The involvement of the private sector in the funding of public infrastructure emerged as a new development in Victoria in the late 1980s and early 1990s within a context of substantial budget difficulties and Loan Council borrowing limits.69 The Australian Loan Council was formed in 1928 and its functions included regulating borrowing by the Commonwealth and states, and placing limits on the states' borrowing powers.
These limits were eventually removed in 1995 because they were being increasingly avoided by the states through sophisticated financing techniques such as entering into operating leases for public infrastructure built by the private sector.
Over the past decade, investment markets have expanded into new ventures and private sector involvement in the provision of public infrastructure has advanced worldwide. The sophistication of such arrangements has increased, as has the sophistication of the methods for allocating risk.70
Victoria is the dominant jurisdiction in terms of the Australian public private partnership (PPP) experience.71 The Committee established that since 2000, Victoria had entered into contracts for 16 PPP projects; further projects are under consideration. By comparison, New South Wales had entered into eight projects, with the remaining states and territories collectively undertaking six projects.
In Victoria private investment in public infrastructure projects since 1990 has extended across different sectors and has included:
• the early Victorian Accelerated Infrastructure Project (1990) - comprising 10 police stations, the Werribee Hospital and the Dandenong Mental Health Community Centre;
• public transport franchise agreements, automated ticketing and the redevelopment of the Southern Cross Station;
• the Melbourne Magistrates' Court and the County Court of Victoria;
• the St Vincent's Hospital redevelopment, the Latrobe Hospital, the Mildura Hospital, and the Casey Community Hospital (previously Berwick Hospital);
• the Intergraph emergency services system and the more recent mobile data network;
• the new prisons project;
• Castlemaine waste water project (Coliban Water), the Wodonga wastewater treatment plant (North East Region Water Authority), the Campaspe water reclamation project (Coliban Water), and Enviro Altona wastewater treatment plant (City West Water Ltd)72;
• the CityLink road project and the EastLink road project;
• the Docklands film and television studios;
• the Royal Women's Hospital redevelopment; and
• the Melbourne Convention Centre development.
Further projects under consideration or being prepared for market include the Royal Children's Hospital redevelopment, the Melbourne Wholesale Market relocation and the Barwon water biosolids management project.
CityLink has been the largest infrastructure project completed to date at a cost of around $2.1 billion, with $1.8 billion being financed by a private consortia and $266 million of associated works and other costs being financed by the state.73 Exhibit 3.1 provides details of each project.
Exhibit 3.1:
Public private partnerships -
Project details 1999 - 2006 74
| Project | Type | Details |
| Public transport franchise agreements | F | Contracts let mid-1999 |
| Castlemaine wastewater treatment | DBOT | Commissioned in 2000 |
| Ballarat North water reclamation | DBO | Contract let 22 May 2006 |
| Mildura Hospital | BOO | Operational in 2000 |
| CityLink | BOOT | Completed 2000 |
| County Court | BOO75 | Completed 2002 |
| Automated ticketing | DBOO | Completed 1998 |
| Coliban water treatment (Aqua 2000) | BOOT | Completed 2002 |
| Wodonga wastewater treatment plant | DBO | Completed 2003 |
| Casey Community Hospital (previously Berwick Hospital) | DBFM | Completed 2004 |
| Docklands film and television studios | DBFO | Completed 2004 |
| Campaspe water reclamation scheme (formerly Echuca/Rochester Wastewater) | DBFO | Opened in May 2005 |
| Mobile Data Network | DBFM | Contract executed June 2003 |
| Southern Cross Station | DBFM | Completed July 2006 |
| Victorian correctional facilities | DBFM | Completed 2006 |
| Emergency alerting system | DBFM | Contract executed June 2004 |
| Metropolitan mobile radio | DBFM | Contract executed March 2004 |
| Royal Women's Hospital redevelopment | DBFM | Estimated completion June 2008 |
| Royal Melbourne Showgrounds redevelopment | DBFM | Completion date September 2006 |
| EastLink | DBFO | Completion estimated in 2008 |
| Melbourne Convention Centre development | DBFM | Completion estimated by 2008 |
| Notes: | F | Franchise |
| BOO | Build-Own-Operate | |
| BOOT | Build-Own-Operate-Transfer | |
| DBF | Design-Build-Finance | |
| DBO | Design-Build-Operate | |
| DBOO | Design-Build-Own-Operate | |
| DBFO | Design-Build-Finance-Operate | |
| DBFM | Design-Build-Finance-Maintain | |
| DBOT | Design-Build-Operate-Transfer |
Sources: Partnerships Victoria website, accessed 1 October 2006; Department of Treasury and Finance, submissions
__________________________________________________________________________________________________
69 Mr W Cameron, (then) Victorian Auditor General, submission no.13, p.1
70 Mr W Cameron, (then) Victorian Auditor General, submission no.13, p.2
71 Australian Council for Infrastructure Development (AusCID), submission no.18, p.14
72 This project is no longer progressing as a Partnerships Victoria contract due to the insolvency of the private contractor. Source: www.partnerships.vic.gov.au , accessed 30 September 2006
73 Victorian Auditor-General's Office, Report on Public Sector Agencies, June 2002, p.117
74 Excludes the Enviro Altona wastewater treatment plant project which is no longer a Partnerships Victoria project
75 Victorian Auditor-General's Office, Report on the Finances of the State of Victoria 1999-2000, November 2000, p.129