Public private partnerships (PPPs) became fashionable on the international scene around 30 years ago (Bovaird, 2004) and since then have become one of the most interesting and controversial topics for theorists and practitioners to explore. However, a literature review of PPPs confirms that the concept is not new. Private capital and expertise in the provision of public services have been utilised for a long time. Different authors agree that many examples in history show that some cooperation between the private and the public sectors existed in the 18th and 19th centuries (Hodge, 2004; Hodge & Greve, 2007; Nisar, 2007). Indeed, an early example could be related to the arrangements that existed between the British Government and the privateers of the 17th Century (Talty, 2007) and as early as the Roman Empire (Callender, 2007). According to Noble and Jones (2006) the term PPP can be traced back to the 1960s during which time they were established in the United States for urban renewal projects.
In Australia, which is a federal system, all states are in different stages of development of PPP initiative and have different experiences (English & Guthrie, 2003; Jones, 2003). New South Wales, Victoria and Queensland are leading in terms of the number and value of newly established PPPs (Jones, 2003), but examples can be found (and are widely published in the press) in each state.
The overall development and implementation of PPPs in Australia can be categorised into two periods: pre- and post-2000. One of the major characteristics of the pre-2000 period is the lack of specific PPP procurement policies and guidelines. In the post-2000 period we are witnessing a more structured approach towards PPP development and implementation with, for example, specific policies, procedures, guidelines, the establishment of government bodies and steering mechanisms (Teicher, Alam & Gramberg, 2006; English, 2007).
The term PPP can be defined in a number of ways. In Australia the operational definition of PPP is 'that government has a business relationship, it is long term, with risks and returns being shared, and that private business becomes involved in financing, designing, constructing, owning, or operating public facilities or services' (Teicher et al., 2006). However, according to English (2007), PPPs are defined as time and cost-specific agreements between the state and a private consortium for infrastructure-based service provision. The consortium is responsible for finance, design, construction and providing services and maintenance for the agreed term of the PPP.
According to Hodge and Greve (2007), for example, there are different definitions of the term PPP. For some it's a governance tool, whereas for others it represents a new expression in the language of public management to replace the terms outsourcing, contracting out and privatisation. In Australia, however, there is a clear distinction. The argument favours the view that PPPs are completely separate from privatisation (Hodge & Greve, 2007; Teicher et al., 2007). In addition, some people see PPPs as a new way to handle infrastructure projects and others make no distinction between contracting and PPPs (Hodge & Greve, 2007). Finally, Private Finance Initiatives (PFIs), which mean 'getting private sector consortia to finance government capital projects in return for a long-term contract to operate the facility' (Euromoney Institutional Investor PLC, 2003a: 1), are another variation on the PPP theme.
This introduction would not be complete without summarising the different types of PPPs that currently exist in Australia and internationally. According to Hodge and Greve (2007) there are at least five families of PPP arrangements:
● institutional cooperation for joint production and risk sharing
● long-term infrastructure contracts that emphasise tight specification of outputs in long-term legal contracts
● public policy networks in which loose stakeholder relationships are emphasised
● civil society and community development in which partnership symbolism is adopted for cultural change
● urban renewal and development.
In Australia there are several different outcomes of PPP. Their specific characteristics are dependent on the particular needs of the project and in this sense they are unique. The most common types are: BOOT (Build, Own, Operate, Transfer), BOT (Build, Operate, Transfer), BOO (Build, Own, Operate) and DBFM (Design, Build, Finance, Maintain) (English & Guthrie, 2003). These variations do not change the underlying nature of a PPP, but rather reflect different roles attached to the job of the PPP providers.
The remainder of this paper comprises six sections. Following this introduction and a brief overview of the various types of PPPs, the key factors contributing to the emergence of PPPs are discussed and an analysis of the financial context of PPPs in Australia is described. PPP regulation and auditing are discussed in the next section and it is debated whether PPPs are a problem or a solution in the present public policy environment. The final section focuses on lessons learnt from the past and how these can be implemented to facilitate future PPP performance improvements.