Historically, government-provided activities emerged relatively early and could not be carried out on the market within market mechanisms.
In antiquity, specifically the Roman Empire, we can talk about the economic activity of the state, about the combination of public and private capital in various forms. If we start from the activities of the Roman state, from the perspective of public services, the most significant economic activity was the supply of basic necessities of life, such as the supply of drinking water and grain, which, however, gained real proportions in the era of the Principate. Considering the significant financial needs of the Empire, which later even the provinces did not have to fully meet, the state eventually looked for other forms of financing that would meet the needs of the Empire, especially during the era of the Principate (from 27 BC to II. century AD), when the reprehensible economic and social order began to collapse, as the Punic Wars radically affected the latifundia. The short economic boom of the provinces, which came after the end of the republican policy of exploitation, ended, numerous and long military campaigns followed. The greatest blood toll of countless wars was paid by small Roman farmers. Small farmers became impoverished, proletarianised, and left for Rome. The city was expanding. The needs for care in the city were getting increasingly bigger. The people of Rome participated en masse in the almost free distribution of food at the expense of the provinces and in the participation in the games. Also for these reasons, this is the time of the creation of the first public services: hospitals, public infrastructure, baths, markets, aqueducts, sewers...
In the Middle Ages, royal prerogatives could be considered as a form of combining public and private property. Royal prerogatives covered different types of entitlements, from those that were relatively easy to enforce to those that were of strategic importance. More or less throughout the Middle Ages, economic life was regulated in this way, we can trace them all the way to absolutism.
In the early Middle Ages, another form of linking public and private capital appeared – the concession.
In the era of mercantilism and cameralism, we can speak of the first real flourishing of the public economy and public undertakings, and as a result of emerging liberalism, the first privatisation measures were implemented in the next phase.
Public services and public undertakings then had an almost decisive role in the economies of European countries in the 1930s and 1940s, when the global economic crisis appeared. The greater part of these was in public ownership and the activities known as public service were not subject to civil but to public law. These activities were not the subject of an supply on the competitive market, but were subject to special rules or benefits and rights.
In the 1980s, the processes of privatisation, liberalisation and deregulation reappeared as a criticism of this approach. The result of these trends is the introduction of market and competition in the field of public services and the elimination of the so-called special rights or privileges. The performance of such activities was gradually subjected to private, civil law. State intervention was reduced and eliminated and private initiative was introduced.
The very concept of public services appeared and developed in France, the cradle of administrative law and the doctrine of public services in the 19th century. The French legal theorist Duguit is considered to be the first founder of public services in legal science, who said that the concept of public service was created on the same day when the differentiation between administrators and the people appeared – citizens who already at that moment realised that they could impose certain obligations on administrators, the fulfilment of which is simultaneously the reason for their existence – the latter should also be the essence of public service.
Therefore, public services directly and to the greatest possible extent influence the quality of life of citizens. Today, key goods are provided to citizens through the public services system – the provision of drinking water, electricity, heating, waste collection, the school system, the health system...
In Slovenia, a functional definition of the concept of public service is established. It is considered that public services are those activities which, for various reasons, must be carried out in the public interest under a special regime. Our functional definition is based on French law. When defining the concept, we start from the nature of the activity and not from the form of the activity. It is such an activity that can not be partially or fully performed in the market within the context of market mechanisms and in particular on two grounds, either the activity in the market does not function or it should not be left to function in the market.
Regarding commercial public services, a formal definition of the concept of public service has been established – public services are those activities that are legally defined by a law as public services. In practice, this causes quite a few issues, as this is not specified for some activities and, therefore, such activities are not public services, despite the fact that their status as a public service is already derived from the nature of the activity as such. In Slovenia, a material definition of the term, which is also gaining ground in the European area, would probably be more appropriate – public services are activities when the providers provide specific legally defined and determined obligations in the public interest. These obligations to provide public services are called public services.
In the provision of public services, a flexible concept of public services, which quickly responds to the evolving needs of users as a result of political, social, economic and technological progress and to changes in social conditions, is important from the perspective of citizens. Public services must keep up with the changes, but simultaneously they must be carried out with quality and without interruptions.
