The principal reason for using a PPP is that, for suitable projects, a PPP can deliver superior value for money for government than any alternative delivery model. The superior value for money outcome can be achieved in different ways. It is usually a combination of a better infrastructure solution and better outcomes, less risk for government and/or a lower cost for government, when assessed over the period the infrastructure is used.
The rationale for PPPs was not always so. It is evident from early Australian government policies on PPPs that the initial focus was on overcoming fiscal constraints and Australian Loan Council restrictions on borrowings by State governments. Many countries continue to see PPPs as a means of delivering public infrastructure that the government cannot otherwise afford, rather than a means of achieving best value for money. The PPP model can only provide superior value for money when used on suitable projects. |
| "For the service-payment PPP model to survive, it must demonstrate an ability to provide superior value for money than alternative delivery models available to government." |