The government's move toward public-private partnerships (PPPs) for big infrastructure projects has been welcomed by the business sector but opposition parties aren't impressed.Finance Minister Bill English announced the new policy yesterday, saying gover
The government's move toward public-private partnerships (PPPs) for big infrastructure projects has been welcomed by the business sector but opposition parties aren't impressed.
Finance Minister Bill English announced the new policy yesterday, saying government agencies would have to consider PPPs for projects costing more than $25 million.
He said it wouldn't lead to privatising state assets.
"This is all about using our money wisely to get very good services and to get good value for taxpayers, and I think it would be silly to ignore the tools that every developed country is using," he said.
"We have to work a lot harder to meet public expectations, so we'd rather be providing a high quality public service that the public can rely on than sitting on our hands watching services go downhill because we won't use tools that everyone else uses."
Business New Zealand chief executive Phil O'Reilly said it was a win-win policy.
"PPPs can unlock value so that more investment can be made in valuable public services," he said.
"In a small country it makes sense for the public and private sectors to be working in partnership."
Labour's finance spokesman, David Cunliffe, said it was a dangerous move.
"It's letting private foxes loose in every crown entity chicken coop -- without proper training for officials or central control," he said.
"It's a recipe for disaster and will see taxpayer assets pillaged the way they were in the 1990s."
The Green Party said it was privatisation in disguise.
"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," said co-leader Metiria Turei.
"All the evidence is that PPPs won't work because taxpayers take all the risk while the private sector takes all the profit."
The Council of Trade Unions (CTU) said the government could always borrow more cheaply than the private sector, so it was difficult to see why public infrastructure should be built with private funds.
CTU economist Bill Rosenberg said there were big risks in 25 to 30 year projects and not all of them could be transferred to the private sector.
"The risks that are transferred will be built into the price of the contract or the ongoing payments for it, increasing the cost," he said.
"There are also very high costs involved in negotiating the very complex contracts."
