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Taxpayer can't be fall-guy in PPPs

Taxpayer can't be fall-guy in Public-Private Partnerships

New Zealanders should be very concerned at the way businesses were queuing to be involved in public-private partnerships to build roads and other infrastructure, Green Party co-leader Jeanette Fitzsimons said today.

"The fact so many private businesses are keen to get involved in PPPs shows they're expecting to make a lot of money, and that money can only come from the New Zealand public," Ms Fitzsimons said.

Ms Fitzsimons was responding to Friday's revelation that Television New Zealand chairman Ross Armstrong had offered private companies a range of benefits if they joined a group advising the Government on its PPP policy. The Government has already announced new transport legislation is being developed to provide for PPPs to build roads and other transport facilities, and that these may be financed with tolls.

Ms Fitzsimons said the Greens believed conditions for PPP contracts should be very tightly constrained so they did not leave all the commercial risk with the public sector, while the private partners captured the profits.

"The news that ex-Australian Prime Minister Paul Keating has been at these meetings with Dr Armstrong's group as a consultant led me to enquire of Australian contacts how such partnerships had worked there. It seems they have been a disaster for the public and a bonanza for the business partners," Ms Fitzsimons said.

The contract for the partnership to build the City Link toll road in Melbourne actually specified the public sector could not build public transport to compete with this road without compensating the private partner. This is shocking.

"This type of contract in New Zealand could lock us into an unsustainable transport system where any success in reducing traffic volumes would lead to the taxpayer compensating private roading companies."

"It reminds me of the disastrous deal Robert Muldoon signed with Mobil to build the synthetic petrol plant. As long as the technology worked Mobil was guaranteed 16 per cent real return on its capital, regardless of whether the project was economic or not. The taxpayer ended up paying Fletchers to take the plant off its hands," Ms Fitzsimons said.

"When Michael Cullen says no company in Dr Armstrong's group will get the inside running for future partnerships, that misses the point. The companies believe they are there to contribute to policy-making, and writing the rules for PPPs in itself gives them undue influence and advantage."


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