The Victorian Government is interested in taking Public Private Partnerships (PPPs) into education as the Blair Government has done. PPPs have so far represented a scandal of economic reform. A method used to shift debt off governments’ balance sheets so they can commit to debt reduction and say ‘look Mum – no debt’, when everything about the transaction is like debt. You get a big asset and a long stream of payments you make on it. But it’s not debt because the private sector have funded it and you get to pay user payments instead of interest. The rub is that the private sector charge a lot more for equity than debt. So unless there is a good deal more risk transfer than there usually is – and sometimes even then – the deal is bad economics.
The Victorian initiative on swimming pools – reported here – will have the private sector funding the pools and also opening the pools after school hours. An obvious thing to do, but not one encouraged by a century or so of government silos. I went to primary school at Harkaway which was a small village in Victoria near the Dandenong Ranges. We played tennis on its tennis courts out of hours, but I expect it wasn’t government policy that we do so.
Anyway, this use of PPPs looks pretty benign to me, though the state might be able to get itself cheaper facilities via a more traditional route which is funding them and outsourcing the management.
It’s a pity in a way that we need to have the private sector involved for a point of bleeding obviousness to be seized upon – which is that assets that are funded by government should (to the extent practicable) be available to the community.
Rather than being a case where PPPs deliver this, it would be preferable if the government figured out that things that it funds should generally – that is in the absence of good reasons to the contrary – be treated as public rather than private assets. I argued this point thinking particularly of access and the Hilmer process where little distinction was made between publically and privately owned assets. But there are lots of applications of the same principle.
Government funded software should – in the absence of good reasons to the contrary – be open source. Whilst they were public assets, Telstra, the Commonwealth Bank and Qantas should have likewise been managed as public assets. This does not mean that they should not have got a good commercial return on those assets, but it does mean that – in the absence of good reasons to the contrary – they should not have behaved restrictively in providing access to the various networks they had to offer.
Commonwealth Bank should have offered good commercially priced access to its ATM and other networks to all comers, Qantas it’s terminals and Telstra its local loop and other assets. That would have been a better way to use these public assets while the industries they were big players in were being freed up. Once they had become sufficiently competitive they could have been sold off.
Anyway, – in the absence of good reasons to the contrary – you can read the paper on ‘extended access’ to government owned assets here (pdf).