Building Nations: Public-private partnerships reboot planned as Government mulls RMA replacement

Act MP Simon Court.

Act MP Simon Court wants to modernise New Zealand’s public-private partnership framework as part of the Government’s work reforming the Resource Management Act.

Speaking at the Building Nations conference in Auckland, Court says the coalition Government sees public-private partnerships (PPPs) as a key tool for enabling greater private involvement in public infrastructure projects.

He said there was an appetite and intent for greater application of private-sector capital, capability and capacity to help deliver on New Zealand’s public infrastructure aspirations.

Infrastructure industry leaders are wary of New Zealand government PPPs. They argue that in the past contracts have placed too much risk on the private partner.

Court acknowledges this. “We know many in the sector feel they signed up to an undue level of risk on past PPP projects,” he said.

“We understand that frustration and recognise that in some cases it has not been in either the client’s or the contractors’ interest to set the performance and scope bar high, and the price low.

“Nonetheless, we expect public-sector agencies to maximise public and taxpayer value in how they manage those existing contracts.”

Court said a new PPP framework must “recognise that contractual risk allocation incentivises proactive and effective risk management, but that there are some risks we may not be able to efficiently transfer”.

Rather than asking the public sector to take back some of the risk, the new PPP framework will look to reduce the uncertainty in a project with more effort going into pre-procurement planning.

“With reasonable time, cost, scope, and performance parameters agreed, all parties should be expected to be, and happy to be, held to account. We are committed to measures that reduce the costs and time required through the procurement process, as well as providing clear guidance on the circumstances where a financial contribution to offset the costs of the procurement process might be expected,” he said.

As part of the PPP reboot, Court said, the Government would make sure the people working on the public side of the partnership have better skills and more resources. They will be supported by the new National Infrastructure Agency, announced yesterday by Infrastructure Minister Chris Bishop.

It’s a promise to lift the public sector’s game when taking part in PPPs. “We expect high performance from our contractors, and the contractors should expect the same from clients,” Court said.

As well as rebooting PPPs, Court said, the Government was looking at strategic leasing where there is an asset the Crown does not need to eventually own.

The new PPP framework comes as the Government continues its efforts to replace the Resource Management Act (RMA). Court says the act needs replacing because of its complexity and it stands in the way of growth.

“We cannot go on thinking every activity needs a consent, and that every consent requires reinventing the wheel in terms of what conditions might be appropriate to apply, when most things have been done before.”

He says that when it arrives, the new system will restore property rights, streamline processes and reduce the need for repetitive consents.