PPPs

October 20th, 2005

The issue of PPPs (public-private partnerships) has been bubbling along for almost a decade, but it has suddenly exploded, partly because of the fiasco with the Cross-City Tunnel in Sydney and partly because of a more general reaction against the string of bad deals that has been handed to the public in the process. I had a piece in the Fin a few weeks ago which elicited a very hostile response from Mark Birrell (former Kennett minister and now head of an industry lobby group). He quoted the British Auditor-general in favour of the British version (PFI), but as a subsequent letter-writer pointed out, some senior figures within the National Audit Office, notably Jeremy Colman, have been highly critical of the accounting for these projects, as have most academics who’ve looked at them.

Since then, there’s been a string of articles and media segments. The Australian, amazingly, has suddenly come out violently against PPPs. I just watched one on the 7:30 report with the redoubtable Tony Harris (whose recent piece has been reprinted at Troppo and also John Goldberg, a long-time critic of the traffic projections and tax arrangements in these deals. There’s some history from Chris Sheil over at LP. My column is over the fold.

Melbourne’s Scoresby freeway project, now the Eastlink tollway, has caused plenty of grief to both sides of politics. Federal Labor’s political woes of 2004 were worsened when the Bracks government announced, repudiating previous promises, that the project would be a toll road. Now Opposition leader Robert Doyle has been forced to abandon his own pledge to remove the toll.

Although Scoresby is commonly described as a $2 billion project, Doyle was advised that buying out the toll would cost at least $4.3 billion. The Bracks government published an even higher estimate, of $7 billion. Although the basis of these calculations was, as usual, not clear because of commercial confidentiality, it appears that the $7 billion is an estimate of the present value of tolls, discounted at the government bond rate, while the $4.3 billion is an estimate of the market value of the project, taking account of the additional risk borne by private investors.

This is not the first instance of this kind. The Carr government in NSW came to office promising to buy out a number of toll road contracts, but found that it was effectively impossible to do so, and had to resort to a complex system of compensating drivers. Undeterred, it has engaged in more toll road projects.

The most recent of these, the Cross-City tunnel, has been particularly controversial, since it has actually made traffic problems worse for many drivers. Apparently to protect toll revenue, other streets were closed when the tunnel was opened.

There are two major lessons in all this. The first, the consistent finding of many studies over the past decade, is that public-private partnerships are, in nearly all cases, an inefficient and costly method of financing network infrastructure projects such as roads. On top of the higher rates of return required by private investors to take risks that are more appropriately borne by governments, these projects typically involve substantial fees paid to financial intermediaries. The difference between the construction cost of projects like Scoresby and the figures quoted when considering a buyout of the toll is due, in large measure, to excessive financing costs.

Reliance on private funding for infrastructure was originally a method of getting around Loan Council restrictions on aggregate government borrowing. Despite some public disclaimers, it seems clear that the desire to deliver projects with the spurious appearance of no additional public debt remains a central component of the appeal of such public-private partnerships. In economic reality, a toll is a tax, and alienating a stream of tax revenue is exactly the same as taking on additional debt. The public is paying a high price to allow politicians to make spurious claims about ‘zero public debt’.

A more fundamental problem is that, in most cases, tolls are a perverse method of financing new road projects. The central aim of such projects is to shift traffic away from existing congested roads and onto the new roads, which are designed to have capacity for years into the future. The effect of a toll is to divert cars from the new roads to the old, congested routes. This is exactly the opposite of economically sound road pricing policy.

The need to collect tolls plays havoc with the design of the road system. Entrances and exits must be designed, not to smooth traffic flow, but to make toll collection easy.

The only sensible system of road pricing is one in which charges are based on congestion, not on the historical accident that the government was short of money when the road was commissioned. Motorists may object to paying for something they previously got ‘free’, but the central lesson of economics is ‘there ain’t no such thing as a free lunch’. What you avoid in explicit charges, you pay for in time spent in traffic jams.

