Public private partnerships: practical and policy problems

Using private finance to fund public assets is a key feature of "public private partnerships", or PPP. However the fact that a public asset may be privately financed means that new practical and policy issues need to be considered.

In his paper, Private Financing of Public Assets: Practical and Policy Problems, prepared for the New Zealand Council for Infrastructure Development, Robert Lonergan considers the practical and policy issues relevant to the use of PPP, and particularly whether the use of private sector finance to fund public assets provides value for money.

This first part of the paper sets out the background to the private financing of public infrastructure in the United Kingdom, which is, in international terms, the most developed PPP market.

The second part looks at value-for-money issues and whether the use of private financing offers "a good deal for the public purse".

Robert considers whether private financing can overcome constraints on public expenditure, the relative costs of public and private sector finance, and practical limitations to the use of private financing.

The final part of the paper looks at particular policy and political challenges in a New Zealand context, and the merits of other forms of funding (such as the use of "infrastructure bonds") to address New Zealand's infrastructure needs.

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