The social face of PPPs

By Penny Langfield in Brisbane

A surge of social infrastructure projects and the prospect of local council “clusters” to streamline regional infrastructure spending shapes as the latest evolution of public-private partnerships (PPPs) in Australia.

Delegates at the National PPP Summit in Brisbane late last week heard that PPPs had undergone an evolution in the past decade and were now accepted as a legitimate method of producing social infrastructure projects in Australia.

Campbell Mackie, chief operating officer of Thinc International, told the summit that Australian PPPs started with traditional infrastructure projects such as toll roads but “for the last ten years we’ve seen a strong move into the area of social infrastructure”.

“If you look at the array of projects that are on foot around the country at the moment you’ll see a great deal of activity in social areas such as schools, regional facilities and hospitals, as well as addressing economic infrastructure such as ports,” Mackie said.

Delegates and speakers at the summit debated whether this shift in project types, coupled with other issues including the global financial crisis, would force changes to the traditional PPP model such as long-term maintenance agreements.

Rob Aldis, managing director of management consultancy Evans & Peck, said long-term PPPs needed common objectives between the government and private sectors to ensure infrastructure was not only delivered to the public, but maintained.

 “We don’t want partners who are just going to jump in for the sake of doing a deal and heading out the door tomorrow, that’s not what service provision to the public is all about,” Aldis said.

Richard Foster, executive manager of Partnerships Victoria in the Department of Treasury and Finance, told delegates joint outcomes needed to be outlined at the bidding stage of the projects.

“At the stage where we are evaluating bids it’s important to government that we have sufficient information in order to assess the qualitative aspects of the project,” Foster said.

Local Government Infrastructure Services chief executive officer, Mark Girard, outlined PPP opportunities in the local government arena.

He said PPPs would increasingly see local councils banding together into regional clusters and forming economies of scale.

Mr Girard suggested councils “utilise scale or leverage scale and have regional operating models for the way plants are operated and maintained.”

These regional models could streamline processes, allowing better workflow and spending of state government infrastructure funding.

Local Government Infrastructure Services works to reduce the risk and cost associated with procurement for rural councils.

“We do that by capturing economies of scale, so in terms of PPPs, I think the only way we’re going to make PPPs attractive for the market from the local government perspective is to create scale in projects,” Girard said.

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