could swing in favour either of the companies or of the users. Therefore, regulation and control could be used as instruments in the partisan struggle for power. A striking example of this was the way in which decisions on tariffs were frequently subordinated to electoral strategies. During these years, the subordination of service management to the partisan accumulation of power became a characteristic of the municipal assembly. One of the most significant events was the scandalous renewal of electricity concessions in 1936 which favoured the companies to the detriment of users’ interests and the rights of the municipality.(20) Concessionaire companies reached an agreement with the national executive and, accordingly, with its delegate, the municipal executive. To do so, they needed the consent of the municipal assembly. However, it was clear that several councillors had been paid-off in order to secure this approval;(21) also that the companies themselves had drafted the presentations that were made during the sessions which were held, and that the Radical Party had received funds to finance the next presidential election, in exchange for its members’ votes in support of the companies. These events tarnished the reputation of the municipality and, especially, the municipal assembly.(22) The fact that many companies had high levels of foreign capital seems to have contributed to a style of management that was often dissociated from local necessities. For example, financial decisions often hinged on events which had a bearing on the companies’ international headquarters; during the two World Wars, for instance, this was exemplified by a collapse in investment.



23. Luna refers to the influence of the electricity companies on the press, giving them considerable influence over public opinion - see reference 17, Luna (1986).

In the long run, it is important to note that this subjugation to a logic of partisan political accumulation could result in users’ hostility as the quality and reliability of services became compromised due to the companies’ inability to take into account the actual operating and financing conditions. Private companies were responsible for the provision of services while state organizations determined policy, the planning framework and had overall control. However, this formal distribution of responsibilities could not ensure a complementary relationship between the two parties, mainly because of the subordination of management to political accumulation, and the potent, social, economic and political influence of the companies.(23) In general, it seems that state bodies failed to carry out their public duties satisfactorily. This was as much the result of the lack of real control as to the subordination (“politicization”) of service management. During the 1940s, two converging factors led to the nationalization of services. The first was the crisis in the service sector (exemplified by the electricity scandals of 1936), which was characterized by a collapse in investment, by inefficiency and corruption. The second was the change in economic policy and the role of the state, which was becoming increasingly interventionist.

b. Centralized-Public Management 24. See reference 17, Luna (1986), page 235.

25. See reference 12, Spinadel (1992), page197.

During the 1930s, there was talk of nationalizing public service concessionaire companies.(24) In the aftermath of the Second World War, the national government began to put pressure on the electricity companies by fixing tariffs and creating barriers to investment. This led to their deterioration and a decline in the quality of services.(25) A debate was taking place in the country which eventually culminated in the inclusion of Article 40 in the constitutional reform of 1949. This stated that all public services should henceforth be administered by the state, and that private companies would be expropriated at the historical value of the installations. In 1945, Gas del Estate (State Gas) was created following the nationalization of La Primitiva. In 1947, the railways were nationalized and Agua y Energía de la Nación (Water and Energy of the Nation) was created. In 1952, the Empresa Naciónal de Transporte (National Transport Company) was formed. In 1957, the private company ANSEC, which supplied electricity to the interior of the country, was nationalized and the following year, (SEGBA) Servicios Eléctricos del Gran Buenos Aires (Electric Services of Greater Buenos Aires) was formed as a joint stock company. Agua y Energía was given responsibility for the provision of electricity in part of the metropolitan area of Buenos Aires. In 1961, Companía Argentina de Electricidad (the Argentine Electricity Company) was transferred to the public sector and SEGBA was transformed into a limited company under state control. Electricity was not fully nationalized until 1978. Subterráneos de Buenos Aires (the Buenos Aires Under-


FEEDBACK 26. See reference 12, Bastos and Abdala (1993), Cafasse and Recchi (1976), Spinadel (1992) and García Heras (1994); also Rauch, Alejandro (1989), Public Enterprises in Argentina. Historical and Political Background, Confidential Report, World Bank, July, mimeo.

27. See reference 12, Cafasse and Recchi (1976).

28. This “free channel” system meant that customer charges for water were not related to the quantity used. Bodard, T. (1987), “Du réseau au bombeador. Làlternative critique pour lèau potable” in Dupuy, G. (1987), La crise de réseaux dìnfrastructure: le cas de Buenos Aires, LATSS, París.

