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State Infrastructure Fund To Cut Out PPP Middle Man
November 10th 2005


NSW Democrats MLC, Dr Arthur Chesterfield-Evans has called for the implementation of a State Infrastructure Fund to provide a less expensive, and more accountable way of building much needed infrastructure.

"After the Cross-City Tunnel unfolds in it's entirety, there is going to be no support for Private Public Partnerships. In virtually every case in the last ten years we have seen some kind of deal that let's the private sector profit hugely at the public's expense - its time to come up with something better," said Dr. Chesterfield-Evans.
The proposal for a State Infrastructure Fund would allow the state government to take back the control of large projects and bring down costs through the significantly lower interest rate that is available to government.

"The NSW Government has a triple-A credit rating, and we should be using it to the advantage of the NSW public. The current regime of Public Private Partnerships just puts money in the pockets of the private sector managers who serve as a middle man between the government and the investors, and the costs for these private sector borrowers just adds to the cost of the project," he said.
Dr. Chesterfield-Evans views today's call by Macquarie Bank for more PPP projects involving superannuation investment groups as a serious reason for the government to manage the financing through a state based infrastructure bond system.

"The fact, that superannuation funds are said to be very interested in the stability and high yield of such projects, makes it very clear that we should not be handing these opportunities over to the private sector for further profit making." he said.

Dr. Chesterfield-Evans points to the overwhelming evidence emerging from the Cross City Tunnel, the Lane Cove Tunnel and the M7, as well as the continuing issue of the Airport Line, as evidence that the current level of concessions being made to sweeten these deals is proving too high a cost in terms of long-term planning.

"A much subtler effect of the government handing responsibility for infrastructure over to the private sector is that the planning authorities have atrophied and lost a lot of staff. This puts the government in a poor position to negotiate for the public good. They just don't have the expertise anymore and this needs to be addressed immediately," he concluded.
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