27 November 2013

Public sector commitment and certainty crucial for PPPs to succeed

Of course Auckland needs to take a good hard look at public-private partnership models for funding badly needed infrastructure says Auckland Chamber of Commerce head Michael Barnett.

With a long list of unfunded major projects it is past time that Auckland seriously looked at new options to relieve the financial burden on ratepayers and taxpayers.

The potential of PPPs and other alternative options in use elsewhere such as more efficient use of assets and greater ‘user pay’ should be part of the debate.

Putting aside the consideration that the Mayoral Funding Group that earlier in the year looked at alternatives for funding Auckland transport didn’t seriously look at these options, Mr Barnett agreed that PPPs deserved serious attention. “But we can’t keep debating these options endlessly. They need to be tied to specific projects and provided as a specific funding solution.”

The E&Y report makes clear that the private sector will only become interested in infrastructure PPPs when they are assured the public sector is fully committed.

We need any PPP project to be defined exactly and undertaken in a way that ensures the private sector is contracted to take on all the risk, and especially traffic risk in transport projects.

Another critical factor in defining a PPP project is to ensure the scale will be sufficiently attractive to the finance market.

Auckland projects of scale that might provide scope for a PPP could be to link the long-debated Penlink project to provide a toll road to the Whangaparoa Peninsula with the Road of National Significance (RONS) extension of SH1 between Puhoi and Wellsford, suggested Mr Barnett.

“The principle of PPPs is not a debate we can sensibly have unless it is tied to specific projects and a business case showing the benefits and the specific projects value,” said Mr Barnett.

ends

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