One of the few politicians willing to learn the lessons of economics is London Mayor ‘Red Ken’ Livingstone, also notable as an opponent of the Blair government’s partial privatisation of the London Underground. Drawing on the ideas of the great Chicago economist Milton Friedman, Livingstone imposed a congestion tax of five pounds on cars entering central London. The result was an immediate reduction in congestion and increase in average traffic speeds. And Livingstone remains highly popular.

The Bracks government has announced a review of Melbourne’s transport problems, and foreshadowed its openness to radical policy options. Only one option has been ruled out in advance as too radical. You guessed it — a congestion charge.

John Quiggin is an ARC Federation Fellow in Economics and Political Science at the University of Queensland.

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  1. Chris Anderson
    October 20th, 2005 at 23:01 | #1

    Nice article there. To a certain extent government’s have long dealt with PPPs (public housing for example) but much of the current debate has been sparked/extended by the extenion of PPPs into major infrastructure.

    Quite often, by its very nature, major infrastructure projects invariably cost more then advertised when begun. This is due to a number of factors such as changed variables during the design/construction process, but mostly becuase the yearly budget cycles of governments creates incentives for departments to spin down the costs of these projects so they are more politically feasible.

  2. conrad
    October 21st, 2005 at 07:25 | #2

    Maybe I’m ignorant, but I can’t see why you think a toll is a *tax*, when most people don’t have to pay it, no-one must pay it, and you get a direct benefit from paying it. It seems more like a service to me (even if the consequences to the goverment revenue stream are the same). Under this definition school fees (because the goverment doesn’t support public schools well enough), fees for trips on publically owned buses and all manner of things would qualify as a tax (even ridiculous ones like fees charged at the zoo).

    I also think you are using what appears to be an independent argument unfairly against PPPs. If roads are built that make the traffic worse due to the deliberate closure of other roads/routes (which was exactly what happened to what I seem to remember was the publically funded SE freeway in Melbourne when it opened in the 80s, with exactly the same complaints dissapating quickly over time), then that is a planning error of the engineers (or the goverment for not listening to them), and nothing to do with the latter road operators/constructors.

    In addition, there are many examples of succesful PPPs from around the world (like most of the highly efficient and cheap rail systems in many parts of Asia). Simply because the Australian goverment has the tendency to screw them up isn’t an argument against them, it is just indicative of the performance of the government.

  3. jquiggin
    October 21st, 2005 at 07:58 | #3

    Conrad, the characteristics you describe apply to consumption taxes of any kind.

    The problem with road closures is an argument against tolls – it isn’t an engineering issue but a financial issue in cases when the motive is to force traffic on to the toll road. The argument against tolls is logically separate from that against PPPs but I think I make that clear in the piece.

    Can you point to some evaluations of Asian PPP rail projects?

  4. Harry Clarke
    October 21st, 2005 at 07:59 | #4

    Your analysis I agree with entirely but the term ‘partnership’ is a misnomer. These are just activities that involve enormous potential second-best distortions and which require extensive regulation if they are to be privatised. Roads should be publicly funded and operated to maximise consumer surplus less construction less congestion costs. If roads are uncongested they shoulde be unpriced but appropriately most roads should be subject to some congestion to reflect tradeoffs between time and capital costs.

    The private sector should build these projects but not operate them.

    Why is Macquarie Bank so profitable and why is Allan Moss worth $18 million per year? He says it himself — they spot areas not subject to competition where long-term profits are assured.

    I think they also make a craft of dealing with naive state governments partly by co-opting ex politicians to lobby for them and partly by deliberately creating confusion over the case for user pays versus efficiency pricing. The latter is what should be sought, the former is the object of inept government who rely on ‘financial advisers’ not proficient resource economists.

  5. jquiggin
    October 21st, 2005 at 08:23 | #5

    Harry, you’re right about “partnerships”. I have an article coming out in Aust Econ Rev that gives this term some critical scrutiny.

  6. Homer Paxton
    October 21st, 2005 at 08:38 | #6

    JQ, living in Sydanee I am staggered that the cross city tunnel will have their losses socialised.

    Surely the best policy is let the private sector build tollways and if they go belly up the taxpayer then gets the roadway at no cost if the government has no funds for it. tony Harris has actually shown that is incorrect however.

