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> Why do people here think it is a bad idea? Because in the US, is is not a proven model. The vast majority of public-private partnerships really end up being

> Why do people here think it is a bad idea? Because in the US, is is not a proven model. The vast majority of public-private partnerships really end up being "public eats the costs, but private entities win all the benefits". It's gotten to the point that the mere existence of the phrase "public-private partnership" is a red flag that something corrupt is happening. (If it was a good faith effort and all above board, then it would all be done publicly in the first place). > it saves govts. from spending large money upfront and not only ensures that private corporations finish the projects but also makes them liable for quality as they are liable for future maintenance. Sure, but it usually accomplishes this by transferring some amount of public assets over to the private corporation in the process, which is a net loss for everyone. It's a backhanded way of looting the public's funds under the veneer of "progress" and "cooperation". Or for a simple analogy, public-private partnerships are usually the governmental version of a reverse mortgage.

pm90 8y ago
I think you're right. PPP model works when the Government doesn't have avenues of raising funds. In less developed countries, Governments often cannot raise money by imposing taxes or issuing bonds (or they can't to the tune required to fund such things). In wealthier nations, the funding is usually not an issue, the Governments are well functioning. I agree with you that these projects must be scrutinized very closely.
- deleted 8y ago
  [deleted]
- yholio 8y ago
  The fundamental problem of any PPP is that a lot can go wrong or change in 20, 50 years. It's impossible to predict and anticipate future economic climate so both parts try to setup adversarial contracts where they are protected as much as possible. On the other hand, a private partner can always fold, go bankrupt, etc. while the state isn't going anywhere and it's obliged by law to abide by it's commitments. So this asymmetry almost guarantees a strong survivor bias towards very bad deals for the public. Except when everything goes exactly to plan for decades, PPPs tend to either fail or be detrimental to the public, by their innate nature. If we bring a bit of corruption into discussion in the initial tender phase, you get the full picture.
oh_sigh 8y ago
This would be in Canada, so we should see how Canada handles PPPs: https://en.wikipedia.org/wiki/Public-private_partnerships_in_Canada https://en.wikipedia.org/wiki/Public-private_partnerships_in...
- endorphone 8y ago
  Amazing that the 407 is used as an example. The government spent, inflation adjusted, over $100B to acquire the land and then build the highway. The cost was for the public. Then they leased it to a private consortium for 99 years for $3B, claiming that it was a win because it "cost" $1.5B to build. That consortium has since made a windfall charging ludicrous toll fees -- the public pays again -- privatizing the profits. PPP is overwhelmingly a sign of a bad deal. Where politicians trying to get a short term "win" end up costing ratepayers multiples.
  - asdfasgasdgasdg 8y ago
    Just because it's not entirely clear to me, are all of your numbers inflation adjusted? Or just the cost to buy the land? Because it doesn't pass the sniff test that the government would lease the project for a century for 3% of its present value.
    - dade_ 8y ago
      Worst govetnment in the history of Canada would. Harris was a whore.
    - endorphone 8y ago
      The government of the day wanted the political "win" of claiming a balanced budget. That it would cost the residents many, many multiples over the years wasn't considered important. I should add another important point about the 407 -- the route was chosen to be a traffic release, and an industrial corridor. Because of the very high toll roads it has become essentially an "executive" highway ($41+ one way trips), and the trucks and other traffic it was supposed to offload clog up the existing highways. The public benefit has been completely destroyed because the highway has been re-purposed for private benefit. It is a debacle from top to bottom. But for one brief moment a government could claim a balanced budget (though they were actually $10B in the red).
product50 8y ago
After looking at the way public infra projects like the high speed train projects in California are managed, I am not sure how one can say that public only infra projects are proven to be successful

pm90 8y ago

I think you're right. PPP model works when the Government doesn't have avenues of raising funds. In less developed countries, Governments often cannot raise money by imposing taxes or issuing bonds (or they can't to the tune required to fund such things). In wealthier nations, the funding is usually not an issue, the Governments are well functioning. I agree with you that these projects must be scrutinized very closely.

deleted 8y ago
[deleted]
yholio 8y ago
The fundamental problem of any PPP is that a lot can go wrong or change in 20, 50 years. It's impossible to predict and anticipate future economic climate so both parts try to setup adversarial contracts where they are protected as much as possible. On the other hand, a private partner can always fold, go bankrupt, etc. while the state isn't going anywhere and it's obliged by law to abide by it's commitments. So this asymmetry almost guarantees a strong survivor bias towards very bad deals for the public. Except when everything goes exactly to plan for decades, PPPs tend to either fail or be detrimental to the public, by their innate nature. If we bring a bit of corruption into discussion in the initial tender phase, you get the full picture.

oh_sigh 8y ago

This would be in Canada, so we should see how Canada handles PPPs: https://en.wikipedia.org/wiki/Public-private_partnerships_in_Canada https://en.wikipedia.org/wiki/Public-private_partnerships_in...

endorphone 8y ago
Amazing that the 407 is used as an example. The government spent, inflation adjusted, over $100B to acquire the land and then build the highway. The cost was for the public. Then they leased it to a private consortium for 99 years for $3B, claiming that it was a win because it "cost" $1.5B to build. That consortium has since made a windfall charging ludicrous toll fees -- the public pays again -- privatizing the profits. PPP is overwhelmingly a sign of a bad deal. Where politicians trying to get a short term "win" end up costing ratepayers multiples.
- asdfasgasdgasdg 8y ago
  Just because it's not entirely clear to me, are all of your numbers inflation adjusted? Or just the cost to buy the land? Because it doesn't pass the sniff test that the government would lease the project for a century for 3% of its present value.
  - dade_ 8y ago
    Worst govetnment in the history of Canada would. Harris was a whore.
  - endorphone 8y ago
    The government of the day wanted the political "win" of claiming a balanced budget. That it would cost the residents many, many multiples over the years wasn't considered important. I should add another important point about the 407 -- the route was chosen to be a traffic release, and an industrial corridor. Because of the very high toll roads it has become essentially an "executive" highway ($41+ one way trips), and the trucks and other traffic it was supposed to offload clog up the existing highways. The public benefit has been completely destroyed because the highway has been re-purposed for private benefit. It is a debacle from top to bottom. But for one brief moment a government could claim a balanced budget (though they were actually $10B in the red).

product50 8y ago

After looking at the way public infra projects like the high speed train projects in California are managed, I am not sure how one can say that public only infra projects are proven to be successful