Citizens expect a high quality of the implementation of public services, which is often limited by the available financial resources. For this purpose, it is necessary to harmonise the level of the expected level of quality of service provision with the actual options. It happens too often that citizens are not afforded the opportunity to cooperate with political decision-makers in these decisions. Public services must be accessible, and user or consumer protection must also be guaranteed.
The modern approach to the provision of public services and the establishment of the necessary infrastructure for their implementation assumes that the private sector is also actively involved in the otherwise traditional state domain. Public-private partnership in all its diverse forms and derivatives is the concept of partnership between the public and private sectors in the provision and implementation of public services and associated infrastructure. Today, it is no longer possible to imagine a modern society and country without a developed concept of public-private partnership.
Terminology in the field of public services is a special issue or problem, as the terminology of EU law in public services differs from the established Slovenian terminology. Despite the fact that the institutes we encounter are in principle the same, due to the possible differences that are present, it is better that when we talk about public service institutes under EU law and under national law, we consistently use EU terminology.
In Slovenian law, we mainly encounter the concept of economic and non-economic public services, and the established functional definition of the concept of public service is not an organisational one. It is considered that public services are those activities which, for various reasons, must be carried out in the public interest under a special regime, because they cannot be satisfied in the market or should not be allowed to be satisfied in the market. The functional definition in Slovenia is based on French law. When defining the concept, we start from the nature of the activity and not from the form of the activity.
According to Slovenian law, commercial public services are considered to include those activities that are legally defined or regulated by law as public services. The umbrella law that regulates economic public services and which determines the manner and forms of implementation of economic public services in Slovenia is the Services of General Economic Interest Act (Zakon o gospodarskih javnih službah – ZGJS). In Article 2 (1), it is stipulated that public utility services are defined by laws in the fields of energy, transport and communications, communal and water management and management of other types of natural resources, environmental protection and by laws regulating other areas of economic infrastructure.
Specific or individual activities carried out as economic public services are defined by various sectorial laws or municipal decrees, but the same also applies to non-economic or social public services.
In the case of non-economic public services, the state does not leave the implementation of these activities to market conditions, primarily for social reasons, because disruptions could lead to unsustainable situations. Such activities are, e.g., public health, education, protection of cultural heritage, pharmacy activity and the like. Market mechanisms in these areas could be entirely equal, but solidarity would not be guaranteed in this way, and the principle of the welfare state also would not be observed. Non-economic or social public services in Slovenia are implemented in under the Institutes Act (Zakon o zavodih – ZZ), which is still the systemic, umbrella law in this area and defines the basic forms of implementation of social public services. In contrast to the current, individual approach to defining public services, when they were first introduced into the Slovenian legal system in 1991, the Institutes Act (Zakon o zavodih – ZZ) defined them in a general way and temporarily introduced them in all areas of social activities until then. In the transitional provision of Article 64, it was determined in paragraph one that until public services have been defined by special acts and ordinances issued by municipalities or towns, any activities or affairs defined by an act or an ordinance issued by the assembly of a socio-political community shall be considered public services.
From the perspective of EU law, we most often encounter the concept of services of general economic interest (SGEI), which in terms of substance defines services which, according to Slovenian law, in principle coincide with the concept of economic public service. With the entry into force of the 1957 Treaty of Rome, the concept of Services of General Economic Interest was an entirely new concept not established in any language of the Member States, nor in scientific literature, therefore completely new concepts were formed in law coexisting with nationally established terms and institutes and it looks like they will continue to coexist. With all the possibilities of unifying terminology, it seems that the EU legislator does not want to encroach upon broadly established "national" terms, and simultaneously, the existence of only EU terminology would have no connection with national systems or regulations, which in the first place were the reason for the ranking and protection of public services at the primary sources of EU. Services of general economic interest are defined as economic activities performed for the general public benefit that would not otherwise be performed on the market without public intervention (or would be performed under different conditions in terms of quality, safety, affordability, equal treatment or general access). Public service obligations are imposed on the contractor by authorisation and based on the criterion of general interest, thus ensuring that the service is performed under conditions that enable the fulfilment of its task.
