Public Private Partnerships and their suitability for Australian State Governments
Public Private Partnerships (PPP) are project’s entered into by Government and private firms jointly. They are usually concerned with the building of public infrastructure and their finance, revenue streams and responsibilities. In this paper I will examine the different types of PPP’s, their benefits and disadvantages and will provide an assessment as to their suitability for Australian State governments. Public Private Partnerships have become an increasingly common way for Government’s around the world to finance infrastructure projects in mixed market economies. The basic principal is that private firms can operate more efficiently than bureaucratic bodies and are able to deliver a public service reliably and in a cost effective manner. These firms provide a public service on behalf of the government for a fee. ... Private firms have varying degrees of involvement in PPP’s, ranging from simply obtaining contracts to service a small part of a function of government, to divestiture, whereby the firm or firms involved own the asset. ... Governments must be both financially and socially responsible. Public Private Partnerships have obvious theoretical benefits for both the Government and private firms within Australia. ... Private business has technical and managerial expertise that is not always available to government. ... Indeed it is the ability of firms to obtain finance that makes them attractive to governments. In raising the funds required to make large capital purchases governments must increase their debt or obtain those funds from increased taxation, neither popular choices for governments of any persuasion. ... The finance options available to firms can result in a public service being offered which might not have been available had the Government been forced to finance it through their mechanisms. ... They minimise costs and maximise revenue in a way that governments will not or cannot do. In order to maximise profits these firms would also examine the most efficient approach to not only the development of infrastructure but also the maintenance and operation of the public service. If the government concerned was to largely undertake the project themselves they would more than likely still offer aspects of the construction, servicing and maintenance to private firms on a contractual basis. ... This introduces an accountability that serves as a safety net for governments. Public Private Partnerships have not been without their critics. ... It is certainly not without its risks, for both the public and private members of the project.