• High Public Sponsor Risks. This early public-private partnership placed a significant amount of the project risk on the public sector. The NSW Government provided a minimum revenue guarantee which required its Roads and Traffic Authority to make predefined, periodic payments to project financiers. This effectively removed traffic risk from the consortium. The Government also assumed additional project risks in the form of inflation, financing, and default risks. The construction consortium assumed only the construction risks for the project. The Government was criticized by the Auditor-General for the excessive financial risks that the Government accepted for this project.
• Gradual Shift of Future Project Risks to the Private Sector. While the risks taken by the NEW Government in this instance appear to be excessive, they provide an indication of the risk adverse behavior of the market to PPPs when first introduced in Australia. Risk premiums were often high with initial PPPs. As the market became more familiar with PPP arrangements, the risk premium requested by the market began to fall. Hence subsequent PPP toll road projects in Sydney have resulted in a more equal sharing of risks between the Government and equity holders, in particular with respective to traffic, financing, and default risk.