Have PPPs matured ?
I’ve been involved in the debate over private infrastructure and public-private partnerships for more than a decade, and have accumulated lots of evidence that the public sector generally loses from these deals. One response I get a lot is that the process has matured and that the failures of the 1990s are no longer relevant.
Sydney’s Cross-City tunnel fiasco makes it clear that this is not the case. This deal has all the features that I and others have been criticising for years – secret clauses, restrictions on future planning, closure of alternative routes, crippling penalties for changes and so on. But there’s more. The inclusion of an upfront payment to the RTA, effectively creating a slush fund outside the normal budget process, is an abuse that wasn’t even contemplated a decade ago.
It’s reported Treasury is furious over this and I’m not surprised. They’ve been trying to establish a coherent PPP process, but toll road projects seem to fall outside its scope. But the fundamental problems are, as far as I can see, inherent in the whole concept.
Other recent developments make it clear that we need a moratorium on PPP deals. How can the public interest possibly be protected when any politician or public servant involved in these processes can expect a multi-million dollar sinecure on retirement, provided they don’t upset the applecart? You only have to look at the payrolls of the major players in the industry to see what I mean. Tony Harris, the former Auditor-General who exposed the dodgy accounting behind many of the early schemes is one of the few people involved in the process who doesn’t have a cushy job or consultancy of some kind.