The Dissolution of public private partnerships: an Australian case study of the political costs involved

In a 2008 discussion paper, Infrastructure Australia, a statutory advisory council consisting of 12 members, noted that ‘national infrastructure ...is the platform for future growth and prosperity’. In recent years, however, a number of PPPs engaged in building this national infrastructure have collapsed. With the creation of a ‘Future Fund’ by the current Australian government and a robust agenda envisioned for the technological advancement of Australian infrastructure through a ‘National Broadband Network’ this paper seeks to examine the non-economic political costs associated with the collapse of such PPPs. Although perhaps pessimistic, in that parties do not generally commit to a PPP expecting it to collapse, the costs associated with unsuccessful PPPs are indeed considerations that should at least be acknowledged at the outset of a venture in a robust risk profile. Even the most detailed risk profile, however, cannot account for the political costs that may be incurred by a government if a PPP collapses. Looking at the experience of the Australian state of New South Wales, this paper argues that transparency and astute political management are essential if the political costs associated with the demise of a PPP are to be minimised.