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ground System) was established as a state owned company in 1960.(26) By now, Buenos Aires was a metropolitan city. In 1947, the city’s population was close to 5 million, just over a third of whom lived outside the Federal Capital (see Table 1). Up until this time, services had developed alongside the expansion of the city and had catered for the vast majority of the population. The shift towards nationalization coincided with a recognition of the new urban-metropolitan region. Consequently, services were not broken up and a single unit of management was maintained for the whole metropolitan area. Nevertheless, the role played by local governments was apparently overlooked in this respect. It seems that municipalities were not trusted to confront problems at the wider metropolitan level.(27) A centralized-public model emerged: centralized since the management of services was being transferred from the municipal to the federal level, and public since state companies were created to take responsibility for them. Thus, services became the product of relations between two parties: the users and the institutions which made up the central level of the state (i.e. the federal government). This included Congress which sanctioned the most widely applicable norms, the government’s politico-administrative institutions – administrative divisions, subsecretariats and secretariats in each sector – and public service companies. Relations between them were regulated by decrees, resolutions and laws (e.g. law 15.336 of 1960 concerning the provision of electric energy). The federal government was responsible for overseeing the provision of services and, to this extent, its role in terms of regulation and control was defined on the basis of policy decisions. At the same time, the state owned the service-providing companies. In other words, the state had acquired different and, in some respects, conflicting roles. On the one hand, it was guarantor for the production of services but it also had the responsibility for ensuring that all inhabitants had access to them. This made it possible for water, for example, to be managed under the “free channel” system which was inconsistent with the different socio-economic circumstances of individual users.(28) The service-user occupied two positions: user-consumer in relation to the service companies and user-citizen in relation to the government. This new set of relations, arising from a welfare state model, sustained the other social relations of the services. It became concretized by their effective provision and enjoyed a further degree of protection from explicit or implicit subsidies. In circumstances where the state was unable to guarantee the coverage of a particular service to all its inhabitants, it tolerated its consumption taking other forms, e.g. associations of users, or when confronted with illegal processes (not always among the poor) as in the case of land invasions, it took no action to stop the irregular connections, or to control the rail or underground railway users who travelled without tickets. The state structures of a politico-representative nature remained almost entirely excluded from the social relations of the



29. Rauch, Alejandro (1993), Monitoring and Regulatory Aspects of Privatisation in Argentina and Latin America, in the Interregional Task Force Meeting on Monitoring and Regulatory Aspects of Privatisation, Oxford, July, mimeo.

services. This gave precedence to a marked politico-technocratic focus. With the exception of a few fundamental decisions (for instance the law of electricity generation), regulation and control were, to a large extent, kept in the hands of the (technocratic) administrative institutions of the federal government. The position of users was mediated by the technocratic definitions of the service. This situation can have a mitigating effect on the political role of the users despite their presence as citizens. The problem stems from the need to construct relations between local citizens and the central level of government (which results from national elections) on locally based issues. As a result, users tend to lose much of their weight as political actors, except the electoral importance (whether symbolic or real) of the Federal Capital and the increasing political sway of Greater Buenos Aires. Paradoxically, the increasing importance of the public service companies was reflected in the diminishing role of state mechanisms of control. As a result, policies were no longer prescribed by central bodies of the state (such as the Ministry of Public Works) and mechanisms of control were not maintained. This remained decentralized by sector, but not territorially, which had a technically impoverishing impact on the central apparatus of the state. These relations gave prominence to organizations which had a capacity to negotiate with the technical apparatuses of the state and the public service industries: its employee unions and the private companies linked to the production of services. These actors contributed to a redefinition of the role played by service producers. Private companies, which were, by and large, subcontracted to the public firms, introduced the profit incentive into management. Unions developed a system of privileges (when faced with the other manifestations of need) which corresponded with their function as employers and users. Services were orientated along increasingly contradictory lines. On the one hand, their function was to extend accessibility to all those who were without it, in what tended to be regarded as a public orientation. But at the same time, they were subject to needs and interests which impeded this orientation, e.g. management strategies which were dependent on political economy – with its influence on tariffs, for example – or subordinated to the subjective interests of a corporate nature – of union members or of business. All this took place within a complex institutional and regulatory framework which had multiple and occasionally incompatible objectives and policies.(29) Furthermore, this system implied that the running of state enterprises was unaffected by the political influence of municipal governments and the articulation of policies based on local strategies. From the elaboration of appropriate policies to efficient production and actual control, this model could not safeguard the internal continuity of the management of services. Companies became increasingly alienated from their original purpose, which was to meet the needs of the users. They could not keep up with the rate of urban growth and this resulted in a large section of


