Infrastructure: Direct Govt Funding Better Than PPPs
August 25th, 2010
The Govt’s move towards public-private partnerships (PPPs) for big infrastructure projects such as new motorways is opposed by opposition parties. Labour’s finance spokesman, David Cunliffe, says the policy is a dangerous move. “It’s letting private foxes loose in every crown entity chicken coop – without proper training for officials or central control.” Cunliffe contends it’s a recipe for disaster and will see taxpayer assets pillaged the way they were in the 1990s.The Green Party also opposes the move saying it is privatisation in disguise. Co-leader Metiria Turei says “opening the floodgates to PPPs will simply result in the transfer of large parts of the health, justice, education and transport sectors into private ownership.” She also doubts PPPs will work financially for the tax payer. “All the evidence is PPPs won’t work because taxpayers take all the risk while the private sector takes all the profit.”
The Council of Trade Unions (CTU) also contends the move does not make financial sense claiming the Govt can always borrow more cheaply than the private sector, so it is difficult to see why public infrastructure should be built with private funds. CTU economist Bill Rosenberg says there are big risks in 25 to 30 year projects and not all of them can be transferred to the private sector. “The risks which are transferred will be built into the price of the contract or the ongoing payments for it, increasing the cost. He adds there are also very high costs involved in negotiating the very complex contracts.”
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