A reminder of a previous post on school PPPs :-
So be warned – don’t spend up on getting these deals together.
A reminder of a previous post on school PPPs :-
So be warned – don’t spend up on getting these deals together.
This entry was posted on Friday, July 23rd, 2010 at 3:26 pm and is filed under #OpenLabourNZ, business, economy, education, finance, infrastructure, Loan Sharks, outsourcing, policy, privatisation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Yep, what are they planning
The sale of the land and buildings to the private sector and then leasing back. This is a short term solution which gives a false picture of the government accounts by transferring debt into the future and wealth into the hands of few instead of retaining it in the hands of the many. The previous Labour government dabbled with and supported PPPs, Trevor still does in that he sees them as “having a place”, except with schools.
Tell us where PPPs have a place in the provision of Housing and how did it work out in Papakura, Trev? What about in Defence? Do we want the banksters in charge of that as well?
Governments will always be able to borrow money at a lower interest rate than the private sector. There is no rational economic argument that can be made in support of PPPs.
Banned for racism Trevor
The problem is Trevor is a/ you support the use of PPP b/ the contracts set up will mean that if you cancel them, using legislation or not, the clauses in the contracts for cancellation will mean forking out a fortune in taxpayers money for cancellation fees or even breach of contract. So, you are in fact talking bollocks Trevor, and you know it. This has been the case overseas and won’t be any different here. The fact is, as proven overseas, that private sector lawyers, accountants and management are far more astute that their equivalent public sector (in this instance) in this topic, you will be eating your words.
Nonsense Simon – challenge you to name a PPP I have supported – not opposed in principle but yet to see one where government wins. And legislation would overide the contracts. That is how the law works here. And notice is being given so those thinking of getting involved won’t be surprised.
Bleep me BLiP
, maybe they can sell those to China as well! 
I feel sorry for R ic h ie
I don’t like PPP’s but it is going to get very expensive if the Nats each term do PPP’s allowing business to profit out of core government business and then every term Labour gives businesses some more money by buying them out, repeat cycle…
Looks like a lot of people here are P -ed off
@Trevor, hopefully notice is being given on more than this blog, I’m guessing large property developers don’t read Red Alert…
The Cross City Tunnel in Sydney is a prime example of how not to run a PPP.
Business is now on notice that legislation will be used to transfer back to government any functions it manages to get its grubby hands on – those already feasting on ACC and those circling our schools included. There’s no need to compensate these minions of Mammon whatsoever. Yes, there will be some extra costs involved in the transition back to the public but those costs will be quickly redeemed by the savings generated – and kept in New Zealand – once the services are returned to the public.
Why’s Labour fighting this – I can remember clearly some of the disasters in school uptake during the last governments watch might this not be a way to ensure that school boards don’t have to scrap with the MOE for uptake of the schools and can concentrate on education ?
Why not give it a try in a few schools and see if it works ?
you only have to look at the history of PPPs and PFIs in the UK to see what a disaster they are. If something goes wrong, as in the Metronet contract on the London underground, the company goes bust and the govt picks up the tab. Otherwise it’s the equivalent of paying your mortgage, then after 30 years – the bank owns your house!
Clearly theft from the taspayer into private hands
ps Trevor
What is the difference between a PPI & a PPP as per your comment to Simon?
Trevor Mallard Said
“The government is supporting this public-private sector initiative because it fits in well with our commitment to work with business to transform the New Zealand economy into an export-led innovative high value economy. It is only by doing this that we can lift the standard of living for all New Zealanders.
http://www.beehive.govt.nz/release/govt+invests+new+wool+industry+network
ta
Well spud
is true because if I was to rewrite for Nationals PPP policy it could sound something like this:
“The government is supporting this public-private sector initiative because it fits in well with our commitment to work with business to transform the New Zealand “education” system to deliver a innovative high value economy. It is only by doing this that we can lift the standard of living for all New Zealanders.
Spot the word that changed?
