HOORAY!
Congratulations to the public transport experts at Curtin and RMIT universities, and ARUP engineering for reminding us in their joint proposed rail link to Doncaster report that there are far better ways than PPPs to fund public infrastructure!
Are we at a watershed? Is this the start of a public fight-back against rent-seeking PPPs?
Governments take heed!
Blind Freddy can see when certain infrastructure projects are required. Melbourne needs the Eastern freeway/tollway to stop spilling traffic into the streets of Collingwood and to connect to the Tullamarine Freeway and/or Western Ring Road. Melbourne needs a railway to Doncaster. No risk. Governments are confronted with two problems: how to prioritise and how to fund projects.
The risk is that the land value increases don’t support the cost of construction, regardless of why any cost benefit analysis guesses that will do. That risk – and the associated return – is properly held by private entities, rather than putting the basis of our system at risk.
If the land value increase supports the cost of construction–i.e. if there’s a positive cost-benefit analysis–there won’t be a risk to the public purse. The private companies putting their capital to work in the project will do their own costings and profit estimates.
Now all you have to do is make that methodology available to private investment so that the risks can be removed from the public account, and you have a complete win.