Compared with some international jurisdictions, the number of PPP projects undertaken in any year and the announced pipeline of future PPP projects in Australia is limited. As noted in Section 4.2 above, Australia has closed fewer PPP projects since 2005, and has a smaller announced pipeline of PPP projects, than the UK, Spain, Canada and France. However, the average value of Australian PPP projects is substantially higher than that of both the UK and Canada, two comparable jurisdictions.
The transparency of the pipeline has improved for infrastructure generally with the creation of Infrastructure Australia and its publication in May 2009 of the National Infrastructure Priorities. However, this document contains little information about which projects might become PPPs, and focuses only on those projects that are important nationally. The States procure most PPP projects, and they have additional, largely local priorities not addressed by Infrastructure Australia.
The recent update to the Infrastructure Australia website means that there is now a reliable, nationally co-ordinated central repository of information detailing projects completed to date and the status of projects currently in the market, collated from the Federal Government, States and Territories. However, information provided by the various jurisdictions on the future pipeline is very limited. Even within individual jurisdictions, it is not easy to obtain information about future potential PPP projects, particularly in respect of the federal Government.
As noted in Section 2.2 above, Australian jurisdictions typically only commit to an infrastructure project following the allocation of its full capital cost within the relevant Government budgetary cycle. Hence, the pipeline of projects generally depends on:
• the need for the project to support Government's ongoing service obligations
• budgetary considerations such as fiscal strategy, and capital borrowing requirements and constraints.
Governments generally only decide on the procurement method once they commit to a project, and normally then move fairly rapidly to procurement. Understandably, Governments generally are reluctant to announce potential projects in any detail in advance of a budget commitment, limiting the size of the announced pipeline.
Once Governments commit to a project, the National PPP Guidelines (published in December 2008) contain detailed guidance on procurement options analysis that specifies objective criteria for selection of the most appropriate procurement model for a project. However, the weightings of these criteria and the scoring against these criteria are subjective. Most Participants felt that jurisdictions and individual project teams within jurisdictions do not apply these Guidelines consistently (and also did not apply their predecessors in individual jurisdictions consistently). Participants felt that, for many agencies, PPP projects bring a perceived loss of control and require unfamiliar skills, for example in developing output specifications, which may be why some agencies have been slow to adopt PPPs.
The lack of a clear pipeline compromises the visibility and knowledge of the Australian PPP market, resulting in:
• a reduced ability to assess whether entry into the market is likely to provide an appropriate return on the considerable initial investment required to establish a team with the requisite skills and experience
• resource capacity constraints amongst existing players, due to an unwillingness to expand teams with specialist skills and knowledge where there is little confidence of appropriate future opportunities to amortise such costs
• bid costs becoming a greater deterrent to participation in projects, due to a reduced ability to take a view on the commitment of "at risk" capital and the opportunity to "win some, lose some"
• a heightened risk of Participants disbanding their specialist teams.
There also is some lack of national co-ordination and orderly release of projects to market, with the timing of projects depending on individual agencies' priorities. One recent example was the proposed bid response dates for the SA schools and Victorian Biosciences projects being on the same day, although these dates changed subsequently. Where PPP projects brought to the market are sporadic in nature, there are greater challenges for the market in its ability respond to projects and to adjust to address capacity constraints.
If Governments do not address the above concerns, the Australian PPP market place may be subject to fewer Participants and general market capacity constraints, leading to reduced competition and possibly worse value for money.