Partnerships Victoria Excellence in public private partnerships The Secretary Department of Treasury and Finance 1 Treasury Place Melbourne, Victoria, 3002 Telephone: +61 3 9651 5111 Fax: +61 3 9651 2062 Website: dtf.vic.gov.au Authorised by the Victorian Government 1 Treasury Place, Melbourne, 3002 Printed by Doculink, Port Melbourne © State of Victoria (Department of Treasury and Finance) 2017 You are free to re-use this work under a Creative Commons Attribution 4.0 licence, provided you credit the State of Victoria (Department of Treasury and Finance) as author, indicate if changes were made and comply with the other licence terms. The licence does not apply to any branding, including Government logos. Copyright queries may be directed to [email protected]. ISBN 978-1-925551-34-1 (print) ISBN 978-1-925551-35-8 (pdf/online) Published May 2017 Message from Tim Pallas MP, Treasurer of Victoria Victoria’s 2017-18 Budget capitalises The PPP model promotes efficiency on our robust economic credentials and social and economic returns and healthy population growth. from government expenditure and Victoria has an historic $30 billion ensures value for money over the infrastructure pipeline, investing an longer term. Since the 1990s, roads, average of $9.6 billion a year over prisons, hospitals, schools and many the next four years into other projects have been procured infrastructure projects. This will by the Government working with the continue to boost our economy, private sector to build high-quality create jobs and benefit Victoria infrastructure and services, using and its people for years to come. the PPP framework. Victoria’s infrastructure pipeline is underpinned by a triple-A rating Victoria is a world-class provider of and a strong balance sheet. high-quality education, research and training and is recognised as Infrastructure is key to meeting the Australia’s Education State. challenge of population growth and Victoria’s professional services is critical to unlocking productivity sector is sophisticated, large and benefits essential for a modern growing. Victoria has considerable economy. Better infrastructure capacity in the legal, accounting, deepens markets, brings consumers management consulting, closer to businesses, and offers architectural, engineering and workers more job opportunities. technical sectors, which can benefit those active in the PPP sector. The Victorian Government is regarded as a leader in the delivery of privately financed infrastructure. As one of the early adopters of public Tim Pallas, MP private partnerships (PPPs), Victoria Treasurer continues to evolve the PPP model by fostering innovation and encouraging industry development. The Partnerships Victoria framework makes it easier to do business in Victoria and aims to reduce the cost and time taken to tender. 1 Victoria: Australia and South-East Asia’s leading destination for PPPs Victoria: Australia’s Investing in an infrastructure powerhouse expanding economy > Victoria’s economy has grown Victoria’s economy is one of the strongly and consistently for strongest in Australia, having more than 20 years, and experienced 3.3 per cent growth in accounts for close to 25 per cent 2015-16, significantly above the of Australia’s economic activity. national average of 2.7 per cent > Investing in world-class over the same period infrastructure projects is vital for The Victorian Government is Victoria’s continuing economic investing an average of $9.6 billion development and growth. a year for four years to fund > Infrastructure investment by the productivity enhancing Victorian public sector is up to infrastructure and address $73.6 billion in capital funding in Victoria’s growing population, the 2017-18 Budget. while maintaining a strong balance > In many infrastructure projects, sheet. There is a substantial and the Government will partner with ongoing investment in core services the private sector through PPPs. such as health, education and public safety, together with significant funding for transformative projects, including the Metro Tunnel and the West Gate Tunnel Project. Government infrastructure investment Average GII 2007-08 to 2016-17 Average GII 2017-18 to 2020-21 ($5.6 billion) ($9.6 billion) 10.1 10.1 9.8 9.3 8.4 5.8 5.3 5.4 5.4 5.6 BILLION 5.0 4.8 4.5 4.7 2011-12 2013-14 2015-16 2017-18 2007-08 2009-10 2019-20 Source: Department of Treasury and Finance 2 Pipeline of opportunities for investing in Victoria The Victorian Government Plans are also underway for the understands the importance, for Western Suburbs Roads Package, both the public and private sectors, which incorporates capital projects of taking a long-term view of and road maintenance. This PPP planning and prioritising new demonstrates Victoria’s track