Fitzsimons Jeanette: Land Transport Management Bill — Instruction to CommitteeCWH In Committee 
Fitzsimons Jeanette: Land Transport Management Bill — Instruction to CommitteeCWH In Committee 
[Volume:613;Page:9684] 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 Part 2 provides for the first time in New Zealand law for public-private partnerships for the building of new roads. This provision has exercised more excitement than any of the other measures in the bill both from those who are extremely wary of public-private partnerships as the first step towards the privatisation of roads for private profit and from those who see public-private partnerships as a wonderful free lunch that will fund roads we otherwise could not have funded. 
The way they are set out in this bill neither of those views is true and perhaps would not be true under any circumstances. But I want to point out that public-private partnerships are not a free lunch a panacea or a source of funding for roads that we would not otherwise have had. Regardless of whether the public sector or the private sector builds a road the money for that road will be borrowed or will come from road-user charges and petrol tax or from tolls. There are only three possible sources of funding for that road in order to pay off the initial capital and running costs. Whether the public or the private sector provides that capital the funding stream still has to come out of the same pockets so it is not really a panacea at all. 
However with a design-build - fund-operate road such as is provided for in the bill there is the possibility of efficiencies in having the contract with the same concession partner who works through all stages of that operation. So the Greens have agreed to support the public-private partnerships provision provided that there are measures in the bill—which are there now—to make sure that the agreements cannot be rigged so that the public purse carries all the risk and the private purse gets all the profit. I think we have achieved that quite well. 
When working through the Rodney District Council (Penlink Toll Road) Empowering Bill that came to the Transport and Industrial Relations Committee a while ago it was interesting to find that the main way that that project was to be profitable for the private partner was through a tax rort. The private partner was double-dipping on tax savings and once the Inland Revenue Department had pointed that out to the select committee it became quite unlikely that the road would have gone ahead—even if the bill had been passed. When these agreements are set up it is very easy to disguise the fact that the public purse is being made to pay twice for the road. I think we have managed to avoid that kind of rort in this bill. 
Another way that the public purse can subsidise private profits inadvertently is if deals are set up where the return on capital is predicated on a certain traffic volume and if that traffic volume does not eventuate—and we have just heard from Mr Brown about what has happened with Tauranga’s Route K where the traffic volumes are— 
Peter Brown 
: You are not challenging me? 
JEANETTE FITZSIMONS 
: No I am not challenging you. I myself virtually predicted that the traffic volumes would not quite measure up and therefore that the revenue would not be there. There are some overseas agreements where the public purse then has to compensate the private partner if those traffic volumes do not come up to scratch. This bill initially tried to prevent that with clause 61(2)(j): “The public sector will not be liable to compensate any party because traffic numbers fall below forecast levels …”. That has been replaced with the rather broader and more general provision in clause 61(3B) which I think is an improvement: “A concession agreement must not include any provision that provides a disincentive for a party to pursue other sustainable transport options …”. In order to keep up traffic volumes on a road we do not want public transport authorities avoiding expanding a rail link or putting public transport into place because they might reduce the profits of the private partner that owns a public-private partnership concession road. 
With those provisions in place plus the fact that there must be an alternative route before a toll can be charged I believe we have put sufficient conditions around public-private partnerships so that where they are in the public interest they will happen and where they are not in the public interest they will not.