Given the performance of wool over the 4 years the PPI was clearly a failure and it gifted taxpayers money into private hands.
Perhaps the funds could have been spent elsewhere; or heaven forbid, been put towards a tax break for low wage earners.
I’m not seeing a lot of difference between National and Labour on this issue if you look past the spin.
I’m not sure this will be a good one to fight the election on, Labour was the orginal PPP party and I don’t think kiwis have forgotten that.
Spare us the hand wringing dave2.
What you forgot about the Wool Industry Network was this
The Wool Industry Network will receive $2 million in government funding over three years as a Major Regional Initiative (MRI). The funding will be matched by $3.175 million in funding from Meat and Wool New Zealand over the same time.
So funding from a private partner as well, but there is more, lots more
The Wool Industry Network will be a public/private partnership comprising funding agencies, the wool production, supply and processing sectors and key wool sector service providers. These parties and organisations include wool growers, wool brokers, wool scourers, wool exporters and wool processors/manufacturers, Meat & Wool New Zealand, Canesis Ltd (formally the Wool Research Organisation of New Zealand WRONZ), the New Zealand National Council of Wool Interests, Wool Equities Ltd, Wool Research Inc, Textiles New Zealand, the Foundation for Research Science and Technology, the Tertiary Education Commission, the Apparel and Textile Industry Training Organisation, Sustainable Farming Fund (MAF), New Zealand Trade and Enterprise and the Canterbury Development Corporation as the regional economic development agency.
Fancy that . All those groups getting together. Sounds like a real” partnership” to me not like Nationals Faux partnership where the government pays more and is the sole user. The private partners lend money to the government at higher rates than the Government can get, build a specialised building which has no other uses, and then charge the state to use.
A bit like Bill Englishs PPP with his family home.
Labour should use this as the example, in easy terms the public can understand. Which links Englishs dodgy ‘ lease back’ of his own home to the scheme for schools.
After all English is the ‘brains’ behind these school deals, Tolley cant be trusted to manage a school lolley scramble
ghostwhowalksnz
Is it working or proving to be a waste of money?
Don’t forget what Labours sold off completely over the years, perhaps PPP would have been better in these cases.
who was stting around the cabinet table when these were sold off
Telecom; State Insurance Office; Post Office Bank; Air New Zealand; Tourist Hotel Corporation; New Zealand Steel; Petrocorp; Government Printing Office; DFC (Development Finance Corporation); National Film Unit; Rural Banking and Finance Corporation; Shipping Corporation; NZ Liquid Fuel Investment; Maui Gas; SynFuels; Cutting rights to state forests; Health Computing Services; Communicate New Zealand
Who in 2006 said:
“Something that we could do and something that I’m quite keen on is that as the SOEs develop the new businesses, especially those that are done in partnership with people in the private sector, we could well have floats of the subsidiaries so that they could be listed on the Stock Exchange, that could help give a bit of depth to our capital markets and get some transparency around those companies, and I think that would help.”
http://www.stuff.co.nz/business/blogs/frontline/3745316/No-honour-among-Kiwibank-thieves
I’m just saying Labour needs to get the sory straight tbefore making statement that will be interpreted as anti business by voters, who rember the Labours track record and are now swinging voters
Dave2 you sound like a mouthpiece for Bill English. Were these sold by the last Labour government , no you have to go back 20 years. 1985 is 25 years ago
As well your advice about getting the story straight should be given to John Key who cant get his fibs all lined up in a row.
eg I have lived at that home for more than a month
I left the company when all that happened ( 2 versions)
I did not read the email – but opened it
I didnt sell the shares
I didnt own a vineyard
@ghostwhowalksnz
An easy question, don’t need the diatribe.
Sheep farmers aren’t backing themselves with a refusal to fund the wool levy. Why should taxpayers put up the money, seriously?
It sounds like it has been an abject failure, and all the money is being spent on industry “hand wringing”.
http://www.odt.co.nz/news/farming/93688/failing-wool-sector-imperils-nz-sheep-industry-taskforce
It highlights the reason why government should back particular products, put the money into tertiary education instead.