Services of general interest under EU law are defined as services that the public authorities of a Member State classify as services in the general interest and, therefore, special public service obligations (PSO) apply to them. The term covers both economic activities and non-economic services. At the same time, it should be noted that non-economic services are not subject to special EU legislation and are not regulated by the rules on internal market and competition under the TFEU. For some aspects of the organisation of these services, other general rules of the TFEU apply, such as, e.g., principle of non-discrimination.
Non-Economic Services of General Interest (NESGEI) – their greater importance in the context of EU law was recognised (only) with the signing of the Lisbon Treaty in 2007. Compared to services of general economic interest, they are (still) given less attention, but it is still possible to discern a tendency that shows itself in paying more and more attention to non-economic services of general interest as well. The distinction between services of general economic interest and non-economic services of general interest in EU law is extremely important, since the EU rules on the protection of competition do not apply to all services of general interest, but only to services of an "economic" nature, i.e. to services of general economic interest but not for non-economic services of general interest.
Social services of general interest under EU law are defined as services that include social security systems covering the main life risks and a range of other essential services that are provided directly to the individual and are important from the perspective of prevention and social cohesion/inclusion. Although the EU Court of Justice does not consider some social services (for example, statutory social security systems) to be economic activities, it is clear from its case law that the social nature of a service in itself is not sufficient to classify such a service as non-economic. Therefore, the concept of a social service of general interest covers both economic and non-economic activities.
Public service – the term public service is used in Article 93 of the TFEU for the field of transport, but the implementation of this context is rarely used in EU law, as it has a rather broad meaning and is, therefore, used ambiguously. Thus, it can be connected, for example, to the fact that the service is provided to the general public and/or in the public interest, but it can also be used for the activity of publicly owned entities.
In some places, the Constitution of the Republic of Slovenia already defines individual activities for which the state/local community is obliged to take care of or to provide them. The Constitution of the Republic of Slovenia does not specify in what way the state should carry out individual activities to provide citizens with constitutionally guaranteed rights, but it can be established that constitutionally guaranteed rights are, in principle, ensured by the state through the organised activity of public services in the broadest possible sense:
Non-economic or social public services in Slovenia are implemented in under the Institutes Act (Zakon o zavodih – ZZ), which is still the systemic, umbrella law in this area and defines the basic forms of implementation of social public services.
Which individual activities are performed as public services, whether economic or non-economic, is defined by various regional laws or municipal decrees.
Among the primary legal sources, the Treaty on the Functioning of the European Union should be highlighted in particular:
The concept of public service, as the broadest conceptual definition in this area, can be found in Article 93 (formerly Article 73 of the TEC and Article 77 of the Treaty establishing the European Economic Community) in Title VI, which defines the objectives of contracts in the field of transport, which are implemented within the framework of the common transport policies. Article 93 of the TFEU is often forgotten is omitted in the context of discussions about public services at the EU level as it relates to the field of transport. In Article 93 of the Slovenian language version of the TFEU, the concept of public service (javne službe, öffentliche Dienst, service public) is explicitly used as the broadest generic concept in this field, with which we operate both in EU terminology and in Slovenian legal terminology, as well as in national terminologies of other Member States.
The concept of services of general interest (Dienste von allgemeinem Interesse, services d'intérêt général) can be found in Protocol no. 26 on services of general interest of the TFEU. Until the adoption of the Treaty of Lisbon in 2007, the term "services of general interest" had its basis (merely) in EU practice, namely as a "supplement" of the term "services of general economic interest", as found today in Articles 14 and 106 (2) of TFEU. The term is broader than "services of general economic interest" but has often been used interchangeably in the past. The concept of services of general interest covers both market and non-market services, the provision of which is defined by public authorities as being in the public interest and which are subject to special obligations of public services. As can be seen from Protocol no. 26 of TFEU, services of general interest are divided into services of general economic interest and non-economic services of general interest. The division into services of general economic interest and non-economic services of general interest from the perspective of EU law is, therefore, important primarily for the reason that the provisions of the TFEU on the protection of competition and the principle of prohibition of state aid apply only to services of general economic interest, while non-economic services of general interest are fully excluded from EU law and the provisions of the Treaties in no way affect the competence of the Member States in this area. With the Treaty of Lisbon, the concept of "services of general interest" found its place in Protocol no. 26 TFEU, i.e. at the level of EU primary sources.
