The Committee is aware of build, own and operate (BOO) arrangements which involve the private sector designing, building, financing and managing public infrastructure for a period of years over which the government will make payments which, in effect, repay the capital cost and maintenance costs and allow a return on capital to the developer. At the end of the concession period the actual ownership of the building will remain with the developer for the remaining period of the lease on the Crown land.
In March 1999 a contract for $26.3 million was entered into with a developer to build the Mildura Hospital on Crown land leased to the developer for 99 years. The agreement involved the government repaying the developer $211.3 million over 15 years, inclusive of construction costs, maintenance services and a return on capital.77
The Melbourne County Court was built under a BOO arrangement.78 The successful tenderer was granted a 99 year lease on the Melbourne site for a nominal rent. The contract was entered into in June 2000 for $193.6 million, inclusive of maintenance over the 20 year concession period.
Before proceeding with any further build, own and operate projects, the Committee considers that the government should ensure that public benefits are maximised.
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77 Victorian Auditor-General's Office, Report on the Finances of the State of Victoria 1999-2000, November 2000, p.127
78 ibid., p.129