    This is not solving our infrastructure problems.

  7. J
    October 21st, 2005 at 09:02 | #7

    Another issue that frequently goes unmentioned with PPPs is that such projects effectively allow the government to avoid traditional administrative law rights and remedies available to subjects. Government decisions can be challenged and reviewed; prerogative writs and injunctions can be sought; information can be accessed under FOI laws. In short, goverments can be held to account. Because of private sector involvement in PPPs and the notion of ‘commercial-in-confidence’ PPPs are not subject to the same oversight.

  8. conrad
    October 21st, 2005 at 09:29 | #8

    I can’t find any non-biased reports quickly off hand (like the corporate site of HK mtr, or investhk), but the newer lines in Hong Kong (which are cheap and efficient by anybodies standard) were funded in this way (wikipedia has a history http://en.wikipedia.org/wiki/MTR) after the MTR was partially privatized in 2000. The deals are extremely weird, since the government often pays for its part of the construction by giving away bits of land (and allowing extensive development on them), and the fares are highly regulated due to the monopoly which the MTR has (I believe the profit margins are fixed also), but it doesn’t stop them running well.

    Everybody’s current favourite is Disneyland and the train line that goes with it, which is also cheap and efficient (versus Disneyland itself, also a PPP, which is neither cheap nor efficient, but mainland tourists don’t seem to care). The train line has only been open since September, but seems to function seemlessly (although as far as I’m aware, a lot of the details are hard to find — so it is hard to tell how well the government will do out of it directly). There are however a number of reports about it dating back from its conception floating around (including an early one in Harvard Business Review, that might also include details about the train line).

    You might like to compare this with current publically funded disaster with the Melbourne train system (Geelong->Melbourne slightly faster than slow train, for which the details become worse and worse), or alternatively the success which the completely public SNCF (France) fast train upgrade between Marseille and Paris has been (which happend about 2 years ago). The 2004 SNCF report is here (http://www.entreprise-sncf.com/mieux_nous/RA2004/index_uk.htm), which might detail the costs, in case you want to read it (in French) .

  9. conrad
    October 21st, 2005 at 09:49 | #9

    You might be able to find the sorts of deals that the goverment is thinking about doing on a new line that is probably going to be built by searching around from here :

    http://www.mtr.com.hk/eng/extensions/sil-westislandline.htm to the HKU site http://www.hku.hk/cupem/home/CentrePublications.htm

    This will have to be a PPP, because the MTR suggests that it is not viable as a purely private venture, although whether the government simply gives a construction subsidy and then doesn’t collect money directly is yet to be determined.

  10. Dogz
    October 21st, 2005 at 09:55 | #10

    Part of the huge price of buying out toll roads seems to be the creative accounting employed by the private partners, most notably Macquarie Bank. Somehow they are able to issue dividends from borrowings using tax breaks, and that inflates the “value” of the project on a discounted cash-flow basis. But it is all engineered: the dividend flow is not coming from the tolls, which don’t cover the cost of most of the projects anyway.

    So how about this for a solution: unlike the commonwealth, as far as I know, the states don’t have “no appropriation without due compensation” clauses in their constitutions (this came up a while back in SA because a bunch of fisherman complained about what the government was paying them to buy their licenses back). So why don’t the state governments simply offer the private partners the replacement price of the road? That would be fair, and would no doubt be considerably lower than the artificial prices generated by the financial engineering of the likes of Macquarie Bank.

    If the owners don’t accept the offer, then just confiscate the road. Would be wildly popular with the public I bet, and would be just desserts for the greedy infrastructure funds.

  11. jquiggin
    October 21st, 2005 at 10:52 | #11

    Oddly enough Dogz, I was discussing this point at lunch the other day. I think it’s workable, but of course you’d have to be confident you never wanted to do another PPP deal before you started.

  12. Doug
    October 21st, 2005 at 10:56 | #12

    Isn’t the building of public roads (not including PPPs) the last great soviet enterprise in Australia?

