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Gordon Campbell on PPPs

Written By: - Date published: 5:40 pm, July 15th, 2009 - 15 comments
Categories: articles, privatisation - Tags: , ,

Gordon Campbell has a great piece up at Scoop on the pitfalls of Public Private Partnerships, something we’re going to be hearing a lot more about in the near future if National and its business mates get their way. Go have a read.

15 comments on “Gordon Campbell on PPPs ”

  1. Rex Widerstrom 1

    What really s**ts me is that in principle PPPs can bring about benefits that public sector operation alone cannot.

    To bang on about my favourite topic for a second, a well-run private prison is superior in almost every way – including reduced recidivism amongst its “graduates” – than one run by a state agency. The corollary is, of course, that the worst private-run prison is hell on earth, exponentially worse than anything ever run by the state.

    What make the difference in those and other PPPs is nothing more nor less than the motivations of the government for entering into the contract and the negotiating ability of its officials. Campbell nails it when he says:

    …the real weakness lies with government. A recurring problem with PPPs overseas has been the inability of central government to stop the private sector from rorting the tax payer. In Victoria for instance, state governments proved incompetent at every stage of the contract process. They invited ‘beauty contest’ tendering where unrealistically low bids won the contracts, allowing politicians to brag about cost savings. Then these same state politicians proved incapable of ensuring the contractors were held to account for subsequent cost ‘over-runs’ and extortionate lease conditions and debt financing that ended up pushing overall costs through the roof.

    It’s his conclusion I disagree with. PPPs aren’t inevitably doomed to failure. It’s just that we need the means to impose restraints on our politicians and a transparent process throughout the negotiation so we know who’s being considered, what they’re offering and why a particular one is favoured – and the opportunity to feed back into that process.

    If we keep doing it wrong then I must sadly agree with Campbell – we should stop doing it at all. But if we did it right there could be significant benefits, particularly around accountability.

  2. Draco T Bastard 2

    If we do it right then no private contractors will want the jobs as there will be no profit in it for them.

    The cost of supplying the service will be the same whether it’s by private or government. The private outfit want a profit so it must, therefore, cost more. Now, costing more wouldn’t really be a problem if the outcome was better but there’s no reason why the government can’t hire the same people and get the job done just as well and not have to pay the profit.

    Accountability, therefore, becomes the issue. That comes down to the contract and hiring the right people. Again, nothing that the government can’t do anyway.

    From what I can make out, the private business people just want the government to underwrite their failed business model – again.

    • Swampy 2.1

      There’s plenty of “reason why the government can’t hire the same people and get the job done just as well and not have to pay the profit”. If a government agency is not a specialist in whatever area of product or service it is (i.e. building a motorway) then the taxpayer ends up paying the costs of establishing, effectively, a new crown owned company from scratch. Tell me, is there just a Government owned firm of construction workers building all the new prisons for example. No there is not, they call tenders and employ some private construction company to do the work because they have the track record of expertise. And then at the end of that construction contract would the government have to lay off all its workers because they don’t have any more prisons to build.

      To say the government can just start up an agency to administer a construction contract when they don’t do it regularly is plainly nonsense.

      As for the profit argument, the government’s profit is political favour / pork barreling, trade union education or whatever other cushy numbers happen between governments and public sector employees, and there are plenty. For example, offering a 30% pay rise in an election year to nurses, paid for of course from general taxation. Or signing a contract with a union for support staff at a school, who aren’t actually paid by the government but by the Board of Trustees at that school. At the end of the day the taxpayer ends up forking out the financial largesse and the government ends up extracting all the political mileage from it.

      • BLiP 2.1.1

        You’re sort of right, but miss the point.

        With PPP’s its about business leveraging off the government to reduce its own costs and/or extract greater profit than is justifiable. Yes, at the end of the day the taxpayers end up forking out but, under PPP’s , we fork out far more than we have to – and – government gets to abdicate from its moral responsibilities. Geddit?

      • Draco T Bastard 2.1.2

        Well, chances are, in running the prisons it is and does have the specialist know how. Same with roads – well, it would be the same with roads if we hadn’t dumped roading onto the private sector (both central and local government always seem to be either building new roads or maintaining existing ones). Constructing new prisons would probably be left to the private sector as we’re not always building new prisons.

        • Maynard J 2.1.2.1

          PPPs are not about construction, but ownership of what is constructed.

          Private companies currently build roads and prisons – without exception I would think. It is all contracted and tendered (although I suspect Transit NZ is heavily involved in oversight of road construction, but I am not sure to what extent) by the government and councils.

          The difference of a PPP is that after being built, the private sector owns the asset in order to recoup construction costs not paid up front, and then to extract a profit afterwards. If this fails, the losses are dumped upon the public sector, although you can guarantee someone in the private sector will still walk away rich from the PPP.

  3. Anthony Karinski 3

    This article by George Monbiot highlights some of the howlers in the UK from PFI.

    http://www.monbiot.com/archives/2007/09/04/the-fat-cats-protection-league/

  4. So Bored 4

    PPP = Politicians paying profit (to their mates). The ethics of private prisons really concern me. These are places we send people to be punished, which necessarily must involve discomfort / pain / inconvenience etc. That the Nats would consider it proper to offer private benefit (profit) from this Faustian arrangement says it all about them.

    • BLiP 4.1

      No. People are sent to prison AS punishment, not FOR punishment.

      Otherwise, you’re spot on. The sickening lust for profit that drives the John Key National Government Inc is insidiously destroying our society and slowly turning it from a nation into a business.

  5. Swampy 5

    Gordon Campbell, an unregurtitated Lefty journalist of the Alliance persuasion, of one of the most left wing media sites in NZ, writes… another of his usual left wing rants about the Business Bogeymen. Nothing new here.

    • So Bored 5.1

      Gee Swampy, the torrid abuse is fine but the image of an UNREGURTITATED (no such word in my lexicon, assuming you mean unregurgitated) raises disturbing images of your lefty foes being digested rather than puked up by some avenging right wing monster (post having been scoffed of course). Your education is obviously lacking, if private you should ask for a refund, if state you need to pay more tax to ensure higher standards.

    • Quoth the Raven 5.2

      Swampy – You can right wingers who criticise PPPs as well, because they’re just more government interference in the market. Thinking that corporate welfare is going to have negative outcomes is a concern not contained to the left or right.

  6. BLiP 6

    Ahhh yes – the good ole, tried and true, right wing response to uncomfortable facts that are not aligned to their aspirations going forward: shoot the messenger.

    If you’d bothered to read the link, Mr Marsh, you would find a lot that’s new.

    Also, Gordon’s pieces are often regurgitated. The link in this very post, for instance.

  7. Swampy 7

    I’ve been reading Gordon Campbell’s writing for many years, and you can count on it being hard left as assuredly as if his name was John Pilger.

    • BLiP 7.1

      Good, isn’t it? We need more writers like them.

      Also, please note, there’s a difference between reading and comprehending. Sure, by all means, disagree with the message and, if you can, explain why. I’m sure even Gordon would appreciate it if you could show why his message is wrong for reasons other than the fact you don’t like lefty journos.

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