Academic journal article Public Administration Quarterly

Addressing Governance, Accountability and Performance Monitoring Issues in Partnerships: Can 'Infrastructure Australia' Provide a Strategic Response?

Academic journal article Public Administration Quarterly

Addressing Governance, Accountability and Performance Monitoring Issues in Partnerships: Can 'Infrastructure Australia' Provide a Strategic Response?

Article excerpt

INTRODUCTION

Australia's development of economic infrastructure, especially in the area of suburban land transport, has largely been undertaken at sub-national level by state governments. While there are historical reasons for this uncoordinated approach to infrastructure development, related to the country's colonial past, it is obvious that there are infrastructure gaps to the extent that it is claimed that continuing national economic development will be hindered. As a no-cost-to-government procurement strategy, PPPs-PFPs (public-private partnerships--privately financed projects) are seen as a viable procurement option to address the infrastructure deficits, especially at times of economic constraints, as is currently the case.

PPPs-PFPs have been used in only about 10 per cent of total infrastructure projects over the last decade (New South Wales Treasury 2009), or two, although large economic infrastructure projects amounting to many billions of dollars figure strongly in terms of the application of the model. While, undoubtedly, governments' competence to establish and manage large economic infrastructure PPPs-PFPs, particularly through the contract development and design-construct stages, has increased over the last 20 years, this procurement initiative has been controversial and, on numerous occasions, has put governments' credibility in question. In recognition of some of the problems within the PPP-PFP model, and infrastructure development generally, the national government has now established Infrastructure Australia (IA).

When projects have failed, for one reason or another, this has usually occurred within the media spotlight and citizens have often been highly aggrieved with the outcomes of governments' decisions related to the projects and asset performance. As such, there has been a negative commentary from the media and the community about the unsuitability of PPPs-PFPs leading to a lack of public trust in the model (AAP 2006; ABC News Online 2006; 2007; Dawes, Chemell and Cubby 2006; Four Corners 2006; Clennel 2008; Rochfort 2008; Ferguson 2009; New South Wales Treasury 2009). Furthermore, there are now cases where the privately managed asset, which might be part of a wider public land transport system, is actually of high quality but the potential strong public value benefit is not achieved because of the public's unwillingness to pay the perceived excessive costs of tolls.

Until recently, Australian governments have only been partly responsive in terms of beginning to develop a robust governance, accountability and performance monitoring framework to deal with citizens' and other concerns. In the past, governments have retreated to commercial-in-confidence disclaimers about detail until pressure has forced action, such as parliamentary and auditors-general enquiries (New South Wales Treasury 2009). While the extent of taxpayers' liability within these so-called no-cost-to-government projects, mostly through purported litigation and pay-outs related to penalty clauses within project contracts, is unknown, the small amount of detail that is in the public domain suggests that taxpayers' liability is extensive. Furthermore, it is possible that such liability is actually directly connected to political risk, which, of course, governments must bear in these arrangements. Up front, there may be no or little cost to governments as financial risk is openly shifted to the private actors, but several years into the concession periods, which typically extend to around 30 or more years, taxpayers' liability of millions, or even billions, of dollars may well apply. Extending de Haven-Smith's (2006) ideas of State Crimes against Democracy (SCADs) such expenditure by governments could be seen as economic SCADs (ESCADS) (Kouzmin, Johnston and Thorne 2009).

Supposedly, Australia has a higher failure rate (around 7 per cent) than the average for developed economies (around 1 per cent) for these PPP-PFP arrangements. …

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