In contrast to Portugal, Spain, and the United Kingdom, where PPP policies and programs are pushed from the national level, PPP activity in Australia has occurred primarily in three states: New South Wales, Victoria, and Queensland. Each state has used highway PPP arrangements almost exclusively to address mobility issues in their respective major urban centers of Sydney, Melbourne, and Brisbane. Moreover, these states have used PPPs rather selectively to facilitate the development of major segments of highway infrastructure in these urban areas.
NEW SOUTH WALES was Australia's first mover in the highways sector in the early 1990s. At that time, its motiva- tions for PPPs were public sector budgetary constraints and a desire for direct pricing of road use as well as the potential to implement congestion pricing.(c) In 1995 the state government enacted the General Government Debt Elimination Act and subsequently the Fiscal Responsibility Act of 2005. These acts established principles of financial management and specified that the state maintain debt levels at certain thresholds. Consequently, they created an aversion to public debt in the government.** Further, the general debt stabilization policy influenced financing decisions on projects such as the Cross City Tunnel, where a no-net-cost-to-government philosophy was pursued.(d) In addition, the notion of transferring significant risks to the private sector was gaining traction, as well as the belief that market risks and rewards, in particular, provided the private sector the incentive to deliver projects as soon as possible.
VICTORIA began its highway PPP program on the heels of New South Wales when it called for expressions of interest from the private sector to develop and finance a new north-south connector highway in Melbourne in 1992. Unlike New South Wales, Victoria needed special legislation to enable this PPP. In 1995, Victoria passed the Melbourne City Link Act authorizing the PPP arrangement. During this period, one of the overriding concerns was limiting public debt burdens, so PPPs were viewed as a vehicle to this end. In addition, a general belief existed that private sector involvement could drive growth and efficiency, and the PPP model provided a means to price risks allocated to the private sector.
QUEENSLAND did not develop a state-driven PPP arrangement until 2006, when it initiated the procure- ment process for the AirportLink and Northern Busway project. The Brisbane City Council, however, began procurement of the North-South Bypass Tunnel in 2005. Since both PPPs were initiated more than a decade after the first highway PPPs in Australia, Queensland was able to capitalize on the experience of other states to more effectively implement these arrangements.