Wait, what?
New public-private partnerships framework has Labour’s backing
A new framework for doing more public-private partnerships (PPP) to build big infrastructure has been released by the government, with backing from the opposition.
It aims to win over reluctant contractors by stopping what the government says has been the “wholesale” shifting of risks on to private partners under the current PPP model.
It lowers the bar for a “more reasonable” comparison between doing a PPP versus sticking with a standard build – which is crucial, as the framework sticks with the key rule that only PPPs that outperform a standard approach would go ahead, the government said.
“Government will only use PPPs when they outperform the counterfactual procurement model,” Infrastructure Minister Chris Bishop said on Wednesday.
In addition, the new framework sweetens the finance pot, with an opening for projects to call on Crown borrowing for the first time.
Amid cost blowouts at the likes of the new Dunedin hospital build, PPPs gave decision makers “greater time and cost certainty … than leaving public sector asset owners to manage risks to budget, timetable, performance and asset condition”, the new framework document released on Wednesday afternoon said.
The key objective remained using the model when it both met an affordability threshold and also outperformed non-PPP approaches on non-price grounds.
“This PPP framework outlines clearly how governments of all stripes should think about PPPs as a procurement method,” Labour spokesperson for infrastructure Barbara Edmonds said in a foreword to the 19-page document put together by her political opponent, ACT’s Simon Court.
PPPs are controversial but favoured by the government as one way to build increasingly unaffordable highways, prisons, hospitals and schools. The latter two were strictly off-limits under Labour from 2017.
The new government has also signalled its interest in using them to build new courthouses and Defence housing and infrastructure.
PPPs typically work where a construct-finance-maintain-and-operate alliance builds a facility then runs it for 25 years, paid regularly by the Crown. Those payments for the country’s only two PPP highways, at Transmission Gully and Pūhoi to Warkworth, are about $100m a year each.
Has Labour lost its bottle already?
Why are we leaning into neoliberal PPPs?
How come Labour can lose its nerve before they’ve even won the 2026 election?
Here is the truth about Labour in power, unemployment goes down and wages go up…
…why aren’t we hammering that home rather than agreeing to more right wing plans that won’t do what’s needed to be done?
We need a Ministry of Works, we need to build it ourselves, we need a mass state backed building and infrastructure programme that we run while allowing the ‘market’ to build bloody houses!
This isn’t. solution, it’s Labour blinking before the war has even started.
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In this instance Labour is doing the right thing as an opposition party: That is not barking at every passing car.
When those passing cars are dragging the corpse of our economy chained behind them, they damned well should bark.
Totally agree with you on the need for a Ministry of Works. The Electricity Dept is another candidate. We used to build and operate our infrastructure based on the needs of the population. Today its all about return on private shareholder investment and profit.
So we are paying to build these two roads then paying $5 billion to rent them for the next 25 years and will be handed them back when they need rebuilding .And yes we did pay to have these roads built because the PPP failed to cost them correctly so the last government had to spend a billion to top them up so they could be completed .$5 MILLION PER KM a year as rent is very high .
Yup, and what Labour are signing on to here means even more cost overruns in PPPs.
Oh shut up gordon walker. You are such a downer with your facts. I can get better facts TQ.
We need Willie now!!
The short answer is that Labour are politically incompetent.
And that’s looking at them kindly, choosing the positive line. Otherwise what are they?…..>
“increasingly unaffordable highways, prisons, hospitals and schools. ”
Why are these things increasingly unaffordable? Aren’t they always going to be increasingly unaffordable when inflation is almost always going to be above 2 percent.
If a normal build is run, local bureaucrats procure from local suppliers and those suppliers will ramp and pad prices to the limit in their quotes because it’s a govt contract, a mates deal gets done and the padded dollars are spent locally.
With a PPP the bureaucrats still mismanage the procurement process but some Multinational Corp screws down the local supplier prices by the threat of worldwide competition. The required profit plus the padded dollars get sent overseas and the PPP clips the ticket on the interest for 25 years.
Why isn’t the government just issuing a Roads Bond for the specific road and recording the road as an Asset with minimal effect on the balance sheet.
Why? I’ll tell you why…NZ has maintained a neo liberal state since 1984 that rolls over every election–Reserve Bank Act, State Sector Act, SOEs that have to return a profit, Crown Enterprises…
Private capital has deeply penetrated public infrastructure, the most obvious example being power generation and supply, other state assets were sold of years ago like Telco.
NZ Labour needs to put Fraser House types up against the wall, and elect a leader and caucus that has read and understood Jeremy Corbyn’s “For the many not the few” in which he proposed renationalisations and massive investment in public services. Bar the massive distraction of Brexit JC could well have become PM and it would have been interesting to see a modern nation turn back to social democracy.
Younger people need to get politically active to shake things up–too late for the selfish boomers that deny them so much.
The government is the largest player in our playground. The private sector see government as easy money particularly if you know which boffin boxes to tick. I am concerned that the bureaucrats will be taken for a ride by the private sector and we will (yet again) make tax funded millionaires. The Ministry of Works built good quality infrastructure to last. The private sector isn’t interested in that because they want ongoing work. What is Labour thinking ? Can someone get Chippy a swamp job somewhere ?
Hear, hear, my good man! (Not mine, but it sounds pretentious, and I feel like joining the pret. crowd.)
What’s that furry thing I see before me thinks Bishop? It’s lumpy not furry and it’s a road or is it?
Why is Labour…..because it’s still a neoliberal bunch of dicks, with a leader who thinks and is practically a clone of Luxon. Simple.
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