FEEDBACK 30. In 1980, the Federal Capital’s 2.92 million inhabitants were connected to the water and sewage systems. Meanwhile, of the 6.8 million inhabitants of the metropolitan area, only 52 per cent and 30 per cent had coverage, respectively. In 1991, the Capital’s population of 2.96 million was connected to the water network, and 95 per cent to the sewage system. Meanwhile, of the 7.9 million inhabitants living in other municipalities, 47 per cent and 68 per cent, respectively were beyond the reach of the water and sewage systems. See reference 12, Brunstein et al. (1988); also ETOSS (no date), Memoria y balance 1993; and see reference 5. 31. Schvarzer, Jorge (1987), La política económica de Martínez de Hoz, Hyspamérica, Buenos Aires. 32. See reference 29, page 6. 33. See reference 5. 34. At the end of the 1970s, the municipality of Buenos Aires privatized the most important urban utility in its charge: the collection and disposal of garbage.

the metropolitan population having no access to services. Finally, they were also unable to maintain the existing networks in adequate working condition or to maintain the quality of the services they provided.(30) The centralized-public model entered a crisis following mismanagement of the public enterprises(31) and their consequent inability to address the most pressing problems of the city. As Rauch notes, vested interests, and political and sector interests (unions and business) had resulted in over-staffing, loss of earnings, lack of transparency, cross-subsidies and inter-agency associations. Tariffs and price structures were applied to macroeconomic policies without being adjusted to costs. Financial and debt policies were at odds with transactions and investments which had the effect of increasing the sector debt and limiting the growth of assets, sales and performance. There was corruption, fraud, “free riders”, obsolete systems of invoicing and an ineffective tax-collecting system. Capital was basic and technological capacity was reduced to a critical low. The end result was the provision of services which were of poor quality and with insufficient coverage.(32) By the end of the 1980s, the city came close to collapse. There were power cuts, water and electricity rationing, floods and a large section of the population was excluded from services.(33) The model had clearly been stretched to its limit. The time had come for a radical change.

c. Centralized-Private Management

35. Azpiazu, Daniel (1994), “La industria argentina ante la privatización, la desregulación y la apertura de la economía. La creciente polarización de poder económico” in Azpiazu, Daniel and Hugo Nochteff (1994), El desarrollo ausente, Tesis-Norma, Buenos Aires; also Gerchunoff, Pablo (editor) (1992), Las privatizaciones en la Argentina, Editorial Instituto Torcuato Di Tella, Buenos Aires; Pírez, Pedro (1996), “Privatización de servicios y gestión de la ciudad. Reflexiones a partir del caso de Buenos Aires” in Programa de Gestión Urbana, Servicios públicos urbanos. Privatización y responsabilidad social, PGUUNCHS-ILDIS- PNUD-Banco Mundial-Distrito Metropolitano de Quito-GTZ, Quito; and Schvarzer, Jorge (1993),”El proceso de privatizaciones en Argentina. Implicaciones

This change occurred towards the end of 1989 in the wake of the so-called reform of the economy and the state. This reform was subsequently enacted in statute 23.696 which set out the regulations and procedures for privatization while proclaiming a state of emergency in the public service sector. A string of privatizations followed in rapid succession: telephones (February 1991); electric power (August 1992); gas (December 1992); water and sanitation (May 1993); the underground trains (January 1994) and the metropolitan railway system (on several dates).(34) These privatizations have resulted in a centralized-private model of management.(35) Services are either retained or re-consigned (as in the case of the underground trains) centrally. The federal government exercises the functions of the state and private capitalist companies are used as the means of implementing these functions. The new social system of services has three exponents: the state, the private company and the user. At the federal level, the function of the state is split between its separate administrative divisions: Congress, which sanctions the decree of privatization and basic regulation;(36) the sections of the Executive who are responsible for policy-making (e.g. energy or transport secretariats); and the bodies in charge of regulation and control (e.g. the National Body for the Regulation of Electricity, the Tripartite Body for Sanitary and Sanitation Works, the National Body for the Regulation of Gas).(37) This global participation by federal

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SERVICE PROVISION IN CITIES preliminares sobre sus efectos en la gobernabilidad del sistema” in Realidad Económica No.120, November-December, Buenos Aires. 36. With the exception of the regulation of the private management of water and sewers which the executive sanctioned by decree. 37. These correspond to the federal level, except for the tripartite body of sanitary works and sanitation (ETOSS) which is integrated with the Federal government, the government of the city of Buenos Aires and the government of the province of Buenos Aires. 38. Judicial power can intervene: for example, when electricity companies denounce clandestine use.

