tag:theconversation.com,2011:/fr/topics/public-private-partnerships-2280/articlesPublic private partnerships – The Conversation2023-01-25T13:24:55Ztag:theconversation.com,2011:article/1932042023-01-25T13:24:55Z2023-01-25T13:24:55ZAtlanta’s BeltLine shows how urban parks can drive ‘green gentrification’ if cities don’t think about affordable housing at the start<figure><img src="https://images.theconversation.com/files/505972/original/file-20230123-3880-1m5d4s.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5409%2C3187&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A pedestrian walking along the BeltLine in Atlanta on Feb. 17, 2016, passes townhomes under construction. </span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/MortgageRates/85b0bf9c6bc94185a45205a672d7e70c/photo">AP Photo/David Goldman</a></span></figcaption></figure><p>Is Atlanta a good place to live? Recent rankings certainly say so. In September 2022, Money magazine rated Atlanta the <a href="https://money.com/atlanta-georgia-best-places-to-live-2022/">best place to live in the U.S.</a>, based on its strong labor market and job growth. The National Association of Realtors calls it the <a href="https://www.nar.realtor/magazine/real-estate-news/10-housing-markets-expected-to-lead-the-nation-in-2023">top housing market to watch in 2023</a>, noting that Atlanta’s housing prices are lower than those in comparable cities and that it has a rapidly growing population. </p>
<p>But this is only part of the story. My new book, “<a href="https://www.ucpress.edu/book/9780520387645/red-hot-city">Red Hot City: Housing, Race, and Exclusion in Twenty-First Century Atlanta</a>,” takes a deep dive into the last three decades of housing, race and development in metropolitan Atlanta. As it shows, planning and policy decisions here have promoted a heavily racialized version of gentrification that has excluded lower-income, predominantly Black residents from sharing in the city’s growth.</p>
<p>One key driver of this division is the <a href="https://beltline.org/">Atlanta BeltLine</a>, a 22-mile (35-kilometer) loop of multiuse trails with nearby apartments, restaurants and retail stores, built on a former railway corridor around Atlanta’s core. Although the BeltLine was designed to connect Atlantans and improve their quality of life, it has driven up housing costs on nearby land and pushed low-income households out to suburbs with fewer services than downtown neighborhoods. </p>
<p>The BeltLine has become a prime example of what urban scholars call “<a href="https://doi.org/10.1038/s41467-022-31572-1">green gentrification</a>” – a process in which restoring degraded urban areas by adding green features drives up housing prices and pushes out working-class residents. If cities fail to prepare for these effects, gentrification and displacement can transform lower-income neighborhoods into areas of concentrated affluence rather than thriving, diverse communities. </p>
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<figcaption><span class="caption">This promotional video from Atlanta BeltLine, Inc. describes the project’s emphasis on increasing Atlantans’ access to green spaces.</span></figcaption>
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<p>The U.S. currently faces a <a href="https://www.nytimes.com/2022/12/30/realestate/housing-market-prices-interest-rates.html">nationwide housing affordabilty crisis</a>. Many factors have contributed to it, but as an <a href="https://scholar.google.com/citations?user=YpAWsOMAAAAJ&hl=en">urban studies scholar</a>, I believe it is important to learn from Atlanta’s experience. </p>
<h2>No more Black majority</h2>
<p>U.S. cities generally are diverse places, and many of them are becoming more so. But the city of Atlanta is going <a href="https://www.usnews.com/news/cities/articles/2020-01-22/measuring-racial-and-ethnic-diversity-in-americas-cities">in the opposite direction</a>: It’s becoming wealthier and more white. </p>
<p>In 1990, 67% of the city’s residents were Black; by 2019, that share had fallen to 48%. At the same time, the share of adults with a college degree rose from 27% to more than 56%. Median income in the city increased from 60% of the median income of the <a href="https://www.ajc.com/news/atlanta-news/population-in-atlanta-how-large-is-metro-atlanta/DMC7A3RM7JCPRK57GBTOI5RBII/">much larger Atlanta metropolitan area</a> to 110%. Median family income in the city in 2021 dollars nearly doubled, rising from approximately $50,000 to $96,000. </p>