  13. jquiggin
    October 21st, 2005 at 11:25 | #13

    “Isn’t the building of public roads (not including PPPs) the last great soviet enterprise in Australia?”

    In’t this cliche the last resort of privatisers who don’t have a case, and hasn’t it been applied to every activity in the Australian public sector?

  14. Dogz
    October 21st, 2005 at 11:26 | #14

    I think it’s workable, but of course you’d have to be confident you never wanted to do another PPP deal before you started.

    Well, that’s what the current private players would want you to believe. But in reality, if there’s a buck to be made somone in the private sector will step up to the plate. It may not be Macquarie Bank, and you may have to change the structure of the deal, but as you point out, the current deals suck for the public so the structure should be changed anyway.

    I suspect the attack from the Australian is due in part to the fact that I doubt there is much love for the merchant banks in the Murdoch camp. They suck huge fees out of News just as they do everyone else. Fees just for broking deals, not for actually creating anything.

    So if you have at least one of the two major Australian media players on side (an enemy of my enemy is my friend), a politician with balls could pull off the buyback/confiscation. Of course, these days politicians with balls are about as common as tits on a bull (to butcher (ha!) a metaphor).

  15. Dave Ricardo
    October 21st, 2005 at 11:27 | #15

    Dogz, tempting as it sounds, it’s a dumb idea.

    If a state govermnent isn’t going to do PPPs, it’s going to have to finance the projects itself. This means borrowing the money, lots of it. Nothing wrong with that, but who is going to lend money to a state government that has just torn up a contract, let alone confiscated an asset worth billions?

    Nobody, that’s who. Or if they did, the risk premium on the borrowing costs would be horrendous.

    The state govermnents would be left with no private partners to do these projects with and no way of raising the money economically, if at all, to do the projects themselves.

    As John said, “the central lesson of economics is ‘there ain’t no such thing as a free lunch’ “. Short of tapping into some massive stream of their own cash, like finding oil under Parliament House, if they want these big projects done, governments either have to get in bed with the private sector, PPP style, or borrow from the private sector. The private sector has them by the short and curlies either way.

  16. Dogz
    October 21st, 2005 at 11:47 | #16

    Dave, I know where you’re coming from, but if the governemnt paid a reasonable, non-engineered price, the private sector would have little cause for complaint because the government would only be “confiscating” the artificial profits generated by the governments’ own favourable tax/accounting treatment. Maybe the government could be smarter about it – rather than doing something as agressive as threatening confiscation, they could change the tax/accounting laws so that the best engineered price is closer to the replacement cost.

    I don’t see why governments need to fear the private sector as a whole. After all, governments have way more power than the private sector will ever have. And the private sector never ignores making a buck – so even if you annoy a few players, there’ll be plenty of others willing to step up. Money doesn’t stay on the table for long.

    But somehow, it seems that at least in this country, the private sector has managed to convince politicians that they’re more powerful than they are.

    Of course there’s a political question, and you almost certainly want to get some powerful media players onside before pulling such a stunt. But given the stance taken recently in the Australian on this subject, it looks like Murdoch would be willing to help you out.

  17. Ian Gould
    October 21st, 2005 at 11:49 | #17

    One of my fundamental concerns about PPPs is that it lets governments dress up their balance-sheets by shifting contigent liabilities off their balance sheets.

    If any of the major private roadway projects got into serious financial trouble the state would bail them out (either through direct subsidies; allowing higher tolls, financial guarantees or outright purchase) – the one thing that almost definitely wouldn’t happen is that the roadway would simply be allowed to go bankrupt and be closed down.

    so the state still ultimately bears much of the financial risk – and in exchange for interposing a relatively small amount of private capital, the operators and lenders pick up what is generally a very lucrative and low risk revenue stream.

  18. Dave Ricardo
    October 21st, 2005 at 12:05 | #18

    Maybe, Dogz, maybe, but I can’t see a state government doing it, or even contemplating it. The last Premier to threaten something like this was Jack Lang, and he got taken care of in very short order.