I like the idea of Government Infrasture bonds that David Cunliffe floated at a Labour Party post budget meeting I attended. Gives a rock solid place for NZ citizens to place their savings.
Actually Im getting ready to do some Labour pamphlet drops are you doing the same, or are you all keyboard and no action? So don’t give me that tribal rubbish, I thought this is a place to debate policy past and future.
Your history is a bit skewed. The Lange labour government didnt promise not to sell SOEs and to start with the dire circumstances after 12 years of Muldoonism allowed the cabal around Douglas to push a right wing agenda. As he subsequently went to ACT, with the likes of Prebble, Shirley etc, I wonder why?.
Goff was around but he was Minister of Customs or some such, so I doubt he was even asked what he thought.
The Clark government , when they came in 11 years ago ( was it that long?) did commit to no more SOEs going, and we ended up with more than we started with.
More recent examples of not getting his story straight from Key were the Kiwibank ‘partial float’ until he words were played back to him.
As for leaflet drop- sounds like you are batting for both teams
Thanks Dave2, saves me an afternoon of internet.
The point is, with fiscal restraint being forced the world over, PPP is an extremely attractive scheme for both Nat and Labour. To completely dismiss it is very dangerous for Labours credibility as they are highly likely to adopt it if/when they get back in. As it stands, it is unlikely Labour will regain power next year, so these PPP/PFI contracts will be well under way. If you want to unwind them, go ahead, although I promise you the taxpayer will be less than impressed when break clauses are enforced through the courts and you use taxpayers money to pay them off and then dip again into the bottomless pit to carry on with these infrastructure projects.
The benefits of creative accounting to shore up public finances are far too attractive to be ignored.
How can you use legislation to override these contracts yet criticise Nat for wanting to change the law when a legal ruling doesn’t go their way?
@dave2 I thought I was the only Labour person with access to Nat research unit notes on me. Doubt you are bona fide. Read very carefully. I don’t support privatising state functions including education and prisons, I don’t support privatising SOEs but do support them doing some new developments as joint ventures, I do think the crown doing joint research exercises as with wool are a good idea – but they certainly won’t work if the funding is cut prematurely as happened with wool or when the partner can’t get their act together as also happened with wool.
Trevor – That is funny -it is s called Google, try as I might, I can’t get the orginal search phrase back.
I was interested in your past statements given your vehement opposition to the PPP, and I thought this sounded a touch out of kilter, appreciate your clarification.
Let me make this clear – National are rolling out the same old tired ideological policies like they did in the 90s. These policies caused great harm to ordinary New Zealanders.
Labour in their last term did well at fixing some of the inequlality that National created. Although the under lying economic princples remained unchanged, luckily Labour rode an international wave of cheap credit and capital gains for 9 years.
I am watching and listening with interest as Labour “might be” repositioning themselves along the economic spectrum, may be even some are willing to swim against the tide of economic orthodoxy.
People are allowed to change, I love the fact that Phil Goff is willing to pursue “No GST on Fresh Fruit & Veges” becasue of a change in technology and the raising of GST. When he discusses that, he qualifies it well, that qualification wasn’t in your orginal post.
SO I get put into moderation for what?
There was a period a couple of months ago when very abusive messages were left that used a few MPs names – so we made that a moderation trigger.
Have undone that as a trial – and Spud if you deliberately evade the moderation process or teach others your methods you won’t make any friends with moderators.
If it is abused will put in place again.
Noted.
I’ll continue to play devils advocate.
After a quick bit of googling it appears PPP can be broken down into 2 broad categories
http://www.dlapiper.com/bulgaria/management-and-development-of-strategic-infrastructure/
1) Concession – end user charged directly for use, toll roads, tunnels etc. Apparently these can fail due to demand risk, someone mentioned Melbourne tunnel?
I don’t like the sound of these espeically if charges are continually negoitable.
