Infrastructure Procurement After the Credit Crunch: A Guaranteed Future for PPPs in Australia?

Tam, Nicholas
March 2012
European Procurement & Public Private Partnership Law Review;2012, Vol. 7 Issue 1, p30
Australian enthusiasm for public private partnerships (PPPs) in public infrastructure procurement in recent years has been tempered by criticism arising in the prevailing financial climate following the global financial crisis. Turbulence in global capital markets arising from the 2008 US credit crunch and ongoing Eurozone instability has diminished access to the quantity and tenor of finance necessary to commence new projects, particularly those larger in scale. This article demonstrates that PPPs have consistently succeeded in driving efficiencies and innovation in public procurement. Moreover, the state of the capital markets accentuates the continued desirability of PPPs in an era of constrained government finances. Therefore, the challenge for policymakers is to tweak the PPP model to ensure projects are structured in a financially attractive way to potential bidders. Of the available policy options, it is argued that limited government guarantees of bank debt and revenue will be the most effective mechanisms to ensure that new PPPs attract sufficient investments.


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