    As for private players stepping in to make a buck, regardless of what’s happened to their brother capitalists in the past, in depends. Private Australian companies operating in China get screwed over by the authorities as a matter of course, but that doesn’t deter others stepping in, because the potential rewards from China are so big. But state governments in Australia aren’t China. They need the private players more than the private players need them. All it takes is a whiff of sovereign risk and they’ll be off doing deals with the government of Ontario, or Texas, or Lower Saxony, or wherever, rather than pissant NSW or Victoria.

  19. Ric
    October 21st, 2005 at 12:13 | #19

    Its good living in Perth, some roads might be a bit congested sometimes but no tolls. A new railway system going straight down the middle of a freeway so that people sitting in their cars doing 15 to 60kmh (when congested) can see public transport wizzing by at 130kmh on its way from Mandurah to Perth, sure it might cost $1.5b to $2b, but a lot of those people sitting in their cars are gonna go “Stuff this sitting in a car park, I’m taking the train tomorrow !”.
    Toll roads are a joke, take the M5 in Sydney, you pay $3.30 for a trip along some of the most lumpy concrete and bitumen in Oz , its only 2 lanes, and gets reduced to a car park regularly.

    And all because an aversion to debt.

    A company with no debt and good cashflow gets taken over on the sharemarket.

  20. Dogz
    October 21st, 2005 at 12:25 | #20

    Dave,

    They [state governments] need the private players more than the private players need them.

    I guess this is the crux of the issue, but I just don’t agree. That’s what the private players want governments to think. Its a political question for sure – you don’t want to be pissing _every_ private player off simultaneously. But the age-old game of divide and conquer still works well today.

    Macquarie still needs their Australian business, and if things get too stinky for them here, it is going to hurt their overseas business too. They don’t want foreign governments asking questions like “if your toll road projects are so f*cking brilliant, why are all the Australian state governments buying them back”?

    This is not about sovereign risk, its about leveling the playing field and cleaning up a few rorts.

  21. October 21st, 2005 at 13:10 | #21

    Short of tapping into some massive stream of their own cash, like finding oil under Parliament House, if they want these big projects done, governments either have to get in bed with the private sector, PPP style, or borrow from the private sector. The private sector has them by the short and curlies either way.

    Hardly the ‘short and curlies’, Dave. Whatever happened to raising money through common and garden variety treasury bonds, the cost on which would be far lower than the 12-16 per cent return the tunnel tollway pirates are ripping off?

    JQ, good to see you are about to attack the ‘parnership’ bunk.

    The concept of ‘partnership’ has come down to us from pre-modern times, and in liberal and social democracies it persists almost exclusively within the private domestic and business spheres. In both these contexts, the concept carries connotations of an alliance of two or more parties sharing, or pursuing joint goals, in something.

    With one minor and disturbing exception at the margins (which I’ll ignore for the main purpose here), nothing within the present PPP policies can be reasonably described as providing for the formation of partnerships, apart from the frequent rhetorical assertions that the policies do have this aim.

    On the contrary, the detail of the policies describes the formation of conventional, commercial, long-term, principal-agent contract relationships. There is no room for discretionary interpretation here. The terms of principal-agent relations are explicit throughout PPP policy statements (and contracts), sitting cheek-by-jowl with the flummery about partnerships.

    The sooner we move back to conventional terms like privatisation, contracting-out and out-sourcing, the better for all concerned citizens, clarity wise.

  22. October 21st, 2005 at 13:12 | #22

    Don’t know how I turned into “csa” – but there you go.

  23. Dave Ricardo
    October 21st, 2005 at 13:31 | #23

    “Whatever happened to raising money through common and garden variety treasury bonds”

    Good idea, Chris, but raising money through Treasury bonds means the government is saying “We want to borrow money from you and pay you 6% interest, which aint much, but you know we’ll pay you back, because we are a trustworthy government”.

    Which is usually fine, but wouldn’t be so easy to do by a government that had just appropriated a multi-billion dollar asset, as Dogz suggested. In those circumtances, I reckon the going rate on Treasury bonds would be a lot more than it is now.

  24. October 21st, 2005 at 14:08 | #24

    Yes, I take that point Dave.

