The following key issues, some of which have now been addressed by the Victorian Government, were raised in submissions and in evidence to the Committee:
• there is a need for consistent and appropriate evaluation methods to be applied to PPPs;4
• the methods used for the public sector comparator (PSC) need to be robust and accountable;5
• details of the PSC should be made available to bidders;6
• local government experience with PPPs has been limited although there is considerable potential for these types of contracts;7
• matters relating to risk management and allocation need to have greater scrutiny and the details need to be made public;8
• PPP projects are increasingly involving greater allocation of risk to the private sector, which comes at a greater cost to government;9
• certain risks associated with public infrastructure projects are difficult to identify and sometimes it is inappropriate to transfer them to the private sector;10
• there is a need to ensure that Victoria and Australia have continuity with PPP projects so that a competitive market is maintained;11
• PPPs are one option of a range of infrastructure provisions;12
• lessons learnt, such as detailed planning and assessment practices for PPPs, could be utilised in other infrastructure projects;13
• PPP projects should continue to be driven by value for money considerations and not by whether the arrangement will be recognised as 'off-balance sheet';14
• the benefits and disadvantages of public private partnerships need to be made clear;15
• there are concerns that the duration of PPPs can lock governments in to contracts for a long period (that is, more than 30 years) which can restrict future policy options and have implications for budget flexibility;16
• there is a need to ensure that the public interest is protected;17
• the public sector needs to assemble the appropriate levels of expertise to match the private sector at every stage of the PPP process;18
• there should continue to be open dialogue under the probity rules during the bid phase for PPPs;19
• the transaction costs for both the private and public sectors are too high;20
• the discount rate is too high and does not reflect the true cost of government borrowing money;21
• the Victorian Government should lobby the Commonwealth Government to provide greater tax concessions for PPP projects;22
• there is a need to review the current threshold amount ($100 million) for PPP projects in Victoria;23
• there is a need to ensure that the basis for price increases are clearly outlined in the contracts, particularly for toll roads, public transport and water;24
• the basis for calculating public debt needs to be reviewed;25
• annual financial reporting in the public sector needs to ensure that the financial details of PPP projects are fully disclosed;26
• the government needs to do more to maintain infrastructure assets and intergenerational equity;27
• stronger accountability and transparency mechanisms are needed for PPP projects;28
• a summary of the details contained in PPP contacts should be made public;29
• the appropriateness of PPPs for some social infrastructure projects is subject to debate.30
The cost of this inquiry is estimated at $196,500.
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4 For example Mr T O'Brien, Company Secretary, Cavan Group Pty Ltd, submission no.1, p.1; Victorian Trades Hall Council, submission no.5, p.1; Mr W Cameron, (then) Victorian Auditor-General, submission no.13, p.5; Moreland City Council, submission no.22, p.1; Professor G Hodge, submission no.31, p.2
5 For example Mr W Cameron, (then) Victorian Auditor-General, submission no.13, p.7; Professor J Quiggin, submission no.25, p.3; Thiess Pty Ltd, submission no.32, p.11; Professor G Hodge, submission no.31, p.2
6 For example Australian Council for Infrastructure Development (AusCID), submission no.18, p.21; Deutsche Bank AG submission no.19, p.4; Thiess Pty Ltd, submission no.32, p.11
7 For example Shire of Campaspe, submission no.6, pp.1-2; Manningham City Council, submission no.10, p.2; Whitehorse City Council, submission no.20, p.4; Mr G Campbell, Partner, Maddocks, transcript of evidence, p.12
8 For example Hyder Consulting (Australia) Pty Ltd, submission no.12, p.2; Thiess Pty Ltd, submission no.32, p.8
9 Professor G Hodge, private briefing; Mr W Cameron, (then) Victorian Auditor-General, submission no.13, p.7
10 For example Deacons law firm, submission no.14, p.4; Deutsche Bank AG, submission no.19, p.5; Professor J Quiggin, submission no.25, p.31; Thiess Pty Ltd, submission no.32, p.12
11 For example Hyder Consulting (Australia) Pty Ltd, submission no.12, p.3; Deutsche Bank AG, submission no.19, p.6; Mr M Lilley, Division Director, Macquarie Bank, transcript of evidence, p.17
12 Mr W Cameron, (then) Victorian Auditor-General, submission no.13, p.4; Professor G Hodge, private briefing
13 Professor G Hodge, private briefing; Professor J Quiggin, submission no.25, p.3
14 Mr W Cameron, (then) Victorian Auditor-General, submission no.13, p.7
15 For example Mr W Cameron, (then) Victorian Auditor-General, submission no.13, p.7; Deacons law firm, submission no.14, p.2; Thiess Pty Ltd, submission no.32, pp.2-9
16 For example Deacons law firm, submission no.14, p.2; Professor G Hodge, submission no.31, p.4; Mr R Walker, Assistant Auditor-General, Victorian Auditor-General's Office, transcript of evidence, p.16; Dr A Smith, Director, Melbourne City Link, transcript of evidence, Mr L Scanlan, (then) Queensland Auditor-General, transcript of evidence, p.16; Mr T Harris, journalist and former New South Wales Auditor-General, transcript of evidence, p.2
17 For example Mr W Cameron, (then) Victorian Auditor-General, submission no.13, p.7, Deacons law firm, submission no.14, p.10; Australian Council for Infrastructure Development (AusCID), submission no.18, p.19; Victorian Council of Social Service (VCOSS), submission no.24, p.4; Mr L Scanlan, Auditor-General, Office of the Auditor-General of Queensland, transcript of evidence, p.16
18 For example Dr S Wilson, submission no.17, p.2; Australian Council for Infrastructure Development (AusCID), submission no.18, p.5; Thiess Pty Ltd, submission no.32, p.9
19 For example Australian Council for Infrastructure Development (AusCID), submission no.18, p.5; Property Council of Australia, submission no.33, p.2
20 For example Australian Council for Infrastructure Development (AusCID), submission no.18, p.22; Deutsche Bank AG, submission no.19, p.6; Thiess Pty Ltd, submission no.32, p.4; Property Council of Australia, submission no.33, p.3
21 Professor J Quiggin, submission no.25, p.36
22 For example Australian Council for Infrastructure Development (AusCID), submission no.18, p.23; Deutsche Bank AG, submission no.19, p.7; Thiess Pty Ltd, submission no.32, p.12
23 For example Deutsche Bank AG, submission no.19, p.6; Mr D Johnson, General Manager, Thiess Pty Ltd, transcript of evidence, p.60
24 Dr A Smith, Director, Melbourne City Link, transcript of evidence, p.17
25 Professor J Quiggin, submission no.25, p.25
26 For example Mr W Cameron, (then) Victorian Auditor-General, submission no.13, p.5; Professor J Quiggin, submission no.25, pp.19-20; Professor G Hodge, private briefing
27 Thiess Pty Ltd, submission no.32, p.1, Australian Education Union - Victoria, submission no.34, p.3
28 Dr S Wilson, submission no.17, p.2; VCOSS, submission no.24, p.7; Professor G Hodge, submission no.31, p.4
29 Professor G Hodge, submission no.31, p.4
30 Mr R Walker, Assistant Auditor-General, Victorian Auditor-General's Office, transcript of evidence, p.15; Professor G Hodge, private briefing