As PPP programs have evolved in the host countries, so too has public acceptance of PPPs, although some issues remain. In many respects, public perspectives of PPPs have improved over time as the nations have tightened policies and improved practices. This is not to say that resistance has dissipated entirely, but that the public has come to expect better government decisionmaking on and oversight of PPPs.
Public concern over private sector profiteering was quite pronounced in some of the host nations at the onset of PPP programs. Public apprehension over the potential for unreasonable private sector profits was a real issue. With time, adjustments in policy and practice have reduced this apprehension. The more recent adoption of value-for- money principles for PPP projects and the public sector's contractual regulation of private revenues or profits as well as sharing in the financial upside have helped minimize this concern. More specific practices are described in subsequent chapters.
Resistance to tolling exists in the host nations visited, particularly the imposition of tolls where none existed before. "Excerpt: Private Sector Financing in Roads: Review of the Major Australian Toll Roads" is from a 1998 report by Austroads, the association of Australian and New Zealand road transport and traffic authorities, that provides an insightful perspective on toll roads. Both opposition aspects identified suggest that public resistance to a roadway or a toll road may have more to do with the fundamental source of the opposition than with who is providing the service. Representatives in New South Wales indicated that while general resistance to tolling has subsided somewhat, a new circumstance described as "toll fatigue" has developed.4
Officials in the United Kingdom have observed two interesting issues related to public acceptance of PPPs. The first is confusing PPP with privatization. To some these words are interchangeable. The difference between the two, however, is more than semantic. The transfer of ownership of an asset to the private sector qualifies as privatization, in which governance is through regulatory bodies such as public utility commissions. PPPs are service arrangements between the public and private sectors that are governed by contracts and the accompanying body of contract law. The second issue is general public opposition to the overall PFI policy, but project-specific support once the public is exposed to the advantages and disadvantages of a PPP approach versus an alternative strategy. In both cases, the government's transparency and accessibility on policy and project information and audits have improved public knowledge and acceptance of PPPs.
Excerpt: Private Sector Financing in Roads: Review of the Major Australian Toll Roads |
It is the politics of toll roads, rather than their economic legitimacy, that has become the issue by which toll roads in Australia have been judged in recent times. There are two aspects to the opposition which has arisen to these toll projects: ♦ road versus no road; and ♦ "free" versus "user pays." In the first aspect, road versus no road, ownership is not the issue. Good planning involves: ♦ integrated management of the land-use and transport system; ♦ adapting urban regions to provide for growth and change while moving towards more sustainable, efficient and equitable cities; ♦ establishing a local land-use/transport system with a closer fit between housing, local employment and services; ♦ developing transport routes as multi-modal corridors, planning them in a regional and local context, and developing roads and their environments together; and ♦ effective community consultation. Governments must be informed managers to ensure the above requirements are met, whether the private sector is involved as project proponent or not. The politics can manifest into "no road" community pressure if the planning process is not successful. In the second aspect, free versus user pays, again ownership is not the issue. Whether the government or a private developer owns a road, recent toll projects have been private sector projects with the tolls providing the revenue stream. Therefore the issue is that the community, if given a choice, prefers not to have to pay directly to use particular roads. Where roads are financed from general taxation, road use appears to be "free." Given that the majority of roads have no direct pricing, users exposed to toll roads may believe they are being treated inequitably compared to users of other facilities funded from general taxes. |
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4 A partial explanation of this fatigue might be the variable rates that residents of Sydney pay when using different sections of the Sydney Orbital. Since the Orbital was developed incrementally by different PPP contractors, the per-kilometer rates vary from segment to segment.