Victoria is the dominant participant in PPPs among Australian jurisdictions, with 16 projects in place at July 2006.
The government commissioned Peter Fitzgerald to undertake an external review of eight PPP projects. This review, which drew heavily on evaluations of selected projects undertaken by the Auditor-General, concluded that the eight projects provided tangible evidence of the benefits available from harnessing private sector skills and innovation of design in infrastructure.
The Committee has also undertaken an examination of certain PPP projects. Because the Committee did not have access to departmental files, the Committee's detailed reviews were limited to some major projects that have previously been the subject of comment by the Auditor-General and Peter Fitzgerald.
The Committee has made a number of significant observations from its consideration of selected PPP projects, including:
• the importance of discount rates reflecting the low market risk associated with some public sector accommodation projects;
• before proceeding with any build, own and operate arrangements entered into for certain projects public benefits need to be maximised;
• the need for more attention to be directed to the long term financial implications of PPP arrangements designated as finance leases, in terms of government debt and future budget flexibility;
• risks being returned to the government where it had previously paid significant premiums for them to be borne by the private sector; and
• a need for the government's PPP policy framework to be extended to encompass the identification and valuing of commercial rights available to private sector developers.
The Committee welcomes the government's implementation of its Gateway initiative, which is intended to bring greater rigour to its management of major infrastructure projects. The Committee considers that this initiative should lead to better decision making within government about whether major projects can be managed by the public sector on a comparable basis with projects being managed by the private sector under PPP arrangements.