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<a href="https://images.theconversation.com/files/506140/original/file-20230124-24-b9m9ej.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Map showing the BeltLine's position within the City of Atlanta." src="https://images.theconversation.com/files/506140/original/file-20230124-24-b9m9ej.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/506140/original/file-20230124-24-b9m9ej.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=704&fit=crop&dpr=1 600w, https://images.theconversation.com/files/506140/original/file-20230124-24-b9m9ej.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=704&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/506140/original/file-20230124-24-b9m9ej.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=704&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/506140/original/file-20230124-24-b9m9ej.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=885&fit=crop&dpr=1 754w, https://images.theconversation.com/files/506140/original/file-20230124-24-b9m9ej.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=885&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/506140/original/file-20230124-24-b9m9ej.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=885&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Atlanta’s BeltLine surrounds the city’s downtown.</span>
<span class="attribution"><span class="source">Dan Immergluck</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
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<p>The most rapid gentrification occurred from 2011 onward, after the <a href="https://www.investopedia.com/terms/f/foreclosure-crisis.asp">2008-2010 foreclosure crisis</a>. Globally, urban scholars call this period one of “<a href="https://www.american.edu/spa/metro-policy/upload/contextualizing-gentrification-chaos.pdf">fifth-wave” gentrification</a>, in which a large increase in rental demand triggered speculation in rental real estate that drove up housing costs. </p>
<p>In Atlanta, this was when the BeltLine really hit its stride after being proposed in the early 2000s and formally adopted as a <a href="https://beltline.org/wp-content/uploads/2019/03/Redevelopment-Area-and-Tax-Allocation-District-Creation-Legislation.pdf">tax increment financing district</a>, or TIF, in 2005. In these districts, anticipated increases in property tax revenues are used to front-fund development projects. No urban development project in metro Atlanta – and perhaps in the entire country – has been more transformative.</p>
<h2>Driving gentrification and displacement</h2>
<p>Even before the BeltLine TIF district was adopted, boosters, developers, consultants and many city officials began touting the benefits of a proposed public-private partnership that could remake large parts of the city. Shortly after the special taxing district for the project was formally adopted, the city of Atlanta created an affiliated nonprofit, <a href="https://beltline.org/organizer/atlanta-beltline-inc/">Atlanta BeltLine, Inc.</a>, to implement and manage the BeltLine. </p>
<p>In 2004, Yale architect <a href="https://www.architecture.yale.edu/about-the-school/news/in-memoriam-alexander-garvin">Alexander Garvin</a> published a report called “<a href="https://beltline.org/wp-content/uploads/2004/12/The-BeltLine-Emerald-Necklace-Study_Alex-Garvin-Associates-Inc..pdf">The BeltLine Emerald Necklace: Atlanta’s New Public Realm</a>.” “The BeltLine’s future users are an attractive market,” Garvin wrote. “Early word of the project has already accelerated real estate values.” In 2005, one developer called the BeltLine the “<a href="https://books.google.com/books?id=2O19EAAAQBAJ&pg=PA67&lpg=PA67&dq=the+%E2%80%9Cmost+exciting+real+estate+project+since+Sherman+burned+Atlanta.%E2%80%9D">most exciting real estate project since Sherman burned Atlanta</a>.” </p>
<p>Many neighborhoods that the BeltLine runs through, especially on the south and west sides of the city, had experienced decades of disinvestment and were predominantly Black and lower-income. But boosters weren’t worried about investors and speculators buying up land near the BeltLine, and didn’t prepare for displacement and exclusion. Garvin’s report did not mention the terms “affordable,” “gentrification,” “lower-income” or “low-income.” </p>
<p>In a <a href="http://saportakinsta.s3.amazonaws.com/wp-content/uploads/2017/05/immergluck-2007.pdf">2007 study</a> for the community group <a href="https://www.georgiastandup.org/">Georgia Stand-Up</a>, I found that property values were increasing much faster near the BeltLine than in areas farther from it. This meant that property taxes rose for many lower-income homeowners, and landlords of rental properties were likely to raise rents in response. This process directly displaced lower-income families and made many areas around the BeltLine unaffordable for them.</p>
