April 3, 2013
Australian P3 agency shares its best practices
A group of business leaders met in Vancouver recently to find out what Canadians can learn from Australia in terms of best practices for using public-private partnerships (P3s) to construct basic infrastructure.
“Transparency is the biggest political lesson that can be learned from Partnerships Victoria,” said Steve Bracks, chairman of the construction and building industry superannuation fund in Australia.
“There is absolutely no problem in releasing as much information as possible on the construction of a P3 project. In particular, the public has a right to know about the contract, so we put this information up on our website within seven to 14 days of the contract being signed.”
This was one of many important lessons about Australia’s experience with P3s that Bracks shared with a group of about 210 business leaders, who gathered in Vancouver for a luncheon hosted by the Canadian Council for Public-Private Partnerships.
Bracks led the Labor party in the state of Victoria to a minority government in 1999.
He also introduced Partnerships Victoria’s policy in 2000.
The Partnerships Victoria policy provides the framework for a government approach to the provision of public infrastructure and related ancillary services through public-private partnerships.
As a result, Partnerships Victoria made a number of advances on the way P3 projects are delivered, including the transparency in the procurement process.
“Matters that pertained to a bid, which allows the contractor to have a competitive edge should be left confidential,” said Bracks.
“But, this has been used as an excuse to not disclose a lot of other things.”
According to Bracks, the biggest problem with transparency is when information is not released early on in the project, but is revealed afterward. This is why it is better to disclose as much as possible from the beginning.
In addition, Partnerships Victoria does extensive feasibility studies that compare the cost of traditional procurement against the cost of using a P3.
These value-for-money calculations are released to the public before a project begins.
Another innovation developed by Partnerships Victoria was to determine that a project proceeds because of community needs, rather than because the assessment was favourable to the partnership method of financing.
Bracks said it was necessary to address the public’s concern that P3 contracts would be awarded to the private sector by stealth.
In response, industrial terms and conditions for P3 projects were locked in early to ensure there was no leakage in employment or programs in core areas of the public sector, such as hospitals and schools.
This way, government retains direct control of public services and outsourcing of jobs is reduced.
This approach made it possible to deliver projects with offbalance sheet financing, which means government does not record any increase in debt or asset levels for the required infrastructure. The private consortium owns the asset and makes this available to the government over the long-term.
One of the most important projects for Bracks as the newly elected premier was a new County Court building in Melbourne, which is Australia’s largest court complex with 54 courtrooms.
The new facility, which opened in May 2002, was the first major social infrastructure project under the Partnerships Victoria policy.
All court services integral to the administration of justice remained in government control and were delivered through a partnership with a private sector partner, The Liberty Group Pty Ltd.
Bracks’ approach to P3s combined with balanced budgets and a growing economy increased the political popularity of the Labor party in the state of Victoria.
Labor was returned with a majority government after a landslide win at the 2002 election. In 2006, Labor was elected for a third term with a reduced majority. Bracks retired in 2007 as the second longest-serving Labor premier in Victorian history.
Today, there are 22 Partnerships Victoria projects in existence worth about $11.5 billion in capital investment.
Founded by the B.C. Treasury Board in 2002, Partnerships BC looked at Partnerships Victoria and Partnerships UK to develop a model for the new agency.
On a policy basis, Partnerships BC is extremely similar to Partnerships Victoria.
Currently, Bracks is the chairman of the construction and building industry superannuation fund (Cbus Super), which is a pension fund for members of the building, construction and allied industries.
“Our pension funds maximize the benefits for members for their retirement,” he said. “We spread our investments across the market and have 8-9 per cent of our portfolio in infrastructure, which is an important part of superannuation investment in Australia. We own airports, ports, toll roads and office buildings.”
Formed in 1984, Cbus Super has about AUD$17 billion in members’ funds under management, and looks after the needs of 650,000 members and more than 70,000 employers.
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