“Critical defence projects and national
highways will be built and operated by private financiers for the first
time, under plans by the Howard Government to encourage the use of
public-private partnerships,” The Australianreports today.

feds have finally discovered PPPs after ten years. It’s peculiar that a
policy combining the public sector’s access to cheaper capital and
the private sector’s better record of project management inherited from
the Conservatives be should have been so easy for Tony Blair’s Labour
Party to adopt – yet so hard for John Howard and Peter Costello to come
to terms with.

PPPs don’t necessarily get good press, as the story of a certain tunnel shows. However, there are plenty of other case studies worth looking at – and we can even learn from the Cross City Tunnel experience.

The weak point of the Cross City Tunnel has been traffic forecasts. PPPs deal with complex infrastructure. The contracts are complex, the
deals are complex, the modelling – financial, demand, whatever – is
complex, but they are all matters that should be able to be overcome by
quality advice.

PPPs can turn into lawyers and consultants
picnics. Deals are poorly structured. Underperforming assets can be
dumped back onto government books when the private sector is supposed
to be carrying the risk, but again these are all issues of advice.

being involved with PPPs in both government and the private sector,
it’s hard to escape from the conclusion is that the real problem with
them as far as governments – and, particularly, bureaucracies – have
been concerned, is that they offer an alternative form of service

They challenge bureaucrats’ old fashioned top-down
powers – and, worse, expose a lack of knowledge of financing, service
provision and project management the pencils pushers like to claim.
PPPs threaten mandarins’ empires and all the cosy relationships based
around them. That seems to be the real reason why we haven’t seen more
movement on this front in Australia.

Peter Fray

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