2) PFI – The asset cannot generate income form charging the end user, but the Government pays a consideration for the availability for the assets. No demand risk but as clearly demonstrated here there is a Political risk.
A school should fall under a PFI, that is a contract would set out the the charges paid by the Government and the obligations that the contractor must meet. As with any contract there are penalties for non conformance to contract obligations.
What is the problem with a PFI PPP?
Please no name calling or questioning my political affliation.
Can anyone point to a PFI PPP that was failed badly?
Dave2, you are correct in that the other forms of PPP involve a risk, which the schools proposal isnt. The govt says we have land A and we want school B on it for X number of pupils etc.
So why is the private side of things happening at all. There is no risk!. yet the govt pays for it. And when the building has become outmoded and needs major renovations in 30 years, guess what it get dumped back in the govts lap, as they now ‘own it’.
In Europe they have become wise to these sort of schemes that that debt off the governments books but transfers a long term financial obligation to the taxpayer and see that places have used this sort of thing to ‘cook the books’
Even the use of this lease deals in normal commercial transactions will soon have to be added to a businesses books whereas they were hidden before.
The end result will be that English will continue to borrow to fund tax cuts , and claim we can afford it since the overall govt borrowing for infrastructure is reduced.
What sense does that make
ghostwhowalksn
That is excatly what I’m asking.
I’m going to dig around to see if I an find specifics, although they won’t be easy to find as failures won’t be heralded as loudly.
I don’t trust Bill English after is tax switch deception; and I can understand the political strategy that you point to as a small government ideology objective.
I see this as part of the bigger policy picture for Labour and I am sure that once policy is released the case will look stronger.
At the moment it is a us and them argument, this may be the actual truth, but I don’t think it plays out to well among swing Voters. Bring on the big policy announcements, early next year I guess.
R ich ie
Depends on what you mean by “failed”, Dave. Perhaps you’d be better to point to single PFI PPP where the public has clearly benefited. But, of course, that’s a trick challenge because, as we all know, there isn’t one.
There is plenty of info on PPPs if you look hard enough – from memory there are several reports on the aussie exp of ppps – while there are some pros, there are quite a few cons. I do not support them for school infrastructure in its form that the nats are proposing, for the following reasons:
- if the firm goes bust, then what?
- govt still has to pay ‘rent’ (or for the right to accommodate them)
- business, in some cases, demand the buildings be used 24hrs – and while I understand this, the issues around security (for teachers resources/school stuff etc) are problematic
- some of the research/reports point to issues of mismanagement – lack of maintenance etc
I do support the investigation into PPIwi – which is public private iwi relationships, where iwi may be involved in building and maintaining buildings for the education sector. The reason this may be workable, is because (in this case I use Ngai Tahu as an example), iwi have a long term vision in terms of investing in infrastructure – in the situation of NT building a school (for example, if they had built the closed school of Aorangi, which was offered but Tolley dismissed), then not only would that school still be around (which would have been better for the kids involved) but the buildings would have been built properly and because the iwi take a long term view and are not going anywhere, it would have been a win win for both the community and the govt. It would be a responsible partnership, kept in kiwi hands and there is a record of with NT. They already have partnerships with a number of sectors – eg they own the police stations etc which are leased back. It works and you can be assured that NT are not going to sod off and leave a mess behind them.
It is possible that PPiwi may be a goer for education, hence investigations into what this might look like would be better than a greedy corporate who is likely to cut corners or be only about the profit with no social responsibility.
@ ghostwhowalksnz I accpet Bill english is probably running a small government agenda and this is a stratagey to push it through. That in itself doesn’t mean PPP PFI are evil only Bill English.
@Paul well considered post; also PIWI sounds like an interesting proposal.
Although building regs and contract should cover the standard of buildings.
This is real debate, taking everything party leadership states as Right is argubably as dangerous to democracy as what NACT are up to with thei small governement agenda.
I was trying to think of an everyday analougy for a ppp PFI, leasing cars?
