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Going public on privatisationA new Monash University centre is examining the financial, legal and social costs of privatisation. KONRAD MARSHALL reports. What do Victoria's City Link project, the planned refurbishment of Spencer Street railway station and the Seal Rocks Sea Life Centre have in common? They represent a new trend in the delivery of state government services called public-private partnerships, in which the private sector designs, constructs, finances, maintains and operates public infrastructure on behalf of the government. According to Professor Graeme Hodge, director of the Centre for the Study of Privatisation and Public Accountability in Monash's Faculty of Law, public-private partnerships represent the final frontier in the privatisation of services and facilities. "If privatisation is a story about the delivery of government services over the past couple of decades, public-private partnerships are the latest chapter," he says. In delivering new infrastructure through these partnerships, the state government has promised better efficiency, improved services, strengthened monitoring and accountability and stronger business confidence, but a closer examination by Monash researchers has revealed some cracks in the veneer. Melbourne's City Link infrastructure project was not only a massive undertaking in engineering terms, it was also one of the largest public infrastructure projects in Australia in the past few decades. The project was delivered on time and met the government's objectives, but at considerable cost to the public, according to Professor Hodge. "The citizens of Victoria paid a high price in terms of lack of clarity and transparency in the deal, but they may also have paid a high financial price," he says. "The high returns of investors were protected at the taxpayers' expense, with the state government tied into providing financial concessions to City Link for as long as 54 years." When the state government signed a contract with City Link in the 1990s, they effectively locked the next 18 Victorian governments into the partnership, he says. "The state is bound by a contractual agreement to lease public land to the consortium and construct works associated with the project, limiting its discretionary power to make decisions concerning the project in the process. Although the government governs in theory, the contract rules in practice." Professor Hodge suggests that the solution to such problems lies in strengthening the roles of independent bodies such as the state's Office of the Auditor-General and the Regulator-General. "Independent bodies can play an important part in examining contracts and generating public debate about them so the best interests of consumers are considered and protected," he says. "These bodies can also help ensure citizens have access to information about deals and how they are affected by them, so that they are aware of their rights." The centre has commissioned a series of projects examining the financial, legal and social ramifications of privatisation, as well as the accountability mechanisms in place to keep private providers efficient and answerable. These include studies into consumer accountability and redress in a privatised electricity industry, state governance under public-private partnerships, the international experience of privatisation, techniques for impact assessment of privatisation, and optimal regulatory models for utilities in developing countries. "The projects are multidisciplinary in nature, encouraging researchers from faculties as diverse as Arts and Engineering to pool their knowledge and skills," Professor Hodge says. Action box |
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