B.5.1 History

The New Zealand Treasury defines a PPP as long-term contract between the public and private sector for the delivery of services where the provision of the service requires the construction of a new assets, or the enhancement of an existing asset, that is financed from external sources on a non-resource basis and where full legal ownership of the asset is retained by the Crown.

Initially in New Zealand, unlike the UK and Australia, there was no specific authority responsible for the promotion of PPPs. However, the Local Government Act empowered a local council to develop a PPP project and to determine the nature and scope of its commitment of resources to the project. A PPP project was overseen by the local council and the project was monitored through reporting on the implementation of the long - term community plan of the local council. Over the years, there were several milestones in the development of PPPs in New Zealand.

• In November 2003, the Land Transport Management Act was passed, empowering public road controlling authorities to enter into concession agreements with a third party, relating to the construction and operation of the roads.

• In December 2007, Kaipara District Council awarded a A$53 million Design Build Finance and Operate (DBFO) contract for delivery of wastewater services to the town of Mangawhai.37

• In June 2008, the Water View Connection Procurement Steering Group concluded that PPPs can offer value for money through disciplines around casting, defining objectives and risk allocation together with the performance incentives that arise from having private finance at stake.38

• In March 2009, Treasury established a National Infrastructure Unit (NIU) to formulate a long-term infrastructure plan for New Zealand.39 In the following months during 2009, various government announcements were further made supporting PPPs for use across difference economic and social sectors.

• In March 2010, the NIU released the National Infrastructure Plan (NIP), which confirms that the government intends to use PPPs where they represent value for money for taxpayers.

The NIP outlines a "step change in the level of infrastructure investment" with NZ$7.5 billion allocated for new capital projects over five years. The New Zealand Council of Infrastructure Development has estimated the government and local authorities will spend about NZ$70 billion on infrastructure development and maintenance over 10 years (Venter, 2009). New Zealand PPP projects to date include projects in the Education, Corrections and Transport sectors. PPP projects in New Zealand are listed in earlier in the section in Table B.1.

The PPP scheme in New Zealand is managed by the NIU - a specialised unit within the Treasury - and has clearly learnt some lessons from the Australian experience. New Zealand is one of Australia's most important partners in the areas of business and trade. The formulation and development of Australia's PPP market provided useful lessons for New Zealand's PPP market.

The overall approach to PPPs taken by the New Zealand Government is: "The government intends to use Public Private Partnerships where they represent value for money to taxpayers." (National Infrastructure Unit, 2010) "Off- balance sheet" consideration, as is the case in Australia, is not a factor that determines the government's choice of procurement option given the underlying economics and accounting treatment of PPPs in New Zealand (National Infrastructure Unit, 2010).

New Zealand's recently released guidance for business case development (NZ Treasury, 2011a and NZ Treasury 2011b) is similar to the UK's guidance. Both documents indicate the respective governments' structured and standardised approach regarding business case development for capital projects, with a special focus on value for money. However, the UK's documents represent a higher level of details while those of New Zealand's tend to be more general. This is in line with the PPP development status of the two countries:

While the UK has pioneered the PPP use, New Zealand is an emerging market. As opposed to the UK and Australia, where relatively abundant literature is available examining PPP application, there is limited research providing a critical review of the key issues in relation to PPPs, with a special focus on New Zealand.

It appears that New Zealand currently favours PPP contracts that deliver value for money and involve government in the operational phase of projects.