  25. Dogz
    October 21st, 2005 at 14:10 | #25

    I am not suggesting that the state government appropriates a multi-billion dollar asset. They should pay a fair price for the asset, but that doesn’t include paying a price that is inflated through tax/accounting tricks.

    I can’t increase the value of my company by borrowing money to pay bigger dividends. Why can the private infrastructure groups?

    The difference between the states and commonwealth in this regard is that the states can decide what is a fair price, and the infrastructure groups have no legal recourse, whereas the commonwealth may be forced to pay the inflated price due to constitutional requirements. Obviously the states need to consider the long-term impact on bond rates and future capital raising any such action would have, but if it is _seen_ to be fair, then any impact should be minimal.

  26. conrad
    October 21st, 2005 at 14:39 | #26

    I think a lot of what this boils down to is that if governements could build and run infrastructure as efficiently as private companies, it would be cheaper for them to do so, as they have access to cheaper financing.

    At least from recent history, this doesn’t appear to be the slightest bit true. The Geelong-Melbourne faster than slow train appears to have gone 10 times over budget. More incompetence went on there than could be imagined (like failing to calculate stopping distances of trains correctly–something you might find on a year 12 physics exam). At least if they were a private company you could sue them to try and retrieve some of the money.

    It seems reasonable to suggest that on balance, governement s in Australia are useless and incompetent when it comes to spending public funds on infrastucture, and in addition are extremeley suscpetible to corruption (like the train that goes through the centre of Australia). This isn’t the case with all governements — if the SNCF wants to come and build a real fast train for me, I’d only be too happy for them to do it and fund it via government debt, which would probably get paid off in a reasonable amount of time because people might actually want to catch the train. At least with a PPP you get an extra source of accountability and a private company that might actually be able to make somewhat accurate estimates of likely costs.

  27. Dogz
    October 21st, 2005 at 14:53 | #27

    At least from recent history, this doesn’t appear to be the slightest bit true. The Geelong-Melbourne faster than slow train appears to have gone 10 times over budget. More incompetence went on there than could be imagined (like failing to calculate stopping distances of trains correctly—something you might find on a year 12 physics exam). At least if they were a private company you could sue them to try and retrieve some of the money.

    Who did the calculations? The government or a private contractor? If the latter, then they can be sued just as easily as in a PPP. If the former then yes, it was a total cock up by the government, but there’s no way they should have been involved at that level of detail in the first place.

    You don’t have to have a PPP to get the private sector involved. Just borrow the money and contract construction out. The problem with PPPs is that in order to put no money into the project, the government has to hand over rights over decades of revenues from the project, which takes away all flexibility in an area that almost certainly requires it.

    Of course, the problem with State governments borrowing money and contracting out is that the process is open to corruption and political favouritism.

    IMO opinion the best solution is borrow and contract, but with the whole process open to public scrutiny to reduce the risk of corruption.

  28. jquiggin
    October 21st, 2005 at 14:59 | #28

    I agree with Dogz on the feasibility question. State governments have used their takings power in the past without scaring bondholders too much.

    “t seems reasonable to suggest that on balance, governement s in Australia are useless and incompetent when it comes to spending public funds on infrastucture, and in addition are extremeley suscpetible to corruption (like the train that goes through the centre of Australia). ”

    Conrad, the Alice Springs-Darwin railway is a PPP

  29. rnr
    October 21st, 2005 at 15:02 | #29

    I’m not sure that private companies are necessarily more efficient at building and running infrastructure projects – as the Spencer Street Station and Wembley Stadium projects would indicate. However I am prepared to accept that generally private companies will have more experience in this area than government and should therefore, in my opinion, be contracted by government to build and run the projects. In this way the project has the benefit of a cheaper source of funds and it removes the need to guarantee revenue from the infrastructure in the form of tolls to ensure the private companies profitability. Mind you government would have to develop a high level of contract negotiation skills.

