||Issue No. 287||28 October 2005|
A Sick Set of Laws
Interview: Under Fire
Politics: And the Winners Are ...
Economics: The Common Wealth
History: Walking for Justice
International: Deja Vu
Legal: The Rights Stuff
Review: That Cinderella Fella
Poetry: Is Howard Kidding?
The Locker Room
PM's Fatal Flush
Sign of the Times
Labor's Love Lost
Saving Private Buy-In
The report by Centennial Consultancy finds that State Governments have been biased in favour of projects carried out by private consortiums because of a fear of public debt. As a result private companies are able to retrieve large returns, 16% in the case of the Cross City Tunnel, at taxpayer's expense.
Authors Professor Bob Walker and Betty Con Walker argue that past and present governments, in evaluating a series of projects, have attached an incorrect risk rating to major projects, meaning the public sector's superior capacity to finance debt is not taken into account.
"In effect, the public sector is being forced to fight with one hand tied behind its back because its one area of clear advantage - the cheaper rate of attracting finance - is discounted by those making the decision," they said.
This was particularly devastating, "when NSW taxpayers lost $2.5 billion because of an incorrect calculation of risk over the Fahey Government's sale of the State Bank."
Government guidelines that evaluate the risk of cost blowouts are not applied equally to Public and Private sector proposals, particularly as Private sector proposals change after the initial go ahead is given.
"This is what happened with the Cross City Tunnel," Professor Walker said in the report, "the contract shows initial costings for a shorter tunnel when a longer and more expensive tunnel was built." The report includes criticism of the Sydney Airport Link and the M2 Motorway.
Unions NSW secretary, John Robertson, called on the NSW Government not to proceed with any new PPPs until a review of the process was carried out.
"We have seen how taxpayers lose out with the current Cross City tunnel contract - but an even bigger concern is the process of deciding whether some of these projects should ever go ahead."
"If all we are doing is shifting viable public sector projects into the hands of private consortia and deferring the pay day for the taxpayer, then the model needs a real re-think."
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