The Government's move towards public-private partnerships (PPPs) for big infrastructure projects is facing mounting criticism, with Labour saying it will inevitably lead to fire sales of state-owned assets.
Finance Minister Bill English announced the new policy yesterday, saying government agencies would have to consider PPPs for projects costing more than $25 million.
"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," he said.
Since then Labour, the Greens, trade unions and the Public Service Association (PSA) have said PPPs make no sense and create risks for taxpayers.
"This is one more desperate ploy by a government with no coherent plan for growing the economy or creating jobs," Labour's finance spokesman David Cunliffe said today.
"It desperately hopes the private sector will finance projects it lacks the vision, courage or resources to do itself."
Mr Cunliffe said PPPs were a sop to private interests and had nothing to do with prudent asset management.
"It will inevitably lead to bad decision-making, fire sales of crown assets and higher capital costs for taxpayers," he said.
"Negotiating PPPs with savvy investment banks requires specialist skills most crown entities simply don't have, so National's one-size-fits-all approach risks taxpayers being taken for a ride."
PSA national secretary Richard Wagstaff said PPPs carried financial risks for the Government and taxpayers, and a loss of public control over services and facilities.
"The Government is once again presenting PPPs as a more efficient, value for money option but international evidence suggests these assumptions are wrong," he said.
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 money.
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.
Mr English says PPPs won't mean privatisation of public assets but the Greens say they are simply privatisation in disguise.
The business sector has welcomed the announcement.
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."