World experts say Private Public Partnerships are an invaluable part of procurement toolkit

With an estimated $60 billion worth of infrastructure investment required in New Zealand over the next ten years, UK PricewaterhouseCoopers partner, Richard Abadie, a World expert on Private Public Partnerships (PPPs) is in New Zealand this week to meet with key local and central government officials to discuss PPPs as a procurement tool.

The Government has indicated an open-mindedness about the use of PPPs as one tool which could help address some of New Zealand's huge infrastructure requirements in the next decade.  This view was supported by an announcement earlier this year by Minister of Transport, the Hon Annette King MP, that a proportion of the Auckland regional fuel tax will help fund the Rodney based Penlink project.

Richard Abadie's New Zealand visit focuses on the public sector benefits offered by PPPs and the PPP trends globally.

"The infrastructure backlog is not unique to New Zealand.  It is a common challenge in most countries around the world where government investment in infrastructure as a percentage of GDP has been in steady decline.  Private finance is increasingly being asked to fill the gap," said Mr Abadie.

His presentations are supported by Nicole Geochegan, in-house legal counsel with international professional services company, GHD, and Simpson Grierson Partner Mike Weatherall, an advisor on PPPs throughout New Zealand including the recently opened Vector Arena in Auckland

Addressing some of the myths about PPPs in New Zealand, Mr Weatherall said "There are some amazing misconceptions about PPPs and for some, it has almost become the procurement tool that dare not speak its name. Simpson Grierson has done a number of partnering arrangements which are PPPs in all but name.  They not only deliver, they save our clients a lot of money"

"If France, Spain, India and even Russia undertake large PPPs, why not us?" he added.

This international perspective has been echoed by the Organisation for Economic Co-operation and Development (OECD), an international body helping governments tackle economic, social and governance challenges of a globalised economy. A role the New Zealand Council of Infrastructure Development adopts in a national context . 

In its 2006 report Policy Framework for Investment, the OECD aimed to mobilise private investment that supports economic growth and sustainable development.

"Public Finance will remain the key source for delivering infrastructure investment, however, PPP and private finance are critical and complementary techniques to address the backlog.  In the United Kingdom, for example, PPP and Private Finance is used for 10-15% of investment in public service related infrastructure.  It is really looked at as part of the procurement toolkit,"  said Mr Abadie.

With the recent focus on whether rates are an appropriate funding mechanism for infrastructure, Richard's experience as advisor to global developers and governments on transport and social infrastructure PPP projects in Europe, Canada and  South Africa will help facilitate discussion amongst attending local government decision makers.

Richard spent two years as the head of the Private Finance Initiative unit at HM Treasury with responsibility for advising the UK government on PPP policy.  Before joining PwC he was a director at a South African contractor and toll road operating company.

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