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Developing a governance model for PPPinfrastructure service delivery based onlessons from Eastern Australia

TitleDeveloping a governance model for PPPinfrastructure service delivery based onlessons from Eastern Australia
Publication TypeJournal
Year of Publication2016
AuthorsLevitt, R, Eriksson, K
KeywordsAlignment of interest, Conflict of interest, Governance, infrastructure, Infrastructure developer, Institutional investor, Investment bank, p3, Pension fund, Pension fund aggregator, PPP, Public-private partnership, Relationalcontracting, risk allocation, Structured finance

Public-private partnership (PPP) concession agreements are awarded by National,State and local public agencies that contract with private companies to finance and deliver infrastructure as a long term service to governments and their citizens, rather than having the private firms design and build infrastructure assets to be financed,operated—and, hopefully, maintained—by government. PPPs are similar to the emerging model of selling business or personal software as a cloud-based service (SaaS)rather than as a product licensed by the user—a model that that has transformed and disrupted the enterprise software industry. Australia is a world leader in PPP infrastructure delivery, and has had over two decades of experience in delivering civil and social infrastructure services to its citizens via PPP concessions. Along the way, the public and private participants in infrastructure PPPs have developed practices and a mature institutional framework necessary for this kind of long-term, risky public-privatec ommercial partnership. This study reports the findings from in-depth interviews with25 senior executives of public and private participants in PPP infrastructure projects from the three Eastern Australian States with the longest history of PPP delivery. Based on the results of those interviews, we develop a governance model for infrastructu reservice delivery: the government selects infrastructure projects, guided by a non-partisan, expert infrastructure prioritization panel, and contracts for the delivery of these prioritized infrastructure services with a private concessionaire financed by long-term institutional investment capital. The concessionaire is a private entity in charge of financing, designing, constructing, operating, and maintaining the infrastructure service.The government supervises the infrastructure service, to safeguard public interest. The government also provides an institutional framework, with contracts and authorities necessary for the interaction between the public and private actors