You pay for the use, maintenance is covered, depreciation is paid for. The difference is you give it back. Why do business do this? They don’t want the hassel of running a fleet as it detracts from their core business. Does it save them money, maybe, does it allow them to use the resource they more efficeintly, probably.
Is State housing in NZ already using PPP PFI? They lease houses fromm private individaul, which are in turn used for a state function. Any challenges here?
Perhaps the problem with PFI PPP is the contracts that have been used. If crudy run down infrastructure gets handed back to the Government at the end of the contract period, I would suggest that is the result of a really badly designed and negoiated contract, not the concept of the PPP PFI.
Facilioty management is a business speciality in its own right and may be Governments have been out negoiated by private enterprise in the head long rush by governments to jump on the band wagon.
I know in the USA Africian Americans were concerned about PPP in prisons. This was because of involvement and lobbying of corporations that ran the PPP prison. These coporates could influence the Justice system affecting prison conditions, numbers and incaceration times all to increase profit.
Through thier cultural lense African Americans who stastiical had the highest incarceration rates saw this as just another type of salvery.
Now that is what I call disgusting use of PPPs.
Otherwise the information being supplied about Benifits by National is weak, but the resulting opposition info hasn’t been up to scratch either.
Its an area that needs to have proper research in order for all to make an informed decision on. One of my main concerns is the actual cost – on the surface it looks like a debt that is transferred off the govts books, but in fact its another form of debt. At the end of the day the private partner needs to be paid, and I am betting they would not be in it if they were not making a good profit out of it.
I need more detail before I see it as a great savior of the public purse.
@dave2: “1) Concession – end user charged directly for use, toll roads, tunnels etc. Apparently these can fail due to demand risk, someone mentioned Melbourne tunnel?”
“Can anyone point to a PFI PPP that was failed badly?”
You’re probably thinking of Sydney’s Cross City Tunnel.
Watch out Dave2
I’ll take this opportunity as a right of reply to
Richie says:
July 23, 2010 at 6:28 pm
Banned for racism Trevor
“I know in the USA Africian Americans were concerned about PPP in prisons”
I got banned (?) I posted a link to a Maori television skit, that I think is part of Willie Jackson show. It took a satirical look at the Wiri prison PPP from much the same perspective you suggest. I now know where they got their inspiration.
I won’t name the show or link it because I would like this posted in the name of fairness.
Not sure why I’m back, Ive got a pending complaint with the Human Rights Commission, informed Maori Television that their work is considered racist by a member of the Labour Caucus, and informed my local Labour MP that I will not be assisting with her up coming electoral campaigning, as I am somewhat disillusioned with one of her colleagues attitude to race relations in this country.
I think, I can understand the rift between the Labour Party and a large segment of maoridom; as it appears some in the Labour party are unable to look at race relations issues using anothers “cultral lense” and perspective.
You were banned for refering to Maori TV as half caste broadcasting. You are racist. I stand by my views. If you want to adopt the terms of the far right them use them elsewhere. Trevor
That is funny Trevor, The Maori Television skit is produced by Half-Caste BroadCast” and is hosted by Toi Iti.
It is what they call themselves, may be an apology is in order.
I take it your not familiar with the show or the clips.
http://www.aucklandactors.co.nz/news/tv/half-caste-broadcast.html
Dave2 thinks leasing cars is the same as PPP ???
Yeah right , when the car costs $30 mill and cant be used for any other use. The real reason for leasing cars is the full cost of the lease is tax deductible,while if they used their own money all they could get would be the 25% yearly depreciation. ( the Nats have just ruled that buildings dont depreciate for tax purposes)
AS well the govt doesnt get a new school in 30 years, they get left with the old one, after making payments for 30 years.
State housing may have leases of houses for say 5 or 10 years, but can they walk away at the end of that time , and the house can be used as a house by anybody. Plus they have to maintain the house , they have contracts with businesses to do this, and could have the same with state owned schools. You dont have to have a ‘leased’ school to have a private contractor do the maintenance.