The starting point for the consideration of services of general economic interest (SGEI, Die Dienste von allgemeinem wirtschaftlichem Interesse, services d'intérêt économique général) is Article 14 TFEU in conjunction with Article 1 of Protocol no. 26 of the TFEU, which interprets Article 14 TFEU. However, as can be seen at first glance from the text of Article 14 TFEU, the opening text "Without prejudice to Article 4 of the Treaty on European Union or to Articles 93, 106 and 107 of this Treaty" indicates the relevance (and collision rules also in the areas regulated in the articles mentioned above.
Non-Economic Services of General Interest (NESGEI, nichtwirtschaftliche Dienste von allgemeinem Interesse, services non économiques d'intérêt général) were given greater importance in the European Union (only) with the signing of the Treaty of Lisbon in 2007. With the aim of highlighting the importance of public services and their special position in EU law, the Member States, in Article 1 of Protocol no. 26 of the TFEU agreed on interpretative provisions relating to services of general economic interest and accordingly stated the guidelines that the EU will pursue in this area, and in Article 2, for the first time at the level of EU primary resources, non-economic services of general interest are also addressed.
The distinction between services of general economic interest and non-economic services of general interest in EU law is extremely important, since the EU rules on the protection of competition and the prohibition of state aid do not apply to all services of general interest, but only to services of an "economic" nature, i.e. to services of general economic interest. TFEU in Article 2 of Protocol no. 26 clearly states that the provisions of the Treaties in no way affect the competence of the Member States to provide, order and organise non-economic services of general interest.
From the perspective of competition protection, the field of non-economic services of general interest is, therefore, entirely exempt from EU law and is entirely within the competence of the Member States, while the field of services of general economic interest is partly regulated by EU law and partly by Member States.
Non-economic services of general interest are considered in EU law, e.g. compulsory education and social care, care for vulnerable groups, e.g., orphanages, psychiatric hospitals, care for older adults, healthcare, but in healthcare, e.g. it should already be noted that the whole of healthcare cannot be considered a non-economic public service. If an individual activity within this field can be performed under market mechanisms, it is subject to the rules on the protection of competition. In a broader context, non-economic public services can include, for example, also police and justice, i.e. areas that by their nature are "non-economic" and at the same time fully within the competence of the Member States and are thus excluded from the competence of the EU.
The fields of energy, post and telecommunications, and transport are traditionally regarded as public utilities. In the case of individual activities within these sectors, we can also have activities that cannot be defined as economic public services, such as, e.g., in the transport sector, the collection of fees for the provision of air navigation services.
At the level of secondary legal sources and EU recommendations, the following should be highlighted in particular:
Non-economic public services are provided under the provisions of the Institutes Act (Zakon o zavodih – ZZ), which is still the systemic, umbrella law in this area and defines the basic forms of implementation of social public services. The most common forms of providing social public services in Slovenia are public institutions and concessions.
The forms of provision of economic public services are defined by the Services of General Economic Interest Act (Zakon o gospodarskih javnih službah – ZGJS) and are as follows:
The Public-Private Partnership Act (Zakon o javno-zasebnem partnerstvu – ZJZP) is relevant for the provision of public services in the form of a public-private partnership.
When discussing the provision of public services, we must distinguish two aspects. On the one hand, there are substantive issues under which we discuss the actual obligations of public services, the way to ensure the public interest, issues related to infrastructure, standards of provision, methods of financing... All these substantive issues must be concretely implemented through appropriate procedures, where we encounter procedural issues. Public services van be provided in the following ways:
In the global financial situation, Slovenia is faced with a development dilemma, whether to invest an unchanged share of public funds in the construction of the necessary public infrastructure or to ensure an unchanged level of public services and thus risk slowing down the development cycle or allow the private sector to enter the traditional "state" field of providing public services and building public infrastructure, thus reducing the burden on public finances. In Slovenia, the majority of investments in public infrastructure are still financed from public funds, and the majority of public services are still provided by the public sector within the state administration's own organisational structure or self-governing local communities either through public utility units or through public companies or public institutes. On the other hand, in Slovenia, public-private partnership are still untapped potential. It is utilised only by municipalities, and it is not possible to find such projects at the national level. The latter can probably be attributed primarily to the fact that municipalities are closer to citizens and are more aware of the population's needs, which must be met, and proactively seek ways to ensure these needs even in difficult economic conditions.
