Private sector involvement in the delivery of public infrastructure is not a new concept. The United Kingdom was the modern instigator of the new wave of private sector involvement, through the development of the Private Finance Initiative (PFI) in the 1990s. In New South Wales (NSW), Public Private Partnerships (PPPs) have been used for over two decades.
The current PPP model of privately financing public infrastructure had its genesis in the Sydney Harbour Tunnel (SHT) project in the mid 1980s2. While initially focusing on economic infrastructure, PPPs have been used over the last decade to procure social infrastructure assets and associated non-core services.
Since the opening of the SHT, there have been a number of economic and social infrastructure projects procured in Australia, primarily in NSW and Victoria. Both States' PPP experience covers a diverse array of sectors, with NSW now having procured infrastructure by way of PPP in the following sectors:
■ motorways
■ heavy and light rail
■ housing
■ health
■ correctives
■ energy
■ Olympic infrastructure
■ diversion of waste from landfill
■ household water treatment
■ waste water recycling.
Considering NSW and Victoria have now been using the PPP model of procurement for more than 20 years, a clear evolution of policy and practise can be traced. The public sector has developed the necessary skill base to procure infrastructure by way of PPP, with the private sector becoming increasingly innovative and adding significant value to public procurement. This has seen dynamic changes to the way Industry and Government interact.
A brief discussion on the evolution of PPP policy in NSW follows. First the development of the toll road economic infrastructure PPP model will be discussed, followed by the more recent development of social infrastructure PPPs, taking into account policy development and reviews that have taken place over time. A discussion outlining the evolution of private sector financing of projects will follow. Finally, the paper will discuss a number of policy issues incorporating tax implications, the management of public interests, and stakeholder management - using the development of Labour Service Agreements as an example.
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2 Working with Government: Guidelines for Privately Financed Projects gives a discussion of the difference between a pure PPP style project and a PPP that involves private financing, called Privately Financed Projects in NSW.