CHAPTER 4: LEGISLATIVE AND POLICY FRAMEWORKS AND PRACTICES

Key findings of the Committee:

4.1  There is no overarching enabling legislation for public private partnership (PPP) projects in Victoria, but on occasions it has been necessary to enact legislation for specific projects to enable the infrastructure to proceed.

4.2  The Victorian Government released its Partnerships Victoria policy documents in 2000 and later produced detailed guidance material. This documentation has provided the model that has largely been adopted by other Australian jurisdictions. Some states have different policies and guidelines in terms of the value of the PPP project, the processes of development, governance arrangements, and various technical and terminological issues, but there has recently been a convergence towards greater consistency in documentation across jurisdictions.

4.3  At November 2005, Australia-wide there had been $10 billion in PPP projects contracted; over $4 billion in projects were in the market; and over $6 billion of projects were being considered as PPPs.

4.4  Research revealed that there are many different types of PPPs internationally and that the models applied differ between countries.

4.5  Internationally few restrictions seem to apply to the policy arenas to which PPPs may be applied. PPP projects have covered broad economic projects such as roads, buildings, tunnels, port development, sports stadiums, wastewater management schemes, hospitals and schools.

4.6  Most jurisdictions have experienced mixed results through PPPs, although the projects have improved over time as lessons have been learned.

4.7  In all countries reviewed, public finance initiative (PFI)/PPP projects accounted for approximately 10 to 15 per cent of total government investment in infrastructure.

4.8  The major PPP models in the United Kingdom are the PFI and the Local Improvement Finance Trust (LIFT) models. With more than 700 PFI projects now operational, the United Kingdom Government is the most experienced; some projects have also reached maturity.

4.9  The United Kingdom PFI model, which has been largely adopted by most overseas countries, is different to the PPP model adopted in Victoria and in other Australian jurisdictions.

4.10  The Committee's discussions with a range of stakeholders in the United Kingdom have indicated the largely positive impact of PFIs. PFI projects were seen to be less suitable for information technology and small capital value projects and in cases requiring specific people services, such as in health care or in frontline services such as defence.

4.11  Discussions held with stakeholders in Ireland, France, Belgium and The Netherlands and in British Columbia highlighted the mixed results from PPP/PFI projects. All identified that some of their early projects had less than ideal results, partly due to a lack of adequate preparation and process, inadequate management skills within the public sector and problems with risk allocation. All jurisdictions indicated that they had learned from their previous experiences and changes had been made, particularly in improving the process for assessing value for money, the public sector comparator, and ensuring that there was a competitive market of potential tenders. To address community concerns about the lack of transparency and accountability of PPP projects, most governments have strengthened governance processes and systems for evaluation and review.