One of the key questions for the future of Slovenia is whether it will succeed in providing the level of welfare state expected by its inhabitants, both in terms of volume and quality. The experience of other countries shows that the latter will not be possible without the active involvement of the public-private partnership. From this perspective, the correct use and implementation of public-private partnerships for the provision of services in the public interest and public services is important for further development and social coherence.
Public-private partnership offers a development opportunity that is still insufficiently realised. Despite the relatively broad public debate, the various models of public-private partnership and the issues related to the creation and establishment of the partnership are still not well known. Too little attention has been paid to the identification and definition of public interest and its relationship with private interest and, last but not least, the inevitable conflict that develops between them. Public-private partnership is only a part of a broader issue, which covers the field of providing public services and the related issues of public tenders, state aid, public infrastructure management, project management in public administration, project financing, etc.
A public undertaking is a legal entity with elements of private and public law. The theory is yet to settle on the placement and regarding the question of whether it is a special (sui generis) legal form.
In Slovenia, until recently, the concept of a public undertaking was used for companies that performed an economic public service and were not necessarily founded only with public capital, but could also include contributions of private capital.
With the adoption of the Public-Private Partnership Act (Zakon o javno zasebnem partnerstvu – ZJZP) in 2006, provisions came into force that stipulate that public undertakings shall be established only with public capital, otherwise they have a status of public-private partnerships.
In Slovenia, the special position of a public undertaking is primarily defined by the ZJZP, which, in the part where it regulates a public company, regulates issues related to the establishment of a public undertaking, the issue of the founder's rights and the issue of the appointment of the director. For all other questions, ZGJS refers to the application of the Companies Act (Zakon o gospodarskih družbah – ZGD-1). Based on the above, it can be concluded that the special features of the institute of public undertaking in the Slovenian area relate mainly to the issues defined in the ZGJS.
The function of a public undertaking in the EU is mainly defined by Article 106 TFEU, which states that undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules contained in the Treaties, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them.
It should be stressed that the concept of undertaking under EU law and according to the case law of the EU Court of Justice does not refer only to companies, but to any organised economic activity, regardless of its legal status and the way it is financed.
The EU Court of Justice has developed case law regarding the determination of the status of undertakings and public undertakings in the direction that when assessing the status of an undertaking under the provisions of the TFEU from the perspective of competition protection, the is its activity and not the legal status, organisation or method of the undertaking’s financing. The court assesses whether an undertaking performs economic activities. If it carries out non-economic activities, the rules on the protection of competition do not apply to these entities. If undertakings carry out economic activities, they are deemed as undertakings subject to the rules on the protection of competition under the provisions of the TFEU. Article 106 (2) TEC allows for a limited deviation from the general ban on restricting or excluding competition under certain conditions in the case of undertakings authorised to provide commercial public services or undertakings that operate as an income monopoly. The Court's judgments in the Corbeau and Ahmed Saeed cases, which refer to public undertakings as holders of special or exclusive rights, illustrate the subject matter.
EU legislation in the field of public undertakings is not extensive, but it mainly deals with two important areas: the transparency of the operations of public undertakings and procedures for the selection of economic public service providers.
The area of transparent operations of public undertakings is governed by the Commission Directive 80/723/EEC of 25 June 1980 on the transparency of financial relations between Member States and public undertakings (hereinafter: Directive 80/723/EEC or Directive 2006/111/EC – the codified version), which was transposed into the Slovenian legal system with the adoption of the Transparency of Financial Relations and Maintenance of Separate Accounts for Different Activities Act (Zakona o preglednosti finančnih odnosov in ločenem evidentiranju različnih dejavnosti – ZPFOLERD-1), and the rules on public procurement and general principles as derived from the TFEU are important for the selection of economic public service providers.
