Public Private Partnerships and Value for Money Framework

Public Private Partnerships

Public Private Partnerships (PPPs) have emerged as an infrastructure procurement and delivery option which can offer value for money. This is achieved by introducing incentives for innovation in the design, construction, operation and management of infrastructure assets by better allocating and managing risks and focusing on whole-of-life costs.

Broadly defined, a PPP is a risk-sharing relationship between the public and private sectors to deliver timely private infrastructure and related non-core services. The specific nature of each partnership will be defined through a contractual agreement covering the delivery of infrastructure facilities over a period of time.

Value for Money Framework

The Value for Money Framework is the basis for the implementation of Queensland's Public Private Partnership policy and complements the National PPP Policy and Guidelines. It provides a comprehensive set of procedures to evaluate a range of project delivery options for infrastructure and identifies the best value for money outcome for the government and the community.

The framework has been endorsed by the Queensland Government and applies to all infrastructure projects that have been identified under the Project Assurance Framework as a potential PPP where the expected whole-of-life project cost will exceed $100 million Net Present Value during the term of the contractual relationship. The framework provides an analysis of projects, focusing on:

• project outputs
• whole-of-life costing
• identification of risks
• allocating risks to the appropriate party to manage.

Examples of Queensland Public Private Partnership projects

Southbank Institute of Technology

The first PPP progressed under the Value for Money Framework policy was the Southbank Education and Training Precinct redevelopment project. The Axiom Education Queensland consortium designed, constructed and will finance and maintain the precinct facilities for 34 years. The redevelopment involved the construction of 11 new buildings and renovating of four existing buildings.

Construction commenced in 2005 and the project reached practical completion on 31 October 2008. Some of the buildings were completed up to five months early. The redevelopment project was judged ‘Best Global Project’ at the international Public Private Finance Awards in 2007 for its exemplary standards in innovation, design quality and sustainability, financial efficiency and effective risk management. The Awards celebrate industry best practice in public private partnerships and attract entries from around the world.

For further information, visit TAFE Queensland Southbank Institute of Technology website.

Airport Link

Airport link will be the first major motorway linking Brisbane city to the northern suburbs and the airport precinct, avoiding up to 18 sets of traffic lights. Electronic tolling will make the journey faster, less congested and safer, with less stopping and starting. Airport Link is a seven kilometre roadway between the airport and the central business district with five kilometres of tunnel.

BrisConnections will finance, design, construct, commission, operate and maintain Airport Link for a period of 45 years. BrisConnections will also design and build the Northern Busway (Windsor to Kedron) and the Airport Roundabout Upgrade, before handing it back to the State.

For further information, on this project visit the Airport Link website.

SEQ Schools Project

Seven new schools will be built as part of the SEQ Schools PPP project. The Aspire Schools consortium will design, build and maintain for 30 years six new primary schools and one new high school in the rapidly growing Sunshine Coast, Western Corridor, the Gold Coast and Redlands areas.

The project is using a combination of private and public debt also known as the ‘Supported Debt Model’ to lower the cost for taxpayers. The model is a variation of the conventional PPP model that is fully privately financed. The Supported Debt Model enables the state via Queensland Treasury Corporation to refinance a portion of the project debt upon the achievement of specific project milestones. In theory, the stages of the project that are low risk are financed through public sector funding.

For further information, on this project visit the Department of Education and Training website.

Gold Coast Rapid Transit

The Gold Coast Rapid Transit project aims to deliver a quality public transport solution for the Gold Coast. The project will reduce congestion and improve public transport services across the city. The Queensland Government and the Gold Coast City Council are working together to deliver a light rail system and stage 1 of the project will link Griffith University with Broadbeach, passing through key activity centres of Southport and Surfers Paradise. The Australian Government has made provision for an equity contribution of $365 million for the project.

For further information, visit the Gold Coast Rapid Transit website.

Sunshine Coast University Hospital

The hospital will be a world class tertiary facility that is expected to open in 2016 with 450 overnight beds, and room to grow to 650 overnight beds. The Sunshine Coast University hospital will work with local universities to provide education and research facilities and opportunities for Queensland Health staff and future health workforce.

The new facilities will be built on highly accessible and community-integrated 20 hectare greenfield site on the southern side of the Kawana Way/Lake Kawana Boulevard. The early development of a private hospital on the Kawana campus is planned to open in 2013.

For further information, visit the Sunshine Coast University Hospital website.

Last reviewed 4 July 2012