government brought the logic of power up to date with a marked technical dominance.(38) Private companies have taken responsibility for the management of services in two principal ways: either by buying the assets of the privatized public companies (as in the cases of the telephone, electric energy and gas companies) or by getting a concession for the provision of a service using state owned assets (e.g. water, drains and the underground trains). Alternatively, the service may be handed over to one or more companies. This plurality may be by sector (for instance divided between those which generate electricity, those which convey it to cities and those which distribute and sell it) or territorial (two electricity or gas distributors in the metropolitan city). It is obviously up to the company (or companies) to figure out the logic of profit. The user is able to articulate her or his needs in two ways: as a contractual client (in the market sense) in relation to the companies or as a user-citizen in relation to the various state mechanisms. Relations between the user and the government are extremely tenuous. This is primarily because of the problem of dealing with local matters at the level of national government. Here, as in the previous model, the distance separating these two levels of political relations tends to disadvantage the local level. In addition, the management system does not incorporate a single politico-representative actor. Thus, users appear merely as the holders of rights with respect to the regulatory norms and not as agents with interests and needs. This system is regulated by a substantial volume of norms which include laws of privatization and regulation of the private services, regulatory decrees, tender documents, contracts resulting from the tender agreements, and resolutions of the bodies of control and regulation. Added to these are the contracts between companies which offer a service and between companies and users. The characteristics of this new model, the context in which it has been implemented, and the processes which gave rise to it, have started producing significant changes in different spheres.

d. Changes in the City

39. The expansion of the telephone network had particularly benefited lower-income sectors of the population. 40. See reference 10, Aspiazu and Nochteff (1994).

Some old problems have resurfaced with the adoption of this new model. In general, services are produced with greater efficiency and effectiveness, and their quality has improved. This is evident in the cases of electric power, telephones, suburban trains and metro (underground trains). Users now enjoy a better quality of service and, in some cases, as with telephones, there has been an expansion of the network.(39) On the whole, though, coverage has not changed substantially. However, these privatizations have had other effects. Besides altering the social system of the services, they have precipitated changes in the social structure of the city. This has been the result of the concurrence of this process with the trends in the Argentine economy over the past 20 years.(40) In a context of the economic concentration and rising levels of


FEEDBACK

41. See reference 35, Azpiatzu (1994), page 172.

42. Azpiazu, Daniel (1997), “El nuevo perfil de la élite empresaria. Concentración del poder económico y beneficios extraordinarios” in Realidad Económica No.145, JanuaryFebruary, Buenos Aires, page 28.

43. In October 1994, the embassies of France, Italy, Spain, Belgium and Great Britain took out actions against the Argentine government to complain about the regulatory bodies’ treatment of private service companies – see Clarín, 5 and 13 November, 1994. 44. Pírez, Pedro (1996), “Privatización del servicio de agua en la ciudad de Buenos Aires” in International Conference on Urban Water Resources, commissioned by the UN Centre for Human Settlements (Habitat) and the UN Environment Programme (UNEP), Beijing, March. 45. Pírez, Pedro (in press), “La situación social de la ciudad metropolitana de Buenos Aires en el contexto nacional” in Realidad Económica, Buenos Aires. 46. Ámbito Financiero, 23 February, 1996. 47. See reference 42.

