The current problems that bidders and governments face in obtaining debt finance for PPP projects have no simple answers. However, governments can take some practical measures to help. These measures include:
• recognising that private debt finance currently is only available in Australia over relatively short tenors, and sharing in the risk that refinancing at the end of this tenor may only be possible at a higher cost
• accepting a lower level of financing commitment in bids
• taking measures to facilitate maximum competition for debt finance, which may involve funding competitions
• for larger projects (over $500 - 1,000 million), being willing to provide either capital grants, where such are appropriate and do not dominate the project's financing, or debt finance on a pari passu basis with banks (capital grants may not be appropriate for the largest projects - those over $1 billion)
• investigating further the credit guaranteed finance or counter-indemnity models as possible way of increasing market capacity and reducing funding cost. Under these models, the government either provides the finance or effectively guarantees it, but benefits from a guarantee of project risks
• the Commonwealth increasing its guarantee to cover states' long-term PPP obligations.