Simon Court ACT MP and Undersecretary to the Minister for RMA Reform and Infrastructure.
New Zealand is amongst the top 10 percent of OECD countries for our spending on infrastructure, but in the bottom 10 percent in terms of getting the benefits from that investment.
In November the Government has launched a refreshed public-private partnership framework. ACT campaigned on this policy which I’ve been working on this policy in my role as Infrastructure Under-Secretary, along with the Minister for Infrastructure Chris Bishop. Public-private partnerships (PPPs), when done right, deliver great value for money and deliver projects on time. They also deliver fantastic whole-of-life asset outcomes for public sector agencies, for taxpayers, and for users over the 25-year lifetime of a typical PPP contract.
Contrast this with the way so many of our public assets have been left to run down over the past few decades, having been built new, opened with a politician cutting a ribbon, but with little to no thought given to the long-term maintenance and renewal of these assets. You only have to think about the leaky pipes, overflowing waste-water networks, leaky schools and hospitals, and roads falling into disrepair due to lack of maintenance to imagine the scale of the problem we are facing.
Some opponents of PPPs claim they cost more over the typical 25-year term than traditional procurement methods. They are correct, because the price reflects the true cost of operating and maintaining an asset, not just building it and walking away as Governments and councils tend to.
Other opponents claim that PPPs are able to make a profit on their investment. They are correct, and there is a good reason for that too. When the private sector has their own capital on the line to finance a new piece of infrastructure, whether it’s a school or a hospital or a road, then hand it back to the Government to a pre-agreed standard after 25 years, they have a great incentive to look after it.
A few weeks ago, I visited Australia I visited a number of PPP schools and what was remarkable about them is that even though they were up to 10 years old, they looked as good and as tidy as the day they opened. Teachers and school managers told us that they don’t need to worry about maintenance, they only need to turn up and deliver education and look after the children in their care.
I met with colleagues in the construction and infrastructure financing sector, including with the Victorian Infrastructure Delivery Authority. One thing they pointed out to me was it didn’t matter whether they had a centre-right or a centre-left Government, they had universal support for public-private partnerships because they understand why the private sector is simply better at managing some risks like design, construction and maintenance than other risks like obtaining resource consents.
That’s why I’m very proud that the New Zealand Coalition Government has achieved cross-party support for the next generation of public-private partnerships, because it makes good sense to invest in that way.
