There is no specific legislation providing a common framework for selecting, developing, managing, financing and reporting PPP projects in Victoria. Instead, these areas are addressed at government policy level. For some projects, however, new or amending legislation reflecting their specific characteristics has been necessary.
The Victorian Government released its PPP policy, Partnerships Victoria, and supporting guidance material in 2000. It has subsequently updated the overview guidance material and expanded the policy framework by issuing several additional documents covering key facets of the PPP process including contract management, development of the public sector comparator, discount rates, interest rate risk, and conflicts of interest. The Victorian policy charges the government with responsibility for the delivery of core social services such as teaching in schools and providing clinical services in hospitals, while ancillary services such as maintenance, computer systems, security and cleaning are commonly undertaken by the private sector consortium.
Other Australian jurisdictions have also developed PPP policies in the past five years. While these policies have drawn on and are broadly similar to the Victorian model, there are some important differences in approach between jurisdictions. A National Council for PPPs has been established to ensure greater consistency across governments in this emerging field of public policy and to provide a pipeline of PPP projects. The aggregate value of PPP projects across Australia which had been contracted was estimated at $10 billion at November 2005. A further $10 billion in projects were either in the market or were under consideration.
The Committee's overseas study tour and research identified numerous variations in PPP policies and practices between countries. The United Kingdom, with its extensive experience in private finance initiative contracts, is most advanced in developing partnerships with the private sector for major infrastructure projects.
The Committee identified from the experience of overseas stakeholders that many of the early PPP and PFI projects had less than ideal results, mainly attributed to inadequate preparation, poor public sector management skills and inappropriate risk allocation. All jurisdictions had learned from their early experiences and had improved their processes. Most governments had subsequently improved governance processes and monitoring arrangements.
The collective government experience in PPP projects in Australia and overseas provides a useful opportunity for the Victorian Government to further progress its policy framework towards a model for best practice.