1  Our Commitment

The Australian, State and Territory Governments (the Council of Australian Governments – 'COAG') are committed to considering infrastructure delivery options that make the best use of the resources of both the public and private sectors. A Public Private Partnership (PPP) is a proven infrastructure procurement method that is increasingly being used by governments across Australia alongside more traditional methods to deliver infrastructure to the community.

The aim of a PPP is to deliver improved services and better value for money primarily through appropriate risk transfer, encouraging innovation, greater asset utilisation and an integrated whole-of-life management, underpinned by private financing.

A best-practice consistent national approach to PPP delivery, through adoption of National PPP Policy and Guidance material, will have benefits for both the public and private sectors. These benefits include minimising transaction costs, removal of disincentives to participation, and a stronger pipeline of PPP projects by ensuring only best-suited projects are considered for PPP delivery.

The choice between public and private provision of infrastructure will be based on a rigorous value for money assessment as part of a procurement strategy. Where it is determined that private sector provision of public infrastructure and related services will deliver better value for money, the choice of contractors will be through a consistent, transparent system of competitive tendering.

Achieving value for money is a key requirement of government and is a combination of the service outcome to be delivered by the private sector, together with the degree of risk transfer and financial implications for government. Value for money is the driver for adopting the PPP approach, rather than capital scarcity or the balance sheet treatment.

Where the requisite value for money drivers exist, PPPs can potentially deliver significant benefits in design, the quality of services and the cost of infrastructure. PPPs can draw upon the best available skills, knowledge and resources, whether they are in the public or private sector. Departments and agencies can focus their own efforts on the delivery of core services, and use the savings generated to improve or expand other services.  PPPs also have the potential to bring forward infrastructure expenditure, including through delivering projects as part of a single package instead of staging capital development over the long term..

In all investment evaluation decisions and subsequent project procurement decisions, governments will consider the potential impact on public interest matters such as privacy, accountability, health and safety, consumer rights, public access and equity. Each jurisdiction will have its own methods for considering public interest matters.

Governments will generally retain responsibility for delivering core services (although this will be determined on a jurisdictional basis) and PPP proposals will ensure fair treatment of public employees. Determination of core and non-core services will occur on a project-by-project basis.

Innovation in PPP models will be encouraged. It is important that the processes for delivering a PPP project be able to evolve to reflect experience and the changing environments in which infrastructure is constructed and financed and in which services are delivered. With the assistance of Infrastructure Australia, COAG will monitor, review and from time to time refine the National PPP Policy and Guidance material.