Public-Private Partnerships - do they work?

[A.Partridge]

Successive Governments seem very keen on the idea that public/private partnerships is the quick solution to all of our infrastructural ills. With the latest debacle involving the eventual buy-out of the M50, does anyone else feel like I do, that WE the public always seem to come out worst in these deals?

 

[CCOVICH]

Moved to LoS.

A. Partridge-you must have posted 50 times to post in this forum.

Note that Miscellaneous Non-Financial Questions is not a forum for debate/discussion of this type.

 

[redbhoy]

Check out "Captive State" by George Monbiot.
The corporate takeover of Britain. Schools promote fast food. Police forces bearing logos.

In general private projects would get finished a lot quicker but then the private sector charge what they want for these services. i.e. Isle of Skye bridge in Scotland.
Our problem is that our public services are farcical so the government tries to outsource the problem to shift the blame from themselves.
If the public sector was run like the private instead of a jobs for the boys club we wouldnt need private funding for public projects!

 

[darag]

Most people don't understand what PPP means and the debate on the subject is often driven by ideology.

PPP effectively has nothing at all to do with whether the work is done by "the public sector" or a private company. Nearly all large infrastructural projects are completed by private companies but most are NOT done as a PPP. The only difference between a PPP project and a traditional tendering process is in the way a project is financed. The finance (i.e. borrowing) for an infrastructure project can come from the government or from a private company. If the latter is used, then it's considered a PPP.

Nor has PPP anything specifically to do with tolls. In many countries tolls are collected (and retained) by the government. You can have PPP built infrastructure without tolls or you can have publicly financed infrastructure with tolls.

There is simply no argument, in my mind, that having a private company do the work (assuming an open and competitive tendering process) is going to be more efficient that doing the work directly using government employees. However there is also no argument that using a PPP structure delivers far worse value to the public because the one thing the government of a stable country can do far more efficiently than any private company is borrow money. Typically the cost of capital for a private company currently lies within the range of 6-12% while I'd be surprised if the Irish government would have to pay more than a fraction above the ECB rate. Given that most PPPs run for 20 or 30 years, this roughly doubles the cost of the infrastructure.

In the UK, PPPs are getting more and more bad press as economists and the like are realising that the Enron-like accounting they represent is simply smoke and mirrors. While the initial cost seems less, all you are really doing is pushing the cost of projects into the future. It may seem great to get a telly on your credit card "for nothing" but if it takes you 10 years to pay off the bill then it will represent far worse value than paying for cash up front.

 

[z107]

There is simply no argument, in my mind, that having a private company do the work (assuming an open and competitive tendering process) is going to be more efficient that doing the work directly using government employees.

I suppose you're entitled to your opinion. In my mind, the private sector is far more efficient, there's no comparision, in fact.
Private companies are living in a dog eat dog world where only the most efficient survive. If the government need more money, they just raise taxes. This inself will foster greater efficiency.


(Opps! - just actually read your post I think I'll leave this here anyway)

 

[Dipole]

for the infrastructural projects it is the same engineering firms doing the bidding/building on PPP and Non-PPP projects.
Some of the firms are going in to consortiums to win PPP projects. What motivation do they have to bid competitively for lucrative public projects when they can bid for even more lucrative PPP projects. I figure if public projects were the only game in town then the tenders for those projects would be more competitive.