New Zealanders needn’t fear public private partnerships if they’re done properly, says an investment analyst who specialises in broadband infrastructure.

Dr Paul Winton, founder of capital investment company Temple, has conducted research on how to use PPPs in a way that extracts maximum benefit at minimum risk to taxpayers.

Mr Winton has previously spoken to NBR about what he considers the best strategy for the rollout of fast broadband in New Zealand.

He says PPPs could be used to improve other areas of infrastructure such as roads and power generation, but only if they can gain widespread support.

That may be difficult; as Mr Winton says there is strong public opposition to involving the private sector in government projects.

“In New Zealand some people seem to have this idea that the government should do everything.

“The government is good at some things but it doesn’t do other things well, so in some cases it may help to bring in private sector expertise.”

But while public support may be low, Mr Winton says businesses are also dragging the chain, despite the new National government making some positive noises about PPPs.

“It takes two to tango. You need the government and the private sector to work together, and so far we haven’t seen much enthusiasm for PPPs on the part of New Zealand businesses.”

He suggests that companies may be wary of putting themselves in the political firing line by partnering with the government, but says New Zealand businesses are mainly just ignorant of the potential benefits of PPPs.

His research has shown that, for PPPs to be successful, three steps need to be followed: firstly, the government has to clearly define what outcome it is seeking, secondly, risks need to be identified, and thirdly, the risks need to be allocated to what Mr Winton terms “the lowest cost owners of the risks”: either the government or the private sector partner.

If done well, there are clear benefits.
Research in the UK showed that private finance initiatives (British version of PPPs) used to drive infrastructure investments were three times more likely to be on or below budget and two and a half times more likely to be delivered on or ahead of schedule.

However, Mr Winton emphasises that PPPs are “not a silver bullet, not a panacea for all issues”.

“But the good thing about New Zealand not being a world leader in PPPs is we can learn from more than 15 years of experience overseas about what to do and what not to do.

“There’s no reason you can’t do these things if the situation is right. They’re not big monsters, not the devil incarnate.”