Public private partnerships to ease the burden
Post-pandemic, government balance sheets look shaky but the voting public continues to demand more and better hospitals, schools, public transport and even jails.
To meet this imperative, public private partnerships (PPPs) are re-emerging as a solution to spread the risk and ease the burden of up-front capital costs imposed on the public purse.
The circa-$1.3 billion Victorian Comprehensive Cancer Centre is a key Victorian PPP.
“Despite governments’ declining ability to fund infrastructure, we have substantial projected population growth so the demand for infrastructure will continue to increase,” says Adrian Dwyer, the chief executive of Infrastructure Partnerships Australia (IPA).
PPPs are long-term contracts between the public and private sectors to develop and deliver public infrastructure. They come in many flavours, including build-operate-transfer (BOT), build-own operate-transfer (BOOT) or design-build finance-operate (DBFO).
The concept is not new: NSW governor Lachlan Macquarie in effect created the first Australian PPP in 1810, by selling the right to toll bridges and ferries to private parties. Victoria pioneered the more contemporary iterations in the 1990s, with NSW and – to a lesser extent – Queensland proving to be fast followers.
IPA notes that, while many of the country’s big-ticket projects are PPPs, they still account for less than 10 per cent of overall capital spending.
“During the pandemic, the push by governments to do stimulus measures quickly meant they delivered [projects] themselves,” Dwyer says. “That means governments have been less focused on absolute efficiency in delivery. Now, they are taking a step back at how to get the most efficient outcomes.”
PPPs have been synonymous with
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