Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

Governments can’t comprehend it, but a partnership is not a dictatorship

By Everald Compton - posted Tuesday, 5 July 2011


Public private partnerships, generally known as PPPs, have had a chequered history in Australia, quite differently to their fate in other nations. Prime examples of such disasters have been the Airport Railway in Sydney and the Clem 7 Tunnel in Brisbane, but there are several more tragedies pending.

Their significant problem has been that governments do not know what the word partnership means. They reckon that a partnership is one where the government lays down all the rules and regulations, while placing all financing and public risk responsibilities firmly in the hands of the privatesector, and clearly indicating that under no circumstances is the government to bear any cost whatsoever. They even make the private sector pay the legal bills incurred in setting-out their rules.

Despite the enthusiastic spin that state and federal governments give us about their positive attitude to PPPs, their actual policies are a disaster and need drastic reform.This is sad because our nation needs PPPs badly. All of our governments have a poor cash flow and mounting debts, which put them in the position of being unable to provide capital to build the infrastructure that we desperately need to overcome crowded roads, inadequate railways, clogged ports, increasing demands for world class hospital facilities, and much more.

Advertisement

In searching for an answer to this debacle, I consulted two friends of mine who are infrastructure partners of Blake Dawson Lawyers, Tony Denholder and Mark Disney. They have done a lot of work on planning how governments can get into PPPs in the right way to get real results, and I reckon that they will be a key driving force behind a PPP revolution in Australia. Setting it out in basic terms, we have come to the beliefthat these principles are the foundation for good PPPs that can be based on toll revenues for a range of different projects:

  • Preferably, all PPPs should be 50/50 partnerships. This equal partnership must cover the provision of capital, the acquisition of debt and the allocation of all risks. The partnership would end on a pre-agreed date for an IPO, when either or both parties have the right to get out.
  • If a government would prefer that the private sector provide all the capital and debt and assume responsibility for all risks, then it must provide a shadow toll for at least a decade based on projected vehicle movements or mineral tonnages transported or shipped, without underwriting any actual trading losses. The minimum franchise period should be 50 years, after which the project is handed back to government for one dollar.
  • Capital required by governments for their equity requirements can be raised from the public by infrastructure bonds that pay a specified margin above the bank rate, with the interest being paid from general revenue.
  • Revenue from bonds can also be used to provide the debt requirements of projects, with interest being the ultimate responsibility of the private partner. This would avoid the high fees normally paid to financial advisers who would otherwise arrange debt.
  • Governments must reduce approval and regulatory processes from the current period
  • Directors appointed to represent the governments on joint venture companies must not be public servants, but instead be experienced corporate directors selected from panels chosen by governments and comprising persons of integrity who have no conflicts of interest with a particular project.

I will be interested in your views, as the creation of a new PPP framework is now a matter of extreme urgency, as Australia is at least a generation behind in meeting its fundamental infrastructure requirements.

Just one instance of this is our total lack of high speed trains. We needed them badly during the ash cloud crisis. Maybe, this could be the trigger for governments to move.  

  1. Pages:
  2. Page 1
  3. All


Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

18 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Everald Compton is Chairman of The Longevity Forum, a not for profit entity which is implementing The Blueprint for an Ageing Australia. He was a Founding Director of National Seniors Australia and served as its Chairman for 25 years. Subsequently , he was Chairman for three years of the Federal Government's Advisory Panel on Positive Ageing.

Other articles by this Author

All articles by Everald Compton

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Photo of Everald Compton
Article Tools
Comment 18 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy