For citizens, and presumably governments, the service provision is not just about realising lowest prices and associated efficiencies. In the Australian historical, social, economic and political context, it is also about adequacy, quality and accessibility of services provided, maximising overall VFM, ensuring proper accounting for the use of public resources, and the achievement of agreed results that often involve a significant non-monetary element. Thus, considerations of public interest and public accountability are also relevant to outsourcing decisions.[33]
The need for independent inquiry into PPP arrangements is recognised in Australia and internationally.[34] Greve and Hodge note the scepticism with which many commentators assess PPP outcomes.[35] Research into Australian PPPs has concluded that the departments of treasury are the sole agenda-setters, rule makers and evaluators of PPPs.[36]
In most OECD nations, auditors-general traditionally provide independent oversight of the activities of executive government and its agents, reporting their findings directly to Parliament, thus playing a crucial role in public accountability.[37] In order to determine the extent of independent oversight of Australian PPPs, an investigation[38] was recently undertaken to determine the focus and extent of Australian state performance audits into these schemes.[39]
Table 1 shows (in bold italics) the categories and value of projects that have been the subject of performance audits by Australian auditors-general.[40] Of the 11 categories of PPPs only four - road, rail, health and correctional - have been performance audited in three jurisdictions: NSW, Victoria and Western Australia ('WA'). Table 1 also reveals that over a 22 year period 16 (12.6 per cent) individual PPP projects with a net present cost of $8 267 million (23.2 per cent) have been audited by Australian auditors-general. One hundred and twenty-one projects worth $27 402 million have not been subject to independent oversight by Australia's auditors-general. NSW has performance audited eight out of a total of 30 PPP projects, Victoria has audited seven of a total of 49 projects, and WA one out of a total of 12 projects. No performance audits have taken place in Queensland, South Australia or Tasmania, despite the cost and number of PPPs that have been entered into.
In NSW, five of the performance audits relate to six toll roads. Three of these were requested by the NSW Parliament,[41] indicating the controversy surrounding them. In Victoria, performance auditing has focused on comparing the performance of privately and publicly operated prisons, and on the negotiation of new public transport franchise contracts. The two performance audits into the Joondalup Health Campus (WA) are the only examples of a state audit of both pre-contractual and post-contractual stages of a particular PPP project.
The investigation into performance audits indicates that they are not a fixed, technical activity; rather, they are malleable and change over time. Different auditors-general both within and between jurisdictions have varying approaches to performance auditing, despite having very similar legislative mandates. This finding suggests that in interpreting their legislative mandates, auditors-general create a de facto mandate potentially open to challenge by executive government. This occurred in the Victorian performance audit of the three PPP prisons[42] and in the first NSW audit of the Sydney Harbour Tunnel.[43] In the Victorian audit, the Government refused to allow the Auditor-General to provide financial information relating to PPP contracts. In the NSW audit, the Roads and Traffic Authority challenged the Auditor-General's right to conduct the audit and tried to stop it. Although there is a legislative prohibition on auditors-general commenting on the efficacy of government policy, one NSW auditor-general, in two separate audits, questioned the government's assumption that championing private toll roads resulted in effective public policy outcomes. These observations confirm the contested nature of performance audits and their dependence on situationally-specific context-bound factors.[44]
The investigation identified an 11-element Australian PPP performance audit framework derived from PPP policies.[45] Mapping the extent and focus of PPP performance audits against this framework indicated that eight out of the 10 audits focused on the pre-contractual stage of the investigated PPPs. Nevertheless, PPP performance audits appear less concerned with checking adherence to processes mandated in PPP policies and more concerned with substantive matters.
The performance audit literature distinguishes between two types of performance audits. Substantive audits investigate the effectiveness of policy implementation.[46] Systems-based audits interrogate adherence to policies and procedures mandated by the audited bodies themselves. The research indicates that five of the PPP audits are substantive, and five are systems-based.[47] In substantive audits, auditors-general have examined matters such as whether risks have actually been transferred to private road operators (NSW Auditor-General) and whether key performance indicators permit the achievement of core correctional services objectives (Victorian prison audit).