Apart from the Fitzgerald report, independent and publicly released post project reviews have not been conducted on the outcomes obtained from PPP projects. Although opportunities exist for the Auditor-General to undertake such a function, reviews undertaken have tended to concentrate on the contractual arrangements including the rights and obligations of the respective parties, sharing of risks, and updates on the progress of major projects. The Auditor-General is prevented under the Audit Act from commenting on government policy as it applies to such arrangements.
The Fitzgerald report was seen by the government as 'providing tangible evidence of the benefits that flowed from harnessing private sector skills and innovation in infrastructure'. His report was critical of the discount rate of 8.65 per cent applied to the eight projects reviewed which leads to a question on whether this amount represents value for money, particularly given that the discount rate adopted in the United Kingdom is now 3.5 per cent plus a risk adjustment to the cash flow. In July 2003, the government subsequently acknowledged that with accommodation projects, such as the County Court, Casey Hospital and the Mildura Hospital, there is a low market risk and the discount rate should have been 5 per cent as compared with the 8.65 per cent discount rate.76
The Committee seeks to demonstrate the importance of having ongoing, independent, post project reviews publicly reported to highlight any advantages and deficiencies in contractual arrangements. Benefits can be noted and deficiencies highlighted then systematically addressed in further projects.
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76 Department of Treasury and Finance, Partnerships Victoria Guidance Material, Use of Discount Rates in the Partnerships Victoria process, Technical Note, July 2003, p.18