As reader Jonno points out in comments to the previous post on this, the problems with Public Private Partnerships are beginning to become apparent even in the UK where, under the name of the Private Finance Initiative, the idea has been pushed strongly by both Conservative and Labour governments.
This report in the Guardian indicates that the UK Treasury is pulling back from an aspect of the PPP model I’ve long criticised, the bundling of “soft services” like cleaning and catering into contracts for the construction and maintenance of hospitals and schools. The British government is still pushing ahead, under intense pressure from the business interests who benefit from these schemes, but the Treasury Report while unsurprisingly positive in tone, stresses the subsidiary role of the PFI, which is expected to account for between 10 and 15 per cent of total investment in public services.
John Quiggin 
PPP’s are just another way to tax the gullible. If you can’t blind ’em with brilliance, baffle ’em with bullsh*t
Public-private partnership will bring success when Government has liabilities towards citizen as well as corporate sectors do not forget their social responsibilities.Only profit motive attitude of private sectors today fail to flourish;ruin in itself.
I have just submitted my comment in this regard.But elaborate study is necessary to make it success.My comment does not mean the solution of the problem.More study materials are necessary for continuous research.
Agreed but not without any doubt.
Thanks for ending it here for today.
Talking to yourself is a sure sign that you have gone mad and turned into a spam bot.
aspro,
The one of the main problems is that the gullible in this instance are normally the ones we elected.
My experience with public/private sector deals is that the public sector are (almost totally)incapable of proper contract management.
Public depts are subject to the Minister and are therefore politicised. Doesn’t matter if they become corporatised, Ministers still sit on the board. Local councils are not far behind, in an effort to cover all eventualities and be seen to be P/C they border on the bizarre.
Landcom NSW have woken up and are now stepping back from hands on land development and taking a more back seat approach. There are real efficiencies to be made in allowing commecial operators to manage the entire works.
What of the PPP, after the event, such as the govt setting up a hydro scheme only to flog it off to the private sector – whereby those who paid for it lose control of :
1) the water
2) the fragile mountain environment
3) the electricity supply?
The public will not only pay for the infrastructure but will also pay through reduced environmental outcomes as the company will be keen to earn its profit without due regard to the fragility of the water system or the mountain ecosystem.
This is why PPPs are seen as profitable – the loss making parts of it are in the public sphere while the profit is in the private sphere. No wonder business loves this version of capitalism.
Are they going to give it away or sell it? Your rhetoric implies they are giving it away as a gift.
Since 100,000 people laboured for twenty years to build it, at a human cost including some 121 workers killed in industrial accidents, the alleged $2 billion they’re getting for it looks to be pretty small beer. As a symbol of nationhood, it’s right up there with the beaches at Gallipoli.*
The environmental issue is this – the contract will specify certain environmental outcomes, but these will become locked in. Future scientific discovery will have no influence on environmental outcomes. At present, the shareholding governments can simply agree to change Snowy Mountains policy – as they did a couple of years back with increased outflows to the Snowy River. Once it’s sold, that’s it.
The most appalling aspect of the whole thing is that not one of the participating governments bothered to consult the electorate about the deal which is being rushed through so as not to coincide with any electoral event. At least Howard could argue that Telstra was thoroughly debated.
*Mind you, it’s arguable that the desecration of the Gallipoli battlefield by this same Howard govt suggests national symbols are of little account.
Years ago they used to build roads with pick and shovel and horse drawn drays – during the depression there was quite a few public works projects with large camps of workers hard at it.
Times have changed, with a good machinery and operators the job can be done with minimum fuss.
Should all roads be held sacred, on par with Gallipoli? I think not, more lefty hysterics.
“Should all roads be held sacred, on par with Gallipoli? I think not, more lefty hysterics.”
Perhaps Rog you know little of the Snowy Mountains Scheme and its place in Australian history and self-awareness. Would the French sell off the Eiffel Tower or the Americans the Brooklyn Bridge? The argument about flogging off freeways and hospitals is primarily economic and this simply is not true for the Snowy Mountains Scheme.
Would they be any less iconic in private hands? Is Disneyland any less American simply because it is not owned by the government?
No Terje, but then again Disneyland doesn’t control a vast natural resource either.
Hal9000,
For those of us in the rest of Australia the Snowy Mountains Scheme was a waste of money. We got nothing for it except higher taxes. If we get a little bit of that back by selling it, I say go ahead. Not every government project needs to be molly-coddled and preserved for eternity just because it was big and impressive.