record infrastructure projects. of highly sophisticated, innovative projects that contribute to the The Government has established greater public good. Infrastructure Victoria as an independent statutory authority to provide expert advice and guide decision-making on Victoria’s infrastructure needs and priorities. The pipeline for new PPP Infrastructure Victoria recommends projects in Victoria is strong. We a 30-year infrastructure strategy, think Victoria is going to be the to inform Victorian Government most vibrant PPP market in infrastructure investment priorities. Australia over the next few years. The strategy identifies projects Compared to other worth nearly $100 billion across a jurisdictions, the Australian number of sectors including PPP market is very active. transport, education, housing, Malcolm Macintyre, health, energy, water and justice. Director, Head of Origination, This is in addition to funding Capella Capital already committed to existing infrastructure projects. For example, the Metro Tunnel is Establishing Infrastructure the biggest public transport project Victoria shows Victoria is not in Victoria’s history. The Metro complacent. There’s a Tunnel PPP scope includes nine commitment to wanting to kilometre twin tunnels and five develop the market. new underground stations. Sandra Lee, The North East Link is a new Manager Private Markets, freeway that will complete the UniSuper missing link in Melbourne’s metropolitan ring road. The project is in the business Melbourne has the right metrics case development phase and is in place for infrastructure Victoria’s next priority road growth. It’s an expanding, project identified in Infrastructure exciting city. Relative to many Victoria’s 30-year strategy. other jurisdictions around the The project will take trucks off local world, the government support streets and reduce congestion in environment is also quite Melbourne’s northern and eastern sophisticated. suburbs. It will provide an essential Trevor Hall, north-south connection, catering Executive General Manager for Melbourne’s future growth, while (Victoria, South Australia, linking the eastern suburbs to the Tasmania, New Zealand) northern and western suburbs John Holland Pty Ltd and the airport. 3 World leader in PPP projects Victoria’s expertise and success in PPPs has been honed by nearly What is a public private partnership (PPP)? 20 years’ experience. The Government contracts the private sector to design, build, During that time, the State has finance and maintain infrastructure and provide services. executed 29 PPPs investing more than $15.6 billion in capital funding It is different to privatisation, with the PPP asset handed back to for major roads, hospitals, schools, government at the end of the contract period. prisons and water initiatives. High-quality infrastructure assets Payment is based on the services delivered and conditional upon such as CityLink, the Royal meeting performance standards. Children’s Hospital and the PPPs always have a private finance element, and there is clear and Melbourne Convention and enforceable risk allocation. Exhibition Centre demonstrate Victoria’s commitment to continually improve and refine its PPP framework. Victoria is a leader in terms of developing the PPP model. There is a long history in Victoria, and that means there’s a strong retained PPPs benefit Victorians through knowledge. This also means Victoria’s PPP model continues to evolve private sector design innovation, for the better. creating world-class infrastructure, and enabling and incentivising Paul Crowe, efficient and focused public Executive Director, Head of Origination, Plenary Group services. The structures embedded in PPPs incentivise the private sector to design the roads, hospitals and schools with an eye The PPP environment in Victoria supports an innovation mindset. on the long term. As a result, users Project scoping documents are articulated in terms of the benefit from assets that are well outcomes the client is looking to achieve, not in terms of how to maintained. achieve outcomes. Victoria’s experience brings a The Victorian market has matured over the years. The State gets the maturity to our relationships with balance of risk allocation right for the sustainability of the project both PPP consortia and and to ensure the right financial incentives. The breadth of projects professional advisory firms. in terms of their differing inherent characteristics, means there is a We strive to ensure our projects: recognition that the unique dimensions of individual projects are properly thought through. > are built on time and on budget; Kate Evans, > transition smoothly from the Partner PwC delivery phase into services and ongoing operations; and > benefit the community