6 September 2012

Why is National copying Australia’s failed highway PPPs?

Public-Private Partnerships to build highway projects have been expensive failures in Australia, with the public bearing the cost, and National should not be looking to copy this failed model, Green Party transport spokesperson Julie Anne Genter said today.

Research compiled for the Greens shows that Public-Private Partnership (PPP) highway projects in Australia have seen cost blow-outs and below-forecast traffic volumes. Private companies in PPPs have collapsed and taxpayers have had to bail out the failed projects.

New Zealand Transport Agency board papers obtained by the Green Party show that the National Government is well-advanced in its plans to use PPPs to build some of its uneconomic highway projects.

“Why would we want to copy Australia and use PPPs to fund highways when they have been such a dismal failure over there?” said Ms Genter.

“In Australia, the history of PPP highway projects has been cost blow-outs, lower than expected traffic volumes, and taxpayer bailouts.

“The Brisbane Council, for example, has so far paid nearly a billion dollars for the Clem7 Tunnel, which is valued at a third of that amount and attracts only a third of the projected traffic.

“The PPP model that the Government favours, called the availability payment model, means that the taxpayer makes yearly payments to the private investors whether or not there is enough toll revenue to cover those payments.

“That means the taxpayer carries all the risk and the private investors pocket all the profits. And the NZTA papers describe that as a good thing!

“Blithe assurances by the Government that they will ensure they get a good deal in the PPP contracts are not reassuring. The lesson from overseas is that the taxpayer gets fleeced every time.

“Research by Greenwich University entitled “Public Private Partnerships in the EU - a critical appraisal” concluded that all a PPP really does is let the Government borrow via a private company at high private sector rates. It costs more than public sector funding and taxpayers have to pay the private company’s profits as well.

“Governments use PPPs as a way to borrow money while keeping the debt off their books but they lock in future taxpayers to paying for a highway for decades to come, no matter how uneconomic it may be.

“It is telling that National is looking to this failed model to fund its uneconomic highway projects,” said Ms Genter.

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