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poverty, private parties have begun to emerge who have a powerful capacity for economic control (by sector and globally) and resource purchasing power.(41) The regulation of privatization has created extraordinary opportunities for the accumulation and maximizing of profits (monopolies, oligopolies, tariff guarantees, etc.). In 1995, for example, of the 200 leading companies in terms of sales, with an average profitability rate of 6.2 per cent, those associated with privatization schemes registered returns of 13.1 per cent, those with service adjudicators returns of 12.5 per cent, and the largest conglomerates, with a share in the capital, returns of 20.7 per cent.(42) The telecommunications companies, for example, recorded net returns of 75 per cent on the price they paid for the public utility, after three financial years. The city’s principal services have been maintained under the control of a small number of economic groups which are highly concentrated at the national level. These economic groups also have close links with concentrated foreign capital assets and have a powerful decision-making capacity within companies. The economic importance of the private managers of the services has placed them in a position of strength vis-à-vis state enterprises. Added to this is the capacity of foreign governments to exert pressure when companies from their countries – and in some cases publicly owned – are involved in the privatization.(43) Public service companies were overstaffed because they incorporated large numbers of employees who may not have been essential to their operational requirements and, to some extent, signified a dysfunctional system. However, this allowed a more equal distribution of earnings. Privatization has left many without work. After the privatization of Obras Sanitarias de la Nación, for example, the workforce of 7,500 was cut by 3,500.(44) An important redistributive mechanism was lost as a result. In conjunction with this, there has been a rise in city based indicators of poverty and unemployment. In October 1996, 27.9 per cent of the metropolitan population were below the poverty line; in May 1997, the figure stood at 26.3 per cent. Meanwhile, open unemployment had risen to 18.8 per cent by October 1996(45). Correspondingly, the concentration of wealth has been growing at a faster rate in the metropolitan city than across the rest of the country. Already facing constraints to its survival, the population has become increasingly sceptical about its continued access to services. Information in the media suggests that some users are abandoning essential privatized utilities such as water: it is estimated that 30 per cent of the population which was recently incorporated following the recent expansion of the network has stopped paying.(46) In addition to these problems, the privatization of utilities has led to an important transfer of power. Economic power in the form of control of the city’s principal infrastructure services has become concentrated in the hands of private economic parties. The process of privatization has also favoured the totality of private activities by creating an institutional framework which has given access to extraordinary profits(47) and simultaneously has


SERVICE PROVISION IN CITIES given them the institutional power to make decisions relating to the management of the service. Privatization has transferred to “the market place” decisions relating to the role of services in the functioning of the city. It has placed these decisions in the hands of private actors which has given them a power which they did not have in the earlier models.

III. PUBLIC UTILITIES AND URBAN QUALITY THIS RAPID REVIEW of the history of urban services management in Buenos Aires allows us to maintain the hypothesis about their role in the deterioration of the functioning and quality of the city. To conclude, we can accept that the decentralized-private and the centralized-public models failed, and that their results were, paradoxically, analogous. These included: deficiencies in service provision in terms of coverage and quality; inefficiency; insufficient funding; lack of maintenance; and corruption. We can also confirm that, by the end of the 1980s, services showed signs of the damage caused by these models of management. These failures can be attributed to the absence of a public strategy for the services which was sustainable in the long term. In other words, there was a lack of management capable of safeguarding the social role of services to meet requirements and as a contributing factor to urban productivity and population growth. This should have been based on the efficient and effective production of services in which adjustments were made out of necessity both in terms of quantity (demographic and territorial) and quality. It may be seen that this failure of strategy and its articulation in the urban dynamics is associated with the absence of political representation. This absence can be perceived in the first two models in relation to the individual circumstances which each was subject to. These ranged from the predominance of individualistic players (of economic or political accumulation) to subordination to the dynamics of international relations, the lack of interconnections with urban management and the lack of any metropolitan level of management. In both models, but particularly in the centralized-public model, users became alienated from the management of services and their end-products. As management gradually became divested from its politico-representative nature and tended to be dominated by a more technocratic discourse, the population started perceiving services as distant realities, separated from daily life. Although the population was dependent on them for its activities, instruments for their modification were unavailable. If this can be proved, then in the absence of public coordination of service management, this would indicate a detachment of the social responsibilities of each urban actor in the functioning of the city as a condition of life within the agglomeration. This would imply a diminished social capacity to make decisions over the services and a loss of social power over a fundamental component in the quality of life in the city: as much for


FEEDBACK families as for companies. This power, in the centralized-public model, would be exercised by the state mechanisms. Set against this historical background of services in the city of Buenos Aires is the current wave of privatization. If we take up the earlier line of thought, this also signifies a weakening of the public function, owing to its two principal features. The first is the transfer of power from state apparatuses to the companies (arbitrated to a limited extent by representation). The second is, once again, the weight of influence of international centres on decisions relating to the services, in a vigorous mercantile environment which assumes no responsibility for those sectors of the population which are faced with difficulties in the market place. Thus, uncertainty looms over the future, particularly since no solution to the problem of service management and the estrangement of social actors in relation to the services, as described in this article, appears to have been found. Before local society can take responsibility for the services on which the quality of life in the city is dependent, users will have to exercise their rights and use the existing potential for control and regulation, and, on this basis, make use of existing tools to propose changes with respect to the services.

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