Article 2 of Directive 80/723/EEC defines "public undertaking" as “any undertaking over which the public authorities may exercise directly or indirectly a dominant influence by virtue of their ownership of it, their financial participation therein, or the rules which govern it.” The following paragraph also defines the dominant influence of public authorities, which is assumed when these authorities directly or indirectly in relation to the undertaking:
The word infrastructure is a Latin compound word consisting of two parts: infra, which means below, underground, and structure, which means joining, masonry, building. The very origin of the word shows that the term infrastructure means a certain system of ground installations that connect economic units into a more or less coordinated system.
The concept of public economic infrastructure is defined in the Construction Act (Zakon o graditvi objektov – ZGO-1), which specifies in Article 2 that a public economic infrastructure facility is a construction engineering facility that forms a network that serves a certain type of public service of national or local importance or forms a network that is of public benefit. Article 2 also defines the concept of built public good. Built public good is land intended for such general use, as determined by the law or regulation issued on the basis of the law and the buildings built on it, if they are intended for general use, depending on the purpose of their use. A built public good of national importance is defined as a built public good that belongs to the network of economic public infrastructure of national importance and the public area on them, and a built public good of local importance is defined as a built public good that belongs to the network of economic public infrastructure of local importance and public area on them, as well as facilities or parts of facilities, the use of which is intended for everyone under the same conditions, such as a road, street, square, passageway and other public traffic area of local importance, market, playground, parking lot, cemetery, park, green space, sports or recreational area and the like.
ZGO-1 does not assume that the facilities of economic public infrastructure also have the status of built public good. The building does not acquire the status of built public good by the creation or construction, but based on a decision issued according to the procedure defined in Article 21 of ZGO-1. The question of whether an individual object of economic public infrastructure also has the status of a built public good is important from the perspective of the question under consideration, mainly because Article 22 of ZGO-1 stipulates that it is not possible to acquire property rights on a building or its part that has acquired the status of a built public good or any other rights in rem through possession, and such an object cannot be subject to enforcement.
According to the current Slovenian legislation, the infrastructure for the implementation of economic public services belongs to the economic public infrastructure, and it has the status of a built public good only if it has been recognised by a special decision.
The infrastructure for the implementation of non-economic public services in ZGO-1 is not specifically regulated.
Current Slovenian legislation does not explicitly regulate the issue of the ownership concept of public goods. According to Slovenian law, property rights to public goods can only be property rights of the civil law type, as the Constitution does not recognise other types of property. If we say that an individual object is "publicly" owned, the adjective "public" does not define a specific type of property, but only that the holder of the right is a person governed by public law (the State or municipality).
Traditional and alternative ways of financing public infrastructure
The traditional way of financing public services and public infrastructure is budget funds in combination with user payments, but one must be aware that the economic crisis has also fundamentally changed the view on investments in public infrastructure. All Member States face problems related to investment in public infrastructure, with some countries being more successful than others in overcoming them. Slovenia is not immune to global events, but it is also one of the countries with a distinctly conservative attitude, especially at the national level, regarding the use of alternative sources of financing, which are encouraged and promoted by the EU for investments in public infrastructure.
Most investments in public infrastructure in Slovenia are financed from public funds, i.e. from the state and municipal budgets. The following can be identified as alternative methods of financing with budget funds:
The Commission intensively recommends and promotes the approach that solving the public infrastructure gap should be addressed through public-private partnerships, regardless of whether the projects are co-financed with EU funds or not. The Commission, for example, in the 2009 Communication on the Potential of Public-Private Partnerships, explicitly refers to greater implementation of public-private partnerships in the financing of public infrastructure. Many EU countries have decided on measures to stimulate economic activity in such a way as to strengthen public investments also by including alternative sources of financing by often dividing larger projects into smaller ones. On the one hand, this allows even smaller undertakings to compete for them, and on the other hand, the public sector ensures a greater spread of risks.
In Slovenia, contracting entities still avoid using the public-private partnership institute in cases where they would like to finance the construction of public infrastructure also from EU funds, even though the EU encourages the financing of public infrastructure with alternative sources of financing, especially with public-private partnerships with simultaneous co-financing from the funds EU. On the other hand, the implementation of the project in this form brings certain advantages. The analysis of implemented public infrastructure projects shows that the main advantages of project implementation in the public-private partnership form are timely implementation and realisation within the foreseen financial framework.
