CALGARY, March 23, 2016 /CNW/ - A report released today by The School of Public Policy and authors Anthony E. Boardman, Matti Siemiatycki and Aidan R. Vining, examines the advantages and disadvantages of PPPs (Public- Private Partnerships) and offers up key policy recommendations.
PPPs procure services for government using private sector capital and expertise. The key justification for PPP's is that the private sector has stronger incentives to deliver services more efficiently and at lower cost than with traditional government procurement. PPPs are mostly used to provide and maintain infrastructure, including roads, bridges, water and wastewater treatment plants, schools, hospitals and prisons.
But do they result in a more efficient use of taxpayer funds? Not necessarily. According to the report "The clearest advantage that PPPs offer is to politicians, who are able to transfer to private partners the risks of miscalculated construction costs and revenue projections (as with a toll road, for example). For taxpayers, the deals can often work out worse than if the government had simply pursued a fixed-price design-build PSA (public sector alternative) arrangement."
Key policy recommendations include:
- Don't constrain options: PPP contracts should be conducted carefully and not presented as the "only game in town"
- Make bidding as competitive as possible: Governments and agencies should be proactive in generating and encouraging qualified bids.
- Provide partial own-government financing: Governments can borrow money at a lower interest rate than can private sector consortia. Therefore, governments should finance a significant part of the design and construction costs.
- Prohibit a private sector partner from selling the contract too early: When a PPP operating contract is sold to a different provider from the original private sector partner - the government may not know what it is really buying over the life of a project.
The paper can be downloaded at http://www.policyschool.ucalgary.ca/?q=research
SOURCE The School of Public Policy - University of Calgary
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