The Fin Review splashed yesterday’s paper by tallying up the
various infrastructure projects announced in the recent state budgets
and declaring that a $26 billion investment boom beckoned in 2005-06, much of
it utilising the funny money financial structuring of Private Public
Partnerships or PPPs.

The Blair Government has blazed the trail globally on PPPs but critics
are increasingly suspecting the whole approach is just one big
accounting ruse designed to reduce the claimed size of Britain’s public
sector debt and deficits.

While off balance sheet structuring should have been given a
permanently dirty name after the Enron collapse, British prime minister
in waiting, Gordon Brown, has been doing his own Enron impersonation for
most of the past decade. The latest edition of Private Eye leads with this edited back item:

Public accounting for the private finance initiative (PFIs,
the English version of PPPs) has again been exposed as a sham by new
revelations that billions of pounds of PFI debts have been incorrectly
omitted from government borrowing figures for years.

Critics have long claimed that by replacing conventional borrowing and
ownership of public facilities with agreements to pay for using them
over decades, the burden on taxpayers is masked for years to come.

In 2004, Chancellor Gordon Brown responded to comments by Tory
spokesman Howard Flight by repeating the earlier claim by his treasury
chief secretary Paul Boateng that “57% of PFI projects are on balance
sheet, not off balance sheet.”

It has now emerged from the Office of National Statistics (ONS) that,
contrary to the government’s assurances, even the liabilities
associated with the 57% of PFI deals classified as “on balance sheet”
have notbeen included in public sector borrowing
figures. These deals could amount to anything up to 25 billion pounds
of extra public borrowing, taking government debt perilously close to
Gordon Brown’s self-imposed borrowing limits and exploding the fiction
that the government’s program of investment comes without a substantial
increase in liabilities.

So much for Gordon Brown’s reputation for prudence.

Sound familiar anyone? How many dodgy Australian PPPs are not yet
on our public sector balance sheets? The Spencer Street redevelopment
in Melbourne? The Carr’s government’s Port Macquarie Hospital contract?
Peter Beattie’s 30-year Southbank TAFE deal?

A cynic might say the major motivation for PPPs is simply to cook the
books and deliver a service while hiding the cost from the public. It’s a sham that Enron would be proud of.