Hold that bandwagon!

Brian Rudman in this morning’s Granny provides a useful breath of realism to counter the campaign to promote public-private partnerships as the silver bullet solution to NZ’s infrastructure woes.

It’s timely, as National promises to “make greater use of public-private partnerships“, and the private sector has the scent of profits in its nostrils. The Government is currently looking at a PPP as a means of building the Waterview Connection.

I’m not saying that we should never get into PPPs. But we need to recognise that they’re no panacea. And that’s not just old-fashioned leftie talk. Here’s Mark Binns, chief executive of Fletcher Construction, quoted by Rudman:

“The concept is a natural progression of private sector involvement in infrastructure, but it is not the panacea for the country’s significant infrastructure requirements.

“There are also concerns about how the process may develop here. These concerns follow the company’s experience in Australia and relate to the complexities, cost, lead times and scale required to justify PPP projects.

“PPP contractual arrangements are usually very complex and this adds a layer of cost to the significant burden associated with bidding for major projects, which is already an issue for the New Zealand construction industry.”

In other words, the transaction costs are pretty steep.

Nor is the overseas experience particularly comforting. The spiritual home of PPPs, the UK, recently saw the spectacular collapse of London Underground contractor Metronet, based on PPPs. The House of Commons transport select committee said the PPP contracts were “pretty much useless.”

Although the Government tried to blame the structure and management of Metronet itself, a Professor of Transport at Imperial College (no less) said:

“The objective was to deliver public services with economy and efficiency. The PPP was proposed as a method of doing that and it has failed.”

As usual, and this is a key point, the city/government was left with the mess. So let’s not get carried away with this idea.

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2 Responses to “Hold that bandwagon!”

  1. Inventory2 Says:

    Public-Private partnerships eh? Now tell me – did Steve Maharey ever find the ditch he was going to die in if Labour ever went down the PPP track?

    Yup, I2, it’s called Massey University.

  2. Inventory2 Says:

    Speaking of which (or witch) – that new course that Massey is offering looks like a doozie!

    http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10526795

    Leave your broomstick at the door!

    Yes, chuckle, chuckle. But belief in sorcery was important in pre-enlightenment times, and figures prominently in various literatures. I liked the lecturer’s statement that, “We are putting it in a historical context. I also teach about Christianity, but I’m not advocating it.”

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