Infrastructure bonds better than PPPs

The Green Party today called for the Government to create infrastructure bonds for New Zealanders to invest in rather than raise financing via the failed public-private partnership (PPPs) model.

“All the evidence is that PPPs don’t work because taxpayers take all the risk while the private sector takes all the profit. PPPs leave the public locked into fixed contracts with private investors who make easy money from the asset, while the public bears all the risk if anything goes wrong. It’s simple - public schools and public hospitals should be public assets.

“If the aim is to mobilize private funds for public infrastructure then infrastructure bonds are a much better idea. Infrastructure bonds allow everyday New Zealanders to put their savings into secure investments that benefit the whole country, while at the same time avoiding private control of what should be public assets” said Russel Norman, Green Party Co-Leader.

“If the aim is to mobilize private sector skills and resources then this can be achieved via contracting in those skills, as is current standard practice.

“The news today that the New Zealand Super Fund will put up to $100 million dollars into PPP investment fund is extremely worrying as relying on PPPs to build schools, prisons, and hospitals is effectively transferring parts of our health, justice, and education infrastructure into private hands – it is privatization via the back door.”

There are numerous examples from the United Kingdom and Australia of PPPs failing to deliver and in some cases costing the taxpayers millions of dollars. Even the New Zealand Treasury has advised that there is little evidence that PPPs work.

“We agree that we need to encourage savings and investment in New Zealand but PPPs do not work. We need to look at alternatives like infrastructure bonds to create better value for money outcomes for the New Zealand taxpayer,” said Dr Norman.

For further information see-

Public Private Partnership (PPP) projects -Myth busting, Australia Institute of Project Management
(www.aipm.com.au/html/media_release_public_private_partnership_ppp_projects.cfm)

Financing Infrastructure Projects: Public Private Partnerships (PPPs), Treasury report 2006 (www.treasury.govt.nz/publications/research-policy/ppp/2006/06-02/tpp06-02.pdf)