Phil Twyford
Transport Spokesperson

21 November 2012

Call for Government to release PPP figures

Labour is questioning the wisdom of the Government using a Public Private Partnership to build Transmission Gully and is calling on it to release figures justifying the decision.

Labour’s Transport spokesperson Phil Twyford said the Government’s timing could hardly have been worse with four big Australian transport PPPs collapsed or in the process of falling over.

“Gerry Brownlee says with great confidence that PPPs are suited to these big infrastructure projects but history shows they are fraught with problems. The failed Australian PPPs, the most recent of which was the Brisbane airport motorway, fell over because of over-optimistic traffic projections.

“After the Australian PPP collapses, and the failed London tube PPP, it is hard to imagine there would be any private sector investors willing to take on the patronage risk in such a project. If the Government carries the risk, and the only gain from a PPP is construction efficiency, then it is hard to see how a PPP would deliver value for the taxpayer given that Government can borrow money so much more cheaply than the private sector.

“Gerry Brownlee should release the business case for the PPP so the public can be reassured that this project will deliver value, and is not just an expensive way to push the cost of the project onto future generations.

“If the Government is so confident a PPP will cost less, why not put out to tender both the PPP version and a design-build option funded by the Crown? Then the public can see the true cost comparison.

“Given the $12 billion price tag for its Roads of National Significance, the Government is desperate to find extra funding options. They are about to raise petrol and diesel taxes, they are legislating to allow borrowing for state highways, and now they are using a PPP to obscure the real cost and saddle the next generation with 25 years of cost which is probably higher than alternative methods.

”The RoNS are not justified economically. It would be better if the Government reviewed its motorway-building programme and saved billions of dollars by cutting the more wasteful and low value projects,” Phil Twyford said.

ENDS

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