  30. conrad
    October 21st, 2005 at 15:22 | #30

    I had not realized that the AS->Darwin railway was a PPP. At least someone would have got the sack somewhere, unless they had very smart lawyers (or the government very stupid ones) working out the contract :)

    The calculations for the Melbourne->Geelong route are just the governments initial suggestions versus the estimated final outcome. There were lots of nasty stories in the papers documenting it some months back, like

    http://www.heraldsun.news.com.au/common/story_page/0,5478,12693772%255E25717,00.html

  31. stoptherubbish
    October 21st, 2005 at 15:26 | #31

    rnr,
    The source of funds are not cheaper if the private sector borrows at all. It is in fact cheaper if the government borrows the funds, and devises the most effective and efficient use of those funds, consistent with current and future needs for capital investment in various services/projects that meet social and economic objectives determined by the polity as a whole.

    The financial product sales market is a very inefficient, ineffective and wholly counterproductive route to sound, equitable, and efficient investment decisions on behalf of the public, however innnovative it may be as a way of developing international best practice remuneration packages for merchant bankers,lawyers and the PR industry.

  32. rnr
    October 21st, 2005 at 15:32 | #32

    stoptherubbish

    Sorry if I wasn’t clear – but I agree that government and not the private sector should do the borrowing.

  33. jquiggin
    October 21st, 2005 at 15:47 | #33

    Conrad, a link to Andrew Bolt is worthless. Perhaps you could find a more credible source.

  34. Dogz
    October 21st, 2005 at 16:58 | #34

    Bolt may be worthless, but Lambert is at least as biased in the other direction. I wouldn’t credit his opinion on Bolt, particularly when it comes to Flannery, who frankly does seem like one of the more egregious global warming scaremongers. He has a habit of saying things like:

    “These hurricanes are generated by high sea-surface temperatures – hot salt water,” he told ABC television.

    “As the planet warms, of course a lot of heat transfer is going into the ocean, so we have the potential to generate massive storms like this.

    “Many people fear that we’re seeing a permanent shift to a much more active atmosphere where these sort of storms will be now a permanent feature of life.”

    And then when confronted by people like Bolt he weasles out with responses like “I didn’t say Hurricane Katrina was _caused_ by global warming”. Yeah right Flannery, you didn’t say that exactly, but you sure as eggs implied it, and you know that most people will interpret your statements that way.

    I’m not a fan of Bolt but I am not much of a fan of Flannery either.

  35. AlanDownunder
    October 21st, 2005 at 17:05 | #35

    1. Conceding for argument’s sake that public enterprise is inherently less competent than private enterprise, at what is it more markedly less competent — funding, building and running infrastructure or negotiating and enforcing PPP contracts?

    2. How soon before all other PPP contracts become public? If the Cross City(‘s) Tunnel PPP contract was not confidential, why would any other be confidential? Are any FOI applications being renewed?

    3. The truth about PPPs is going to enhance the political saleability of congestion pricing just as the duration of PPPs precludes the implementation of congestion pricing. In a few decades’ time we’ll be screaming for it.

  36. Dogz
    October 21st, 2005 at 17:33 | #36

    Found some more great Flanneryisms:

    “I think there is a fair chance Perth will be the 21st century’s first ghost metropolis,” Dr Flannery said. “It’s whole primary production is in dire straits and the eastern states are only 30 years behind.”

    Tick tick tick….. 5 years into the 21st century and Perth is looking just fine….

    He said climate change tended to move in steps. In 1976, when the first step occurred, the south-western corner of Western Australia lost 20 per cent of its rainfall, and its catchment fell from 340 gigalitres to 111 gigalitres. The average is now 160 gigalitres. In 1998, when the second step occurred, the world experienced the worst El Nino effect and the death of 17 per cent of its coral reefs. South-eastern Australia was hit by drought

    Hmm, haven’t heard of this “step theory” of climate change before. Nor that climatologists attribute the severe El Nino or the drought to global warming. Still, I sure am glad Flannery is out there setting the record straight with calm, collected, and factually based statements (irony alert). What would we do without him.

    And he said Sydney needed to move immediately to hybrid-fuelled cars, and introduce stringent standards for housing that would foster solar and environmental industries.

