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A more balanced approach to PPPs

Comments on Stephen King "As another toll road bites the dust, what is the future for PPPs?", 25/02/2013, https://theconversation.edu.au/as-another-toll-road-bites-the-dust-what-is-the-future-for-ppps-12386

The solution mentioned in the second last paragraph is a bit of too one sided in terms of risk bearing, because it would leave the future users and the government bear all the risks and the private partners virtually none.

A more balanced one is that a solution also make the private partners bear at least half of the risks and the government as the public partner bears half, similar to the Henry mining tax design, but differs to that design in a crucial and fundamental way, that is, the risk sharing is built in in the design before a project starts.

Unlike the Henry mining tax which would come into play in the middle after a lot of risky private investments have already been made and factored into the price of those mining venture as reflected in the share price.

Only in this way it would be a fair deal and the private partner will put likely maximum efforts into those PPP projects. Otherwise, moral hazard may arise, because, in most cases when government is involved and where the responsibilities are not clearly defined, the government (taxpayers) would end up if the projects go wrong, but the private partners will gain if the projects go upside.

As to the case that Australian governments can borrow at much lower rate, why don't they borrow and then quasi lend to the private partners to share the savings, say half and half, so that it does not change/affect the balance sheet of the government but the public partner (government, that is the taxpayers) can benefit from it?

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