The State of Victoria has well-developed procedures for assessing proposed PPPs that allow for the review and control of contingent liabilities. The Victorian Department of Treasury and Finance reviews planned projects at several stages, and Cabinet approves the project at four (Figure 1). A department considering a PPP that would get its revenue from the department (not users) must first seek approval for the capital spending that would be needed if the project was publicly financed. If a PPP is used, the approval for capital spending is converted into approval for spending on the PPP's services.
In 2001, Victoria published the first Australian PPP guidelines, which included a detailed discussion on "Risk allocation and contractual issues" (Government of Victoria 2001a). In 2008, state guidelines were largely superseded by national guidelines (based in part on Victoria's), which were endorsed by the Council of Australian Governments. The guideline documents include "procurement options analysis," "practitioner's guide," (which has a chapter on risk allocation) "commercial principles for social infrastructure," (which is about risk allocation and related issues) "public sector comparator guidance," and "discount rate methodology" (Government of Australia, Infrastructure Australia (2008a). Draft guidelines on "commercial principles for economic infrastructure" are also available. (Government of Australia, Infrastructure Australia (2008b). These guidelines discuss the process that governments should follow to develop and award a PPP contract and the risks that they generally should assume and those that they generally should not. They are therefore an important element of the control of contingent liabilities in PPPs.