Datafolha: Support for privatization jumps and reaches 38% – 04/08/2023 – Market

Brazilians’ support for the privatization of companies and public services has increased in the last six months, and the majority of the population positively evaluates the quality of service and products delivered by the private sector in comparison with those provided by the State.

The population’s adherence to the continuation of the sale of state assets is greater in sectors where privatizations and concessions have already taken place, such as highways, sanitation, airports and electricity. But, despite considering private products and services better, Brazilians find them more expensive.

According to a Datafolha survey, 38% of Brazilians support privatizations, compared to 45% who say they are against. The approval rate is the highest in the Datafolha series at least since 2017, when only 20% were in favor of the topic. Overall, men are more supportive (46%) than women (30%).

Despite more Brazilians approving the privatizations, there is no majority support or rejection, revealing that the opinion on the subject has not yet crystallized.

In September of last year, only 26% were in favor of transferring companies and public services to the private sector, while 66% were against it.

The increase in support for privatizations may be related to the fact that the Workers’ Party, which is resistant to the issue, won the presidential elections in 2022. In a scenario of divided voters, supporters of Jair Bolsonaro (PL) or right-wing parties may have reinforced their convictions when responding to the survey.

According to Datafolha, 70% of the supporters of the PL are in favor of privatizations. Among PT supporters, only 28%.

Last week, President Luiz Inácio Lula da Silva (PT) decreed the removal of Correios, EBC (Empresa Brasileira de Comunicação) and Conab (Companhia Nacional de Abastecimento) from Bolsonaro’s list of privatizations. The three state-owned companies are part of a package with seven more excluded from the PPI (Partnership and Investment Programs) and the PND (National Privatization Program).

According to Datafolha, the more educated and wealthy, the greater the adherence to privatizations. But even among the poorest families, with incomes of up to two minimum wages, support is not very different from the population average — 34% and 38%, respectively.

Datafolha also questioned Brazilians about how they evaluate the quality of products and services delivered by the private sector compared to state-owned companies. The majority (54%) consider private ones better; 25% think they are worse; 6% consider it equal and 15% could not answer.

In terms of age, 63% of those aged between 16 and 34 consider private products and services better than state-owned ones. For those over 60, only 42% have this assessment. Younger people, however, find private products and services more expensive than older ones.

Regarding the quality of customer service, 61% think that provided by private companies is better compared to state-owned companies, while 22% consider it worse – another 6% think the same and 11% did not know how to answer.

However, when questioned about the prices of products and services offered by private companies in comparison with those of state-owned companies, 67% answered that the former are more expensive, while 19% consider public ones to be cheaper. The poorer the family, the greater the perception that private prices are higher.

The Datafolha poll polled 2,028 people aged 16 or over in 126 municipalities on March 29 and 30, and has a margin of error of two percentage points, more or less.

In the survey, Datafolha also asked respondents about support for the transfer of state companies and services to the private sector.

The adhesion of Brazilians to privatization is lower when it comes to Petrobras (37% in favor, 53% against; the others are indifferent or do not know) and public banks, such as Banco do Brasil and Caixa Econômica Federal (36% in favor, 55% against). In the case of Correios, there is a virtual tie between those in favor of privatization (45%) and those against it (46%).

In sectors where there have already been a series of privatizations (and large investments by private companies), Brazilian support for the continuation of the sale of state assets tends to be greater than the percentage of those opposed.

In the case of highways, 48% of respondents are in favor of privatization; 44% against. According to an association that brings together concessionaires in the country, they have invested, in the last 25 years, around R$ 240 billion in the 24 thousand kilometers of highways currently granted.

According to Fundação Dom Cabral, based on Federal Highway Police records between 2018 and 2021, the risk of accidents on public highways is four times higher than on concessioned roads.

In the airport sector, 47% support privatization, while 42% are against it. In recent years, the percentage of passengers who assess airports as good/very good jumped from 69% in 2013 to 92% in 2021, according to the National Civil Aviation Secretariat.

In basic sanitation, where almost half of the population still does not have treated sewage, 49% of Brazilians support privatization; 44% are against.

Since the approval of the so-called new regulatory framework for sanitation, in 2020, the federal government has accounted for around BRL 90 billion in investments and grants paid by private companies to provide services in 225 municipalities. The intention is that, by 2033, 90% of the sewage in the country will be collected and treated.

Last week, the Lula government made changes to the framework, considered a setback. With the changes, the way was opened for state-owned companies to operate water and sewage services without bidding, changing one of the foundations of the law sanctioned in 2020.

Datafolha also asked Brazilians how they evaluated the privatization of the telephone system, following the sale of Telebrás, in 1998, during the Fernando Henrique Cardoso government (1995-2002).

For 39%, the transfer of the state service was excellent/good, and another 25% consider the result fair. About a quarter (27%) think it was bad/terrible, and 9% did not know how to assess it.

Before the privatization of Telebrás, Brazil had 7.4 million active cell phones, and fixed lines were expensive enough to be declared in the Income Tax. Today, the country has 259.1 million active mobile lines, and the call cost, in relation to 1998, fell from R$ 7 per minute to R$ 0.44, on average.

Privatizations in Brazil began more than three decades ago, with the launch of the National Privatization Program. The biggest ones occurred between 1990 and 2000, especially during the FHC government, when companies in the telephone, steel, mineral extraction and banking sectors were sold.

About US$100.3 billion was raised in that period (in face values). As of 2001, the sale of state-owned companies declined and gave way to concessions and PPPs (Public Private Partnerships) – leading to the transfer to the private sector of highways and airports, among other assets.

Despite the downsizing, Brazil still has 47 state-owned companies under the control of the federal government, which employ around 445,000 employees. In 2021, personnel expenses reached BRL 116.1 billion, with some monthly salaries exceeding BRL 100,000, in addition to generous profit sharing and retirement and health plans far superior to those of the private sector.