As previously stated, the procurement of public services, assets and projects through the use of PPP is claimed to be an extension of the liberalisation agenda of New Public Management (Grimsey and Lewis 2004: p.52). PPP began to emerge as a serious alternative to more conventional methods of public procurement during the 1990s, becoming popular in countries such as Chile, Ireland, Mexico, and the UK (International Monetary Fund 2004: p.3) at least in part due to increasing demands on the provision of public services, and the ever-increasing financial burden of maintaining and replacing ageing public infrastructure and other assets.
PPP can be viewed as a refinement of earlier attempts at privatisation (International Monetary Fund 2004: p.4) although other factors have been credited by commentators such as Ahadzi and Bowles (2004) and the Asian Development Bank (2008: p.3-5) as being drivers behind its uptake. These they say, include further reducing government budget deficits, the need for smaller cash outlays and a decrease in the number of subsidies offered to private developers; the desire to introduce more market-based competition in the economy whilst retaining its regulatory and supervisory roles as part of partnership arrangements; and the achievement of greater efficiency and skill developments claimed to be obtainable through engaging superior private sector technical and management expertise. This latter point is a somewhat weak argument, since it is likely that, if the public sector were to retain responsibility for project delivery and operations, it would also employ suitably qualified and experienced personnel to do so. Thus the desire to contain public sector staffing costs (including the long-term future liability of funding employee benefits such as superannuation) is likely to be a compelling 'hidden' driver for PPP.
Also occurring in 1992, the then Conservative Government in Britain implemented the PFI, a private finance panel established within Treasury (Spackman 2002), intended to progress private sector investment in public services and infrastructure (Quiggin 2004) through the use of PPP (PPP being a term that is interchangeable with PFI (English 2008: p.2)). Over the next years, PFI, as well as being viewed by parliamentarians and public sector officials as a vehicle for reducing levels of government borrowing through cross-sector investment and service delivery, it became a model for the 'efficient' allocation of project risk (Quiggin 2004; Li et al 2005), although in practice, its application has led to questionable results.
In the UK, PFI continued under the New Labour Government in 1997 (and still continues under the Conservative Government in 2014), expanding its reach into the health and education sectors (Broadbent and Laughlin 2004; 2005) as well as delivering services and infrastructure within other industries. In the main, belief in the value of PPP in Australia, and in particular, Victoria and New South Wales, has been influenced by experiences in the UK (Partnerships Victoria 2001a: p.4; New South Wales Treasury 2002: p.11).
It should be noted that this form of privatisation (in contrast with other reforms such as de-nationalisation) has been largely embraced and continued by both the conservative / liberal and socialist shades of government in the UK and in Australia. Whether this paradox is ascribed to genuine political philosophy, or is more pragmatically driven by the practical difficulties of unbundling complex long-term contractual arrangements already in place, is largely a moot point. The important feature is that PPP, by their very nature, have survived political change. They are a distinguishable feature of the macro- and micro-economic landscape in many countries, even where command-economies are the norm.