Govt confirms public-private moves

Infrastructure Minister Bill English. Photo / Mark Mitchell

Finance Minister Bill English has confirmed the Government will introduce measures to encourage private investment in major infrastructure projects.

Speaking yesterday at the Council for Infrastructure symposium in Auckland, English said Government agencies proposing projects with a whole-of-life cost of more than $25 million would be required to consider "alternative procurement options" including public-private partnerships (PPPs).

"PPPs will be appropriate only for some projects, but we believe putting it to the test will increase price competition and ensure that tax payers get the best possible value for money," he said.

Last month Education Minister Anne Tolley said a PPP for a school would involve the private sector building and maintaining the property over a long-term contract - probably 25 to 30 years - while the board of trustees would run the school and the Government retain ownership of the land.

The Government has said it would consider using PPPs for some new school projects.

Fletcher Building general manager for investor relations Philip King said although the new measures might see more projects coming to market, PPPs could prove complex. Bids needed to be made in a consortium - including operators, financiers and construction firms.

"It's certainly a lot more complex, from our perspective, than simply bidding on a construction project," King said.

Infratil executive Tim Brown said he was "not so sure" of whether the changes would have large-scale implications for the Wellington-based firm, which owns and operates businesses in the airports, public transport and energy sectors.

But he said the New Zealand Social Infrastructure Fund, managed by Infratil, could benefit from the changes.

"In due course it's all part of a roll-back of the nanny state and the 'Government should provide everything' mentality," he said.

John O'Rourke, principal of Australia-based Plenary Group, which specialises in public private partnerships, welcomed English's announcement.

"The real test will come with the emergence of a pipeline of projects as this will be the key to attracting international investment and resources from PPP specialists such as Plenary Group."

In April the Government announced its first PPP, a 1000-bed male prison on Corrections-owned land at Wiri, South Auckland.

The Government invests about $6 billion a year in infrastructure projects and maintenance.

English said the Government planned to publish a regular investment statement setting out Crown assets, liabilities and how it planned to manage its "large and growing investment in tax-payers' assets".