PPPs and upfront cash – part 2

John Quiggin18 Comments

I’ve been thinking about the upfront cash payments that are apparently part of most recent PPP contracts signed by the RTA in New South Wales. In essence, the government is borrowing money at the average cost of capital imputed to the project (I’d guess this is at least ten per cent), paying fees to the consortium for the privilege and repaying the loan by increasing the allowable monopoly toll. As Chris Sheil said in comments on the previous post, this takes us back to the good old days of selling taxes.

These arbitrary payments undermine claims that PPP contracting has matured and that everything is now to do with value for money and optimal risk allocation. THe purported official rationale I saw was to “ensure that taxpayers are not out of pocket”, which is redolent of the kind of cash-based accounting mentality that got us into the private infrastructure mess in the first place. This is an illustration of the fact that we’ve never got past the kind of deal-driven rent-seeking mentality that has characterised these boondoggles all along.
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What I’ve been reading

John Quiggin11 Comments

I’ve been too busy to keep up this supposedly regular feature, but I have been reading lots of interesting stuff in the last few months. Over the fold, I’ll list some of them and try to write a sentence or so about each. (I’ll probably keep updating this for a couple of days as I get time). I plan to review some of these, so your suggested priorities would be of interest.
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Walkley on blogs

John Quiggin58 Comments

The Walkley magazine (home of the Walkley awards for journalism – the nominees are in this issue), has a feature about blogging, including a bit from me. The money quote from the main article is

Daily Telegraph columnist Anita Quigley spoke for many journalists when she wrote on August 10, 2005: “Why some pimply-faced geek, sicko or average Joe Blow thinks someone else wants to read every random thought that crosses their mind is beyond me. Alongside the belief that we all have a novel in us – we haven’t – blogging is the ultimate form of narcissism.�

There’s also an online blogging forum, but it hasn’t really got started yet.

Also from the Telegraph, a piece by Malcom Farr, which I’ll link without comment. Hat tip, Surfdom

PPPs and up-front cash

John Quiggin9 Comments

I only recently caught up with the fact that the Cross-City Tunnel and other PPP projects in NSW involve upfront payments (in this case around $100 million) from the private parties to the Road and Traffic Authority. I haven’t had time to work through the implications of all this, but it certainly raises a lot of questions.

No rising generation

John Quiggin29 Comments

Reading Maggie Gallagher on how gay marriage will bring an end to marriage as an institution for procreation and Leon Kass on how the Pill has ruined courtship, you can see the usual story of a vanished golden age. For Kass, it’s the turn of the 2Oth century when “our grandfathers came a-calling and a-wooing at the homes of our grandmothers, under conditions set by the woman, operating from strength on her own turf”. For Gallagher, it seems to be the 1950s.

The assumption is that turning the clock back a century (or half a century) will be enough to restore the golden age. In fact, the turn of the 2Oth century was a period of moral panic cast in terms very similar to those of Kass and Gallagher. As effective family planning became possible for the first time, the birth rate plummeted, falling from 5.1 births per married woman to 2.6 in the space of only forty years for the cohorts born between 1860 and 1900. My mother wrote the book on this. It’s loaded with quoted denunciations of selfish females pursuing pleasure at the expense of their duty to the race.
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Protected by law

John Quiggin25 Comments

Like everyone, I’ve been bombarded with government advertising pointing out how marvellous the new world of Industrial Relations is going to be, and in particular how all my existing rights are Protected by Law!. So I thought I’d call the Workchoice hotline number to see what would happen if I was asked to sign an AWA that required me to work on public holidays. I had a few follow-up questions ready but the operator who answered, while trying to be helpful, couldn’t do much more than offer to send me the brochure. Looking around, I see Crikey had much the same experience.

I don’t suppose anything is going to stop this legislation, but the government has certainly chewed up an awful lot of political capital on this one, without any clear idea why it wants it (apart from repealing unfair dismissals laws, which are loathed by the small business base). If the economy ever turns sour, they will be in big trouble.

Weekend reflections

John Quiggin16 Comments

Weekend Reflections is on again. Please comment on any topic of interest (civilised discussion and no coarse language, please). Feel free to put in contributions more lengthy than for the Monday Message Board or standard comments.

PPPs

John Quiggin41 Comments

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.
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The last remnant of the Rum Corps

John Quiggin10 Comments

I spoke today at the conference of the Finance and Treasury association[1] about risks to the Australian economy. Regular readers will know my concerns, but Ill try to post the presentation once I can get my FTP software working properly.

As is pretty much standard for such events, I got paid in alcohol, in this case in a very nice presentation case. Academics (and other speakers at such conferences) must be about the last group who stick to this great Australian tradition, dating back to the first days of European settlement. Even garbos don’t get beer so much now that they operate retractable arms rather than picking up bins. The custom still survives here and there (I’ve slung the odd slab for favours of various kinds) but public speaking gigs are the only ones when you can count on it.

fn1. The name refers to corporate accounting functions, not to the government departments.