PPP theory at odds with practice

THE failure of public private partnerships (PPPs) to get off the ground in Western Australia was a talking point at the Infrastructure WA conference held recently in Perth.

A State Government decision to abandon its PPP plan with Multiplex for a new multi-sports stadium, was the catalyst for discussion led by Freehills senior associate infrastructure Toby Browne-Cooper, who argued that WA needed to adopt a “hybrid” approach to attract the infrastructure funding model in the state.

“They're not necessarily the answer for all infrastructure projects but if you choose them for the right one then they can deliver value for money for the public sector and ultimately the taxpayer,” he said.

PPPs have failed to take off in WA, despite the government's initial enthusiasm, when in 2002 it publicly backed the model with the launch of a specific policy embracing their potential.

The only proposal to gain approval since then has been the $195m district court project led by ABN Amro and Multiplex currently under construction in the city. In addition to design and construction, the pair will provide custodial and security services for up 25 years.

Mutiplex and Mirvac Fini originally submitted proposals for the new indoor stadium, with Mirvac Fini later withdrawing from the tender process in June this year.

Multiplex then said double the $50m originally offered by the government was needed for construction of the stadium.

Less than two months later, treasurer Eric Ripper announced that proposals put forward by the private sector had failed to meet all of the design and financial criteria, and that the Government had decided to build its own $160m, 14,000 seat stadium on the Northbridge Link site on Wellington Street.

The Gallop Government has also ruled out toll roads in the state, a prime PPP candidate as shown with success in other states.

But Browne-Cooper said it was questionable whether a stadium was able to work as a PPP anyhow, and that hopefully the government would make a decision on the likelihood of it succeeding before putting the project out to tender next time.

Ray Sputore, director and general manager of Leighton WA, said that the local contracting industry was “genuinely concerned” about the viability of PPPs in the state. A number of attempts at the PPP model had been unsuccessful he said, and the reality was they are likely to be few and far between based on the current situation.

However, Browne-Cooper said that the size of the WA market presents an opportunity to do things a little differently than is currently the case in the eastern Australian states and the United Kingdom, where they have been an extremely attractive prospect.

An example, he said, was the proposed redevelopment of the old state treasury building, in which the government has called for expressions of interest from contractors to undertake the project with the possibility of provision for office space at the heritage site, leaving the door open for a PPP arrangement.

He added that this was probably where the market sat in WA in terms of complexity.

“It is a bit of a hybrid model and it is appropriate for the Western Australian market,” he said.

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Seated (L-R): Ray Sputore, director and general manager for Leighton WA; Peter Moore, general manager planning and infrastructure Water Corporation; Toby Browne-Cooper, senior associate, Freehills; Peter Hopfmueller, construction manager Thiess; Richard Mann, director City Project New MetroRail Public Transport Authority; Rob Jefferies chief executive City of Geraldton.