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Everything we did was focused on or fell under three umbrella goals: safe streets, strong neighbourhoods, a thriving economy. The organising principle was competition – the engine that drives excellent performance. …We wanted to be regarded as possessing unique advantages when compared to other cities and regions. We also wanted ompetition to drive our provision of services, whether we were providing them ourselves or coordinating their provision through private vendors – Stephen Goldsmith.

Many South Africans recognise the face beaming at them from the cover of a biography currently on display in our bookshops. However, while New York mayor Rudolph Giuliani’s inspirational role in the aftermath of 11 September has turned him into a celebrity, it obscures the fact that he is only one of a group of successful mayors who have transformed some key American cities during the past decade.

One of the best documented is Stephen Goldsmith, who, from 1992 onwards, served as mayor of Indianapolis, Indiana, for eight years. His achievements are remarkable: he eliminated city deficits, enhanced services, rebuilt infrastructure, revitalised neighbourhoods, attracted new businesses, created jobs, and reduced crime – all of it while cutting taxes. He and his staff set out to address the problems of Indianapolis on the basis of a clear vision: ‘to prepare the city for the 21st century by reducing the size of government, creating wealth through the marketplace, and rebuilding civility by giving authority back to families, churches, and neighbourhood associations’.

 Small victories

He began by concentrating on small practical victories, and learning from these. An early programme was aimed at privatising the removal and sale of abandoned vehicles. Until then, it had cost the city a significant sum to dispose of 900 vehicles a year. A private company removed 2,300 vehicles and paid the city to do so. People applauded as the vehicles were towed away. These tiny seeds of optimism were eventually nurtured into effective community organisations, and a renewed sense of responsibility for the urban environment among city residents.

Another early test case was privatising the rendering of accounts to the city’s sewer users. Within three years, the benefit to the city in the form of cheaper costs and additional revenue from users not previously billed was $10,6 million a year.

A move to privatise street maintenance was opposed by unionised city employees, until Goldsmith asked them to quote as well. Motivated by the prospect of competition, they submitted the lowest quote, won the tender and actually delivered below it, working 68 per cent more efficiently than they had done while they were employees of the city. The workers were earning more than before, and the city was paying less.

Similar experiences followed in respect of the city’s printing services, waste water purification, airport, prisons, golf courses, vehicle fleet, and public parks. Goldsmith and his team developed a ‘yellow pages test’: if the phone book listed three companies that provided a certain service, the city probably should not be in that business: ‘If there are five florists in Indianapolis, the city probably does not need its own hothouse; if window-cleaning services are booming, why should the city operate its own?’

Between 1992 and 1997 more than 70 city services were opened to competition, either by privatizing them entirely or giving municipal employees a chance to compete with private suppliers.


Key issue

The key issue, he discovered, was not whether tasks were performed by public or private institutions. A private monopoly, like the water company, might be less bureaucratic and more efficient than a government monopoly. But without the spur of competition, the difference in price and service would be distinctly unrevolutionary. ‘It was competition, not privatisation, that made the difference. Competition drives private firms – and, we soon discovered, public agencies – to constantly seek ways to reduce costs and improve services.’

An early priority for making Indianapolis more attractive to investors was to reduce the ‘thousand pinpricks’ of regulation, while lowering taxes by controlling public expenditure, and spending the savings on housing, infrastructure, crime prevention, and community development. When he took office, he was appalled to find that Indianapolis’s regulatory code was 2 800 pages long. During his period of office, 157 000 processes and regulations were removed.

Urban communities and their leaderships came to occupy a central position in his approach to urban governance. Previous policies, he concluded, had focused on what government could do on its own while overlooking the individuals, groups, and structures present in each community that could be a large part of the answer.

Resolving urban problems required a joint effort by government, the private sector, and community organisations. Working in these partnerships would help create a sense of ‘municipal citizenship’ among city residents. ‘A strong municipality requires citizens, not merely taxpayers and recipients of public services. … Municipal citizens understand that the health of a city rests upon the degree to which they actuate their duty to the city and each other.’ In so doing, he argues, citizens also empower themselves.

Goldsmith strongly emphasises the importance of community-based organisations. Besides supporting and working with existing neighbourhood organisations, his administration actively created new ones.

‘No amount of government reform will save cities…without the support of active neighbourhood-based organisations, vibrant communities of faith and strong families…Too much government usurps the will of the community, but ineffective government is harmful as well … Vibrant twenty-first century cities…need just enough effective government, but can only succeed if healthy families instil positive values leading to opportunity and a good life.’

There are important lessons for South Africa coming out of Indianapolis and other American cities.