PPPs Privatisation In Disguise

The Key Government’s plan to give private industry a stake in the ownership of new public assets is simply privatisation in disguise, said Green Party Co-leader Metiria Turei today.

The Government plans to introduce a new requirement for public-private partnerships (PPPs) to be considered for all new public infrastructure projects worth more than $25 million.

“Opening the floodgates to PPPs will simply result in the transfer of large parts of the health, justice, education, and transport sectors into private ownership,” said Mrs Turei.

“It feels like the beginning of the 1990s all over again.

“All the evidence is that PPPs don’t work because taxpayers take all the risk while the private sector takes all the profit. PPPs leave the public locked into fixed contracts with private investors who make easy money from the asset, while the public bears all the risk if anything goes wrong.

“It’s simple — public schools and public hospitals should be public assets.

The Green Party today again called for the Government to create infrastructure bonds for New Zealanders to invest in rather than raise financing via the failed PPP model. Bonds would give New Zealander investors a fixed interest rate return on their investment

“If we allow a private stake in our key infrastructure, the risk is always that it will be sold to the highest bidder overseas and overseas companies will not run New Zealand assets according to our best interests. Bond issues avoid this outcome altogether.

“If the aim is to mobilize private sector skills and resources then this can be achieved via contracting in those skills, as is current standard practice.”

There are numerous examples from the United Kingdom and Australia of PPPs failing to deliver and in some cases costing the taxpayers millions of dollars. Even the New Zealand Treasury has advised that there is little evidence that PPPs work.

“We agree that we need to encourage value for money from the public sector spend but PPPs are not the way to achieve it. Alternatives like infrastructure bonds will create better value for money outcomes for the New Zealand taxpayer,” said Mrs Turei.

For further information: Public Private Partnership (PPP) projects — Myth busting, Australia Institute of Project Management www.aipm.com.au/html/media_release_public_private_partnership_ppp_projects.cfm

Financing Infrastructure Projects: Public Private Partnerships (PPPs), Treasury report 2006
www.treasury.govt.nz/publications/research-policy/ppp/2006/06-02/tpp06-02.pdf

ENDS

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