The Office of the Auditor-General has published a Discussion Paper on "Managing the implications of public private partnerships" (PPPs). The Discussion Paper aims to inform readers about the opportunities and challenges of PPPs to the public sector and to encourage informed debate on the topic.
In the paper the Auditor-General, with the assistance of a "maturity" analysis prepared by Deloitte, takes a look at perceived benchmark criteria for effective PPPs and identifies where New Zealand sits against those benchmarks. Overall New Zealand is considered as having moved from a "developing" PPP market in 2006 to an "active" PPP market in 2011 but is still short of being a well-functioning and "mature" PPP market (such as Australia or the United Kingdom).
Areas identified where advances have been made include:
- Improved understanding of the commercial principles of PPPs and more experience of transactions by public and private sector
- Improved standards of public sector governance and procurement, with effective evaluation and award criteria
- New Zealand having an established common law tradition, based on respect for contracts, transparency, and good standards of governance. (To get to the next stage a standard contract is seen as being essential for delivering effective PPPs.)
Some of the areas identified where improvements are required before New Zealand has a well-functioning (or mature) PPP market include:
- Gaining further experience in identifying and allocating risk (i.e. developing standardised sector specific risk allocation processes which can provide a starting point for negotiations)
- Building domestic and private sector skills (especially in smaller organisations which currently lack the resources to access PPP knowledge or experience)
- Improved sophistication (and financial instruments) in the domestic capital markets, which currently suffer poor liquidity in the long-term debt market and few specialised domestic equity sponsors.
The Discussion Paper can be found here.