#345
Post
by rubberman » Mon Aug 10, 2015 3:29 pm
Claybro,
Both of those things might be true, but they aren't the fundamental reason.
First of all, governments have downsized so much they can't, literally can't do the work themselves. Concepts, yes. Fly through videos, yes. Flash presentations , yes. But actually design, document, supervise construction? No. No possible way. And you cannot build that competence overnight. It takes a generation to do that, and governments of both persuasions have let it happen.
Ok, so it can only happen with a PPP, with funding, detail design, construction by the private sector.
Now here's where the problem lies.
Let's work an example to illustrate the point :
A freeway for $10 Billion cost to build. The private sector will charge $15 Billion. Or more. As witnessed by outrageous costs elsewhere in Australia.
Macquarie bank will add $100 Million in "fees".
Private sector bankers will charge 8% pa interest via complicated transactions designed to avoid tax.
That's roughly $1.2Bn per year.
Given the financial failures of such projects previously (Clem Jones tunnel in Brisbane), the private sector is demanding state governments guarantee to pick up the shortfall.
End result, drivers pay tolls AND taxpayers pay $1.2 Billion per year.
Let's say we had not ditched public sector expertise, and could actually build the thing ourselves. Hahaha.
Assume that the $10 Billion Private sector cost became $12 Billion if managed by the public sector.
Funding for that at a bond rate of 3% means a funding cost of $360 Million per year.
Basically, the fundamental problem is that because we got rid of our in house technical ability, something that should cost $360 Million per year, would cost $1.2 Billion. And Labor governments are baulking (like Victoria and South Australia ).
Both parties competed to reduce public sector numbers, and this is where they came from. We loved it and voted for them. So now we have a choice: be royally shafted, or do without the infrastructure. It's our own fault, too bad.