The real killer for PPP is do “private schools’ use them ? After all the Catholic Church or even Kings College have a steady income from pupils fees and you would think that Lease to own would be manna from heaven.
But of course they dont see it that way, as they know you pay more that way.
Wake up Dave2, even the private education sector doesnt use ‘lease to own’ but of course Nationals big donors love lease to own so it will be shoved down the throat of taxpayers by that taxpayer funded leased home rorter Bill English
@ghostwhowalksnz – A n a l o g y, had a bad day?
I was considering the value in PFI PPP using the car lease as analogy. Don’t waste your time managing capital focus on your core business.
The Killer argument actually turns out to be a lame duck, all that Catholic Church Land has probably been endowed some time in the last 50 – 100 years and have been donated the money to build the schools.
Where on the other hand there are many medium sized private training companies do lease space. In fact apart from Banks, not many large companies own their own buildings at all. They are all leased how do they possible survive under the evil management of a landlord.
SO what does that leave – State Houses so is it a PPP PFI?
It sounds like it is, sounds like a well thought out contract for both parties.
Okay it may not work for schools, but have the debate beyond the I’ll considered headlines that we get subjected to.
Double dipton been caught with his hand in the till but what has that got to do with PPP PFIs?
This is a management consulting line used to convince clinets to undertake difficult and complex reorganisational work requiring…management consultants. However, there seem to be very few examples where the results have panned out as promised; another example of this is outsourcing IT/cleaning/catering etc. The line used there was that you could just focus on your core business not this other stuff.
But managers ended up having to micromanage subcontractors out for a profit instead of employees.
Not that big an improvement eh?
These changes are just as likely to increase costs for minimal revenue/productivity gain and reduce control over outputs.
Ask if anyone at Ohakea likes the catering now its been outsourced and they can see that corners are being cut on food quality and food portions.
Strewth Loota, I think we have much to agree on re PPP/PFI.
Trevor
Thank you for allowing my right of reply, clearly there has been a mis-understanding.
The Show is actually called “Half Caste BroadCasting”, I didn’t name it, when you go to the Maori Television web site you are presented with that name.
I did not call, Maori television half cast broadcasting, as above I was refering to the show that is produced under that name and is shown on Maori Television as that.
How does that me a racist?
This has clearly been a mis-understanding, do you accept that?
http://www.aucklandactors.co.nz/news/tv/half-caste-broadcast.html
http://www.stuff.co.nz/entertainment/tv/3130484/Maori-news-show-aims-to-deliver-bite
“Toi Iti, the actor son of Maori rights activist Tame Iti, will perform a satirical piece playing a conflicted half-Maori, half-Pakeha character who sees the news from both perspectives”
I though the wiri piece was great, I in no way meant my post as a derogatory or a descriptive term just the name of the show!
Great Loota, a real example of one that failed, thanks, no the half baked nonsense that gets hand around as truth.
I find it funnier that Trevor Banned someone and calls them Racist whilst he defends Maori Television from what he thinks to be a racist remark.
While in reality it is the name of a program on the Maori Television website – keep that powder dry Trevor!
I found the Wiri PPP prison on Maori Televison and produced by “Half Cast Broad Caste” Toi iti – hope that make it past the symantics police. It is great
http://www.maoritelevision.com/default.aspx?tabid=75&pid=7603&epid=6520
Just goes to show he might support Maori Television but he certainly doesn’t watch it, well not Willie Jackson any way
Ok Richie unbanned
Its seems that T.M. is not impervious to good reasoning and a solid case being made!
Now if Tolley, Collins, et al would do the same…
Yes Trevor did do the right thing by Richie.
Thanks Trevor, Spud , Loota
Time for a self imposed ban, Ill check in at a later date.
I’m surprised at the personal impact of being labeled a racist when everything you believe and do is to the contrary.
I know it is water off a duck’s back for a seasoned politician, but for someone at the other end of the spectrum it caused a couple of restless nights.