Thursday, February 07, 2008

Against Public Private Partnerships

The government is planning to use a Public-Private Partnership to fund a major segment of Auckland's transport network. But while this might give them a quick way of getting an extra chunk of road, I don't think its a good idea. Overseas, PPPs have been a complete disaster, with unnecessary and expensive projects being given priority over cheap and vital ones because they are more attractive to financiers, and private companies slashing public services while walking off with enormous profits. In Sydney, the private operators of the cross-city tunnel imposed a contractual obligation on the government to close public roads to force traffic through their investment - essentially using the coercive power of the state to subsidise their profits. When the public objected, they threatened to force the government to buy them out at an enormous profit (eventually the tunnel went bankrupt in the face of underutilisation).

Needless to say, this is not a pattern I want to see repeated here. Government exists to serve the people, not to transfer public money into private pockets or provide private investors with a guaranteed return. While it might conceivably be possible to come up with a PPP system that doesn't involve a one-sided arrangement where the government sells us out for the benefit of rich foreign investors, looking at our past performance on such matters - e.g. privatisation in the 90's - I very much doubt it.