4.2 Legislative and policy frameworks in other Australian jurisdictions

In the past five years, all Australian jurisdictions have issued policy documents governing the identification, establishment and operation of PPP arrangements. Victoria was the first to issue its guidelines under its Partnerships Victoria initiative. Soon after, in November 2001, New South Wales issued its Working with Government: Guidelines for Privately Financed Projects. Other states and the Commonwealth followed. All the guidance material had its origins in principles developed by the Heads of Treasuries working party.

The Committee's review of these documents highlighted that the governing principles or framework adopted by the different jurisdictions are broadly based on Victoria's PPP policy and guidelines. There are material variations on matters such as fair value compensation on termination, change in law and change of control provisions, they contain various technical and terminology differences, and they also follow slightly different processes for the development of a PPP project.

The Committee was advised that because of criticisms from industry that the PPP policy needs to be implemented more consistently to reduce bid costs, some limited progress has been made in achieving consistent principles and practices across jurisdictions. The National Council for PPPs, a forum for coordination between federal and state Ministers and officials, was set up in 2004 as part of the move towards having a more consistent approach to PPPs across all Australian jurisdictions.

The major differences in policies and practices are:

• core and non-core services - New South Wales, Victoria, Queensland, Western Australia, the Australian Capital Territory and the Northern Territory draw a distinction between core and non-core services, and expressly preclude private involvement in the provision of core services;

• value for money test - the framework in Queensland does not apply without special Cabinet committee exemption if the capital value of a project is $30 million or less or its net present value does not exceed $50 million. In Victoria, New South Wales, Northern Territory, and the Australian Capital Territory there is an explicit presumption that the project will generally not satisfy the value for money test unless it has a total contract value (in net present value terms) of more than $10 million (Victoria) or $20 million (New South Wales, Australian Capital Territory, Northern Territory) or can be bundled together with other similar projects to overcome that threshold. At the Commonwealth level, the $20 million and $50 million thresholds are only relevant for determining the level of approval required;

• long term -the duration of the project must not be less than 5 years for the Commonwealth; 25 years or more for New South Wales, the Australian Capital Territory and South Australia; and up to 30 years for Victoria.

• public sector comparator (PSC) - the New South Wales policy requires it be used for all projects, while the South Australian guidelines state that it is not necessary where the project is financially free-standing (consumer funding rather than government funding). The other jurisdictions follow Victoria's lead, which requires the construction and use of a PSC except in the rare situations where the Department of Treasury and Finance agrees that a PSC is not required. In that case, an appropriate benchmark still needs to be constructed to demonstrate value for money.

• release of the PSC - one way the policies diverge is in the matter of the PSC's release to the public and, more significantly, to bidders. The Commonwealth and SA policies have no general rule on release, and in those jurisdictions that do, approaches range from complete confidentiality to a general policy of release. The PSC is to remain confidential in Western Australia until the contract is executed, while Victoria, Tasmania and the Australian Capital Territory have a general rule against disclosure of the total PSC value.

The Committee observed that full adoption of the PPP model varies considerably across jurisdictions. Victoria and New South Wales are at the forefront; Queensland, South Australia, Western Australia and the Northern Territory have each completed one PPP. The Federal Government and the other Australian jurisdictions all have PPP policies in place but as yet have not completed a project. Exhibits 4.2 and 4.3 show the number and type of PPP projects either undertaken or in the pipeline.

Exhibit 4.2:

Completed or signed public private partnership
projects in Australia at July 2006

Exhibit 4.3:

PPP projects in the market in Australia at July 2006117

Exhibit 4.4:

Potential PPP projects at 10 July 2006118

The Committee's research confirmed that there are no general laws in any Australian jurisdictions governing PPP procurement.

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99 The current total cost estimate for the HQJOC Project is approximately $300 million. The cost includes the buildings and infrastructure; the command, control, communications and information systems; land acquisition; workplace relocation costs, and design, professional fees and construction contingency; but excludes goods and services tax. Source: www.defence.gov.au/kid/hqjoc/pages/faq.htm, accessed 24 July 2006

100 www.waterfront.nt.gov.au/waterfront/about/index.html, accessed 24 July 2006

101 NSW Auditor-General's 2006 The New Schools Privately Funded Project, p 10

102 NSW Joint Select Committee on the Cross City Tunnel, p.22 - First Report February 2006

103 Source: www.mallesons.com/expertise/project_finance/5501627W-03.htm, accessed 24 July 2006

104 www.globalrenewables.com.au/en/operations/eastern-creek-ur3r-facility/, accessed 24 July 2006

105 Mr Carl Scully, MP, NSW Minister for Roads, media release, 9 December, 2003

106 www.parracity.nsw.gov.au/news/20020531_367.html, accessed 24 July 2006

107 NSW Budget Statement 2005-06, p.9

108 Has an estimated value on completion in excess of $360 million. http://cti.cri.com.au/, accessed 24 July 2006

109 www.wlg.com.au/about-the-project.html, accessed 24 July 2006

110 19 April 2005 Queensland Premier's Office, Included in this amount are construction costs of approximately $230 million

111 www.plenarygroup.com.au/content/newscentre/32, accessed 24 July 2006

112 www.smh.comau/news/National/Risdon-Prisons-infamous-past/2005/05/09/1115584891860.html, accessed 24 July 2006

113 Partnerships Victoria, website, www.partnerships.vic.gov.au

114 Partnerships Victoria, website, www.partnerships.vic.gov.au , $364.4 million tenders vic website $250 million

115 Partnerships Victoria, website, www.partnerships.vic.gov.au , $309 million; tenders vic website $341 million

116 Partnerships Victoria, website, www.partnerships.vic.gov.au , $367 million; tenders vic website $370 million

117 National Public Private Partnerships Forum: Projects in the Market, at July 2006 www.pppforum.gov.au