From the perspective of co-financing with EU funds, the implementation of a project in the form of a public-private partnership should not be an obstacle to obtaining funds, and the practice in this direction is also slowly developing in Slovenia, although examples of public-private partnerships with simultaneous co-financing from EU funds are still rare. This is precisely why the Institute for Public-Private Partnership strives to systematically approach the promotion of the combined use of these two alternative sources of financing and the broader implementation of this approach in practice.
Regarding the method of providing public infrastructure and its impact on the public debt, two levels must be distinguished at which borrowing and the impact of the method of providing public infrastructure on the public debt are discussed.
The first level is represented by the "internal" rules of each Member State regarding borrowing. Namely, the state is sovereign up to a certain limit in determining the rules regarding internal borrowing rules, such an example is adoption of special rules related to municipal borrowing, regulated by the Financing of Municipalities Act (Zakon o financiranju občin – ZFO-1, Official Gazette of the RS, Nos. 123/06, 57/08, 36/11 and 14/15 – ZUUJFO) or, for example, regulation of individual areas in sectoral legislation.
Another level is represented by EU rules regarding borrowing and state debt.
Since joining the EU, Slovenia has been obliged to report the country's deficit and debt to the European Commission twice a year, by 1 March and 1 September, for the past four years and on the planned deficit and debt in the current year. The sent data are the basis for checking compliance with the reference values for the country's deficit and debt. A special methodology is prescribed for the preparation of the report, as fiscal policy and the monitoring of developments in this area have a special role in the effective functioning of the economic and monetary union. This also applies to verifying compliance with the provisions of the Stability and Growth Pact. In this context, comparable, up-to-date and reliable data are particularly important. Therefore, it is necessary for countries to prepare data in such a way that they apply the same principles or standards, the same categories definitions, classifications and the same accounting rules. The methodology that provides such rules for compiling accounts and tables on a comparable basis is the European System of Accounts (ESA).
Accounting for public-private partnerships has long been one of the major uncertainties and important issues of public-private partnerships in the EU. Individual Member States had their own accounting rules, but no specific guidelines existed at the EU level. It was only in 2004 that Eurostat published guidelines on the evaluation of the impact of various project financing mechanisms on public debt and the budget – New decision of Eurostat on deficit and debt, Treatment of public-private partnerships.
Eurostat's decision was taken for the purpose of statistical reporting, since proper accounting is connected with the achievement of the Maastricht criteria and with the effort to reduce inflation and public debt.
According to the Eurostat Decision, assets included in public-private partnerships should be defined as non-government assets and, therefore, not included in the balance sheet or budget if the following conditions are cumulatively met:
Further guidance on the accounting of public-private partnerships was included in August 2004 in a special Chapter 4 of the MGDD – ESA95, which was replaced in 2010 by the ESA (ESA10), which entered into force in September 2014. The changes impact national accounting standards and the presentation of debt also in the field of public-private partnerships.
This field is notably affected also by Commission Regulation (EC) No 1164/2009 of 27 November 2009 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Financial Reporting Interpretations Committee’s Interpretation 12. Regulation 254/2009 defines how to recognise the infrastructure in the case of a concession in the financial statements of the concessionaire or of the concession operator.
The collision between state aid and the provision of economic public services in the EU is one of the most pressing problems in this area.
The division into economic and non-economic public services is important from the perspective of EU law mainly because the provisions of the TFEU on the protection of competition and the principle of prohibition of state aid apply only to services of general economic interest, but not to non-economic services of general interest. Equally important is the distinction between market or competitive activities and non-market activities. More…
In the case of commercial public services, there is a big problem regarding the financing of these services, because due to their nature, they cannot be financed either partially or fully on the market. Thus, there are various combinations in terms of financing – they are partly financed by direct user payments, partly from the budget, but there is often cross-subsidisation, and the matter of state aid is a special issue.
With the decision in the Altmark case, the EU Court of Justice took the position that compensation granted to contractors of economic public services obligations does not constitute state aid in certain cases and under certain conditions