Understanding the Public Services Industy

Public Services Industry Review
5.7 Looking in more detail at the component of public spending used to procure services
– which is defined as the PSI – some interesting differences emerge (Figure 5.2).
Although Australia has the lowest share of public spending in GDP, the size of its PSI
relative to its GDP is the same as that of Sweden. Conversely, despite spending over
half its GDP through the public sector, the relative size of the PSI market in France is
less than half that in Australia. The UK is towards the top end of this sample with a PSI
of 5.7 per cent of GDP.
Figure 5.2: PSI share of GDP in selected OECD countries
Billions
Procurement of
services (2005)
Procurement of
services (2006)
Per cent of GDP
US ($)
662.0
5.3
Spain (Euros)
27.9
2.8
France (Euros)
50.6
2.9
Sweden (SEK)
178.0
6.1
Australia (Aus $)
61.2
6.1
UK (£) 79.4 5.7
Source: Oxford Economics
Note: 2007/08 UK figure (source: OE), UK GDP(2007, source: OE)
5.8 In terms of the absolute size of the PSI market in these countries, unsurprisingly the
US dominates, reflecting the greater size of its overall economy (Figure 5.3). The UK is
second and is substantially larger than any of the other countries considered.
Figure 5.3: PSI spending in selected OECD countries on a comparable basis with the UK
Countries
US
Spain
France
Sweden
Australia
£bn at market rates
393.8
24.7
44.8
16.4
32.3
UK 79.4
Source: Oxford Economics
Note: 2007/08 UK figure, other countries 2005 or 2006; updated to 2008 using a constant share of GDP and estimated
market exchange rates.
Health and Education
5.9 Considering specific areas of PSI spending, the most obvious difference across
countries is the extent to which consumers pay privately for health and education.
In the US, for example, private spending on healthcare accounts for 14 per cent of
consumer spending compared with around 4 per cent elsewhere (Figure 5.4). In
education there is more variation, with the proportions ranging from 0.5 per cent to 3.5
per cent of consumer spending.
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