People died and we should preserve their memory – but they worked for their families and the future of this country, not a distinct way of owning a piece of infrastucture.
Perhaps Hal you have invested too much emotion in to what are essentially only public uitilities – time for that well earned cuppa, hmmm?
Andrew,
The hydroelectric scheme of the Snowy Mountains plays an important role in stabilising the electrical grid in NSW and Victoria. It is also one of the few available means of energy storage within the grid and allows for significant smoothing of the mismatch between electrical supply and demand across the hours of the day. As such I think everybody in NSW and Victoria that use electricity has been a beneficiary of the scheme. I am quite certain that once it is in private hands those same consumers will continue to be beneficiaries.
Regards,
Terje.
Isn’t one of the primary attractions of the PPP for governments that it takes liabilities off the balance sheet, so that debt-averse Labor states can continue to claim to be paying down debt while still providing infrastructure?
Perhaps. But they don’t need a partnership to do that. They could just get the private sector to build the infastructure and let them assume the full cost, the full risk and the full commercial benefit.
They ARE a corrupt thing.
They fit in with the overall neo-libs mantra of “small (read impotent) government” and the unsaid reality of privatisation of public wealth and socialisation of debt when things go wrong. They are part of the globalist move that was capitalism’s response to Keynesianism; of divide and conquer through turning the nation state in on itself and against other nation-states, against an older ethic of social cooperation and use value over exchange value and feishism, through the encouragement of greed and selfishness. The increasing the relative power of multinationals and pension funds etc occurs against the backdrop of local and trade deregulation, further weakening the capacity of a democratic to direct its own affairs. As exchange value precedes use value, what is produced becomes even less valuable in real terms, futher ultimately discrediting government, which is the chosen scapegoat of the mass media.
But, in the end it matters little whether the ransacking occurs at gunpoint, as in Iraq, or surreptitously in places like Australia. The price will have to be paid later if not now.
PPPs have real downsides in that governments forget the outcomes that are for the benefit of the whole society and focus on the benefits for those who make a profit.
It is likely to lead to corruption as it is not so hard for a politician or key public servants to receive a benefit in kind or in a brown paper bag. As we can see from the AWB payments to Iraq this kind of behaviour is already well entrenched in the psyche of Australian business as many people have condoned the behaviour as inevitable. We can expect to see more of this if PPPs become entrenched.
If the company doesn’t do their sums properly (or deliberately underestimates) the government is likely to put in more money as the whole project would fail otherwise.
The government loses control, the lawyers have a picnic and the results are too often poor as companies seek to benefit their narrow shareholder base which comes at the expense of service to the public and the environment.
As the company only has the responsibility for one aspect ie the delivery of the outcome the other parts which make up the social contract between the people and government are too likely to be ignored.
There’s an interesting column on PPPs in today’s Age.
http://www.theage.com.au/news/opinion/private-deals-public-pays/2006/04/05/1143916587268.html
The column is by a guy called Graeme Hodge, apparently a professor of law and director of the centre for regulatory studies at Monash University, who has co-edited a new book titled The Challenge of Public-Private Partnerships: Lessons from International Experience. Anyone seen it?
Hodge is good, and has worked in the field a long time. This piece is more critical of PPPs than I’ve seen him write in the past – suggests that things are going badly under Bracks.
Interesting postscript in an article entitled,”$1.2 billion sting in the rail”, by William Birnbauer, in the “Age”;13/4, to that last bracket of blogs concerning Prof. Hodge. It features revelations from a report by four Melbourne academics (Mees, Stone, Buxton and Moriarty) that suggest that privatisation of Victorian public transport has already cost a billion dollars more, since 2004, than it would have if it had remained in public hands. A “hit” of a further $two billion is expected by 2010.
This has this writer in mind of a point Prof. Hodge made, which he thinks is meant to infer that infrastructure in public hands, generates a scrutiny likely to develop respondingly more acceptable performance, not in evidence with subsequent privatisation examples and their nonsenses of “Commercial in Confidence”, etc.
Hence the neo-lib furphy of “private” as more efficient than “public” is resoundingly refuted at its base (unless we employ the notion of “efficiency” in the sense it should be applied to neo liberalism. That is, as “efficient”, not so much in the providing of a better product, but its ability to ransack for the benefit of shareholders)
Transparacy of accounting for avoiding corruption and corporate social responsibility are needed for PPP.