© The Treasury The Role of Public Private Partnerships in New Zealand Infrastructure Dan Marshall Senior Advisor, PPP Programme 2 April 2014
Jun 15, 2015
© The Treasury
The Role of Public Private
Partnerships in New Zealand
Infrastructure Dan Marshall
Senior Advisor, PPP Programme 2 April 2014
© The Treasury
Outline
First Principles: The role of PPP in New
Zealand infrastructure
Reflections on the first three years – what
we have learned
Looking forward
2
© The Treasury
First Principles
PPP is about: better outcomes
Enhanced levels and quality of service for an
equivalent cost to that of the public sector
Performance regimes that require levels of
performance higher than the public sector
3
© The Treasury
First Principles
PPP is about: paying for performance
Absolute alignment of focus on outcomes
Unitary Charge 100% at risk
4
© The Treasury
First Principles
PPP is about: a catalyst for change
Improving how we think about service delivery
Driving continuous improvement
Promoting wider network implementation
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© The Treasury
First Principles
PPP is about: asset design and whole of
life asset management
Outcome driven asset design
Historic procurement – a race to the bottom
Long-term perspective – recognising the future
cost of today’s decisions
6
© The Treasury
First Principles
PPP is about: innovation in services
delivered from assets
Outcome driven service delivery and asset
design
International best practice
Focus on operations and service models
7
© The Treasury
First Principles
PPP is about: real risk transfer
Identification and recognition of project risk
Allocation of risk to appropriate party
Development of risk management processes
8
© The Treasury
First Principles
PPP is not about:
off balance sheet funding
lowest cost procurement
solving procurement process problems
9
© The Treasury
Reflecting: PPP - The Early Years
5
10
projects to market
2 projects banked
3 versions of the standard form
Project Agreement released
$1.8b worth of infrastructure under PPP
procurement in New Zealand
~
2 public binding rulings
obtained
© The Treasury
Reflecting: PPP - The Early Years
5
11
projects to market
2 projects banked
3 versions of the standard form
Project Agreement released
$1.8b worth of infrastructure under PPP
procurement in New Zealand
~
2 public binding rulings
obtained
$220b investment in infrastructure
in New Zealand
© The Treasury
Reflecting: A Client Agency Perspective
“ A flagship project for the Department, and very important
for our goals of reducing reoffending, lifting overall
performance across the Department and ensuring better
public value ” Ray Smith
Chief Executive – Department of Corrections
12
“ [PPP] will allow the NZ Transport Agency to establish a
performance-based contract based on very specific
service, quality and value-for-money outcomes.” Geoff Dangerfield
Chief Executive – NZ Transport Agency
© The Treasury
Reflecting: A Client Agency Perspective
“ At Hobsonville Point, we will be creating a school that
allows for students to become the best they can be in all
areas of development through strong relationships,
shared learning design and high expectations of our
whole community.” Daniel Birch
Foundation Principal – Hobsonville Point Primary
13
© The Treasury
Reflecting: A Client Agency Perspective
14
“ PPP opens the door for private sector innovations that are
not always achievable under traditional public sector
procurement methods, and today’s decision gives us the
certainty we need to move ahead and deliver the
important economic and safety benefits of this project.”
Geoff Dangerfield
Chief Executive – NZ Transport Agency
© The Treasury
Reflecting: A Client Agency Perspective
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“ It soon became clear to me that the project had been
designed to encourage collaboration, and provide the
private sector with the freedom and incentives needed to
deliver different and innovative solutions ”
Ray Smith
Chief Executive – Department of Corrections
© The Treasury
Reflecting: Lessons learned
We can close deals with outcome based
performance regimes
It is the outcomes that count
A pipeline can be useful - and a problem
16
© The Treasury
Reflecting: Lessons learned
Whole of life analysis adds value
Process clarity and understanding is
crucial
How we engage is critical
17
© The Treasury
Currently: we’re thinking about
Depth of the construction market
Ensuring lessons learned are captured and
applied
Management of projects post financial close
The finance market
18
© The Treasury
Currently: we’re thinking about
How we ensure network wide application of
innovation
How we optimise engagement with the
market
How we reduce uncertainty and complexity
for the private sector
19
© The Treasury
Currently: we’re thinking about
The application of PPP principles more
broadly
The scope for private sector involvement in
non-PPP infrastructure projects
Ensuring the New Zealand PPP model is
well understood
20
© The Treasury
The future: PPP in New Zealand
Proving PPP – entering the operating phase
The maturing of the New Zealand model
and market
A clear and present pipeline
The promised guidance material
21
© The Treasury
The future: PPP in New Zealand
In procurement: – NZ Transport Agency (Transmission Gully)
– Ministry of Education (4 new schools)
– Department of Corrections (Auckland Prison)
Business case: – NZ Transport Agency
Of interest: – Ministry of Health
– Canterbury Earthquake Recovery Authority 22