PPPs in Australia have largely been used in the infrastructure sectors to supplement public expenditure and expertise. Worldwide, it is believed that 60% of PPPs are in the transport infrastructure sector (Cook, 2007). The traditional forms of fund procurement on the part of public authorities have been replaced by a belief that PPPs will provide the desired Value For Money (VFM) without the need for immediate government outlay. Furthermore in non-PPP projects worldwide cost overruns occur in approximately 73% of cases whilst in PPP projects this figure stands at only 22% (Cook, 2007). Time delays were also more prevalent in non-PPP cases further strengthening the case for private involvement in the provision of public amenities, services and infrastructure from a VFM perspective. The criticisms of this movement towards PPP adoption have been varied and range from accusations that the public is funding private profits (Shaoul, 2005) to private sector investors complaining that the government is imposing undue restrictions upon arrangements when constructions begins and circumstances change making PPPs a less attractive option than 'going it alone'. Amid the discourse, the Australian Research Council (ARC) has recently funded academic investigation into the post-performance evaluation of public private partnerships (English, 2006).
Linda English has noted that in the Australian experience PPPs can be separated into two discreet periods - pre-2000 and post-2000. The adoption by Victoria, an Australian State, of the term 'PPP' in 2000 to cover a range of hybrid public private models was a 'watershed' in PPP developments in Australia. Prior to 2000 the various models that characterised the PPP experience were the 'BOO' model (Build, Own, Operate) and the BOOT model (Build, Own, Operate and Transfer). The Victorian Government, in particular, had used a privately operated service model to fund a range of traditionally publicly funded operations including hospitals and corrective services. An alternative model is the Design, Build, Finance and Operate (DBFO) approach. In 2000 the practice of having these services provided exclusively by private enterprises was shifted such that the public now had a greater role. This movement, it is here argued, can only be understood on a political level. In 1999 a new Victorian Labor government was elected after 7 years of Conservative (Liberal National Party) rule. The shift from out right privatisation of traditionally government provided services towards the PPP model could thus be seen and understood as a shift from right wing economic polices back towards the centre left.
The approach adopted by the Victorian government was based on the UK models developed to facilitate that country's Private Finance Initiative (PFI). In 2005 other Australian states and the federal government agreed to harmonise PPP implementation measures. By the end of 2005, however, the federal government had yet to be party to any PPP projects. As of 2006, there were 127 PPP projects worth $AU 35 billion that had been undertaken in Australia (English, 2006). PPPs were most utilised in Victoria accounting for 38.6% of the overall total. New South Wales came in second with 29.7%. In New South Wales the annual expenditure on PPPs as a percentage of overall capital works budget is 11% and is expected to remain between 10-15% (Phibbs, 2007). Again the political angle is important to consider in appreciating these statistics. For much of the early part of the 21st century all Australian state governments were Labor with the federal government being the sole conservative administration in the country. In 2007 the Labor party won federal office on a platform of 'rebuilding the nation' with massive policy commitments to renew and initiate Australian economic infrastructure for the new digital age. One of the largest policy commitment's, which has subsequently been commenced in the form of a PPP, is the ambitious National Broadband Network (NBN). The federal government has registered a company (NBN Co Ltd) with a massive government commitment of $43billion over the life of the project. It is hoped that this project will provide superfast broadband Internet to 90% of homes and business in Australia.
From the Victorian and Federal contexts in Australia, it is apparent that the PPP issue seems to be related to party politics. The centre left in Australian politics seems to be more inclined to have government involvement in the PPP context whilst the centre right is more inclined for full privatisation. As such, one of the key costs associated with the dissolution of PPPs in Australia that this paper seeks to focus upon is the political cost. When a relationship between private investors and the government sour in the context of PPPs, political ramifications for both the incumbent government and the consortia involved does not seem to feature in pre project risk profiling and indeed the question must be asked, can such a risk even be calculated and accounted for?