    And that will have exactly how much impact on the global CO2 level Dr Flannery? (BTW, Flannery’s PhD is in Zoology, not Meterology. His (second) undergraduate was Earth Sciences, and first was English. He doesn’t seem that well-qualified on the climatology front – I suspect he wouldn’t know a partial differential equation if it bit him on the bum).

    Like I said, I am very very suspicious of this guy. Not convinced he is anything more than a rather adept self-promoter.

  37. SJ
    October 21st, 2005 at 19:04 | #37

    Flannery doesn’t enter into this, dogz. You were asked to produce a credible reference. So, produce one.

  38. October 21st, 2005 at 20:03 | #38

    The Bracks government has announced a review of Melbourne’s transport problems, and foreshadowed its openness to radical policy options. Only one option has been ruled out in advance as too radical. You guessed it — a congestion charge.

    Nationalise the suburban highways.
    Congestion charge the urban byways.

  39. Peter Fuller
    October 21st, 2005 at 21:08 | #39

    Re the Melbourne-Geelong “fast” rail project: As I understand it, Bolt is literally correct in that the Government contribution has risen from $80m to $750m. However, this was due to the original plan (a PPP, iirc) falling over. So the Vic Government is now meeting the whole cost, rather than a modest proportion of the total, as originally envisaged.
    This may allow an inference of incompetence on the part of Bracks and Transport Minister Batchelor but by itself it doesn’t prove anything about the merits of Government funding compared to PPPs. Further and better particulars required to make the point Conrad is advancing.

  40. conrad
    October 22nd, 2005 at 06:59 | #40

    That was just a specific example that was quick to dig up. I used it since it was of recent political controversey, where politicians were shouting and point scoring, rather than trying to find a solution.

    I’m just being pragmatic. Over the last 90 years or so, a country like France has constructed, via public funds, an extremely good, cheap, and efficient national train system. Because it is good, people use it (and it gets exported all over the place now as well). They have similar problems, in that France is a big country and you need long lines. There are also similar cultural tendencies, in that many people in one place like to go to another place for their holidays (North->South France, versus Victoria->Wherever). This shows that it is not just high people density countries that can have a decent train system.

    Alternatively, if I compare that to what exists in Australia (where people even have had difficulty trying to standadize track size) and how well it runs then there is an undeniably huge difference (is anyone saying the rail system has been well run in Australia ?). I wouldn’t even think of taking a train from Melbourne to Sydney, for instance, but I take the Marseille->Paris line (a similar distance) all the time (including over the weekend for a quick holiday). Its not just me here, as there are large numbers of buses that make trips like Melbourne->Sydney that no-one would take if there was a fast efficient train service. In addition, I suspect most people would favor the train over the plane for trips of about that distance (as is true of France), since a decent train would get you from the centre of the two cities in about 4 hours versus having to go through airports etc.

    So my conclusions is that if the French government wants to loan money to build a decent cheap train system, I’m all for it. Alternatively, I wouldn’t in the slightest bit trust the people who spent 90 years constructing the system in Australia, and still don’t seem to be able to construct or run things without controvesy today. Why should I ? If a private company wants to come along and join in with the government to run a better service, then I see that as better than no service at all (or the current state), even if it costs a bit more due to higher financing costs and higher profit margins.

  41. Dogz
    October 22nd, 2005 at 11:47 | #41

    Flannery doesn’t enter into this, dogz. You were asked to produce a credible reference. So, produce one.

    Yes he does SJ, and no I wasn’t.

    Follow PrQ’s link – it is to Tim Lambert’s blog where he gets stuck into Bolt for attacking Flannery. PrQ is using that to justify his assertion that Bolt is “worthless”. Like I said, Bolt may be worthless, but looking at Flannery’s background and his pronouncements over the years, he looks like little more than a rather skilled self-promoter, with no background in anything relevant to the study of climate change, who has jumped on the global warming bandwagon to enhance his own media profile. Just an opinion of course, but that’s my take on the guy. Not someone I would hold up to prove Bolt worthless.

    And I never linked to Bolt in the first place – it was Conrad. Check your facts before getting stuck into others.

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