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<p>The BeltLine TIF ordinance included some provisions for funding affordable housing, but as I show in my book, they were fundamentally insufficient and flawed. The BeltLine was the work of a coalition, including core members of Atlanta’s traditional “<a href="https://books.google.com/books?hl=en&lr=&id=bEITAAAAYAAJ&oi=fnd&pg=PR9&dq=Stone+Atlanta+Urban+Regime&ots=mg2iyVlGu4&sig=vICy3M8GI88SfGLDUCQgSZH82u4#v=onepage&q=Stone%20Atlanta%20Urban%20Regime&f=false">urban regime</a>” – elected officials and the downtown business elite. Their vision produced a wealthier, whiter city population. </p>
<h2>Noninclusive growth</h2>
<p>Rather than focusing on securing land for affordable housing when values were low, Atlanta BeltLine, Inc. prioritized building trails and parks. These features helped boost property values, accelerating gentrification and displacement.</p>
<p>After the <a href="https://www.federalreservehistory.org/essays/subprime-mortgage-crisis">subprime mortgage crisis</a> in 2007-2010, foreclosures put pressure on housing markets. Atlanta lost about 7,000 low-cost rental units from 2010 to 2019. Meanwhile, construction of new, pricier apartments boomed: Permits were issued for more than 37,000 units over roughly the same period. </p>
<p>By my calculation, Atlanta’s job market exploded from 330,000 jobs in 2011 to over 437,000 jobs by 2019. Companies like Google, Honeywell and Microsoft moved in, often with city and state subsidies. Many new jobs paid over $100,000 per year and went to young, highly skilled workers, driving up housing demand. </p>
<p>In 2017 the Atlanta Journal-Constitution ran a high-profile <a href="https://www.ajc.com/news/local/how-the-atlanta-beltline-broke-its-promise-affordable-housing/0VXnu1BlYC0IbA9U4u2CEM/">investigative series</a> documenting that the BeltLine had produced just 600 units of affordable housing in 11 years – far off the pace required to meet its target of 5,600 by 2030. Some of these units had been resold to high-income households. Soon afterward, <a href="https://roughdraftatlanta.com/2017/08/23/atlanta-beltline-ceo-stepping/">the CEO of Atlanta BeltLine, Inc. resigned</a>. </p>
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<p>That year, a student and I redid my 2007 study on home values around the BeltLine. Once again, we found that during the years we examined – this time, from 2011 to 2015 – home prices near the BeltLine <a href="https://doi.org/10.1080/02723638.2017.1360041">rose much faster than in areas farther from it</a>. The BeltLine was certainly not the only cause of gentrification and racial exclusion in Atlanta, but it was a key contributor. </p>
<p>Atlanta BeltLine, Inc. has increased its affordable housing activity in recent years, and in late 2020, it initiated a program to pay the increased property taxes of legacy residents. However, by this point in the BeltLine’s existence, displacement prevention efforts may be too little, too late. By May 2021, only 128 homeowners had applied for the program. <a href="https://nextcity.org/urbanist-news/the-atlanta-beltline-wants-to-prevent-displacement-of-longtime-residents">Just 21 had received assistance</a>.</p>
<h2>Putting affordability first</h2>
<p>What can other cities learn from Atlanta’s experience? In my view, the most important takeaway is the importance of <a href="https://shelterforce.org/2017/09/01/sustainable-large-scale-sustainable-urban-development-projects-environmental-gentrification/">front-loading affordable housing efforts</a> in connection with major redevelopment projects.</p>
<p>This means assembling and banking nearby land as early as possible to be used later for affordable housing. Cities also should limit property tax increases for low-income homeowners and for property owners who agree to keep a substantial portion of their rental units affordable. They might offer low-cost, long-term financing to existing lower-cost rental properties – again, in exchange for keeping rent affordable. </p>
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<p><a href="https://www.nytimes.com/interactive/2022/08/09/headway/anacostia-bridge.html">Some large-scale urban redevelopment projects</a>, such as the 11th Street Bridge Park in Washington, seem to be making serious efforts to <a href="https://create.umn.edu/toolkit/">anticipate and mitigate gentrification and displacement</a>. I hope that more cities will follow this lead before undertaking “transformative” projects.</p><img src="https://counter.theconversation.com/content/193204/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dan Immergluck does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A longtime critic of Atlanta’s BeltLine explains how the popular network of parks has increased inequality in the city and driven out lower-income residents.Dan Immergluck, Professor of Urban Studies, Georgia State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1774272022-02-21T14:15:30Z2022-02-21T14:15:30ZAU-EU Summit: private sector partnerships are where real change can happen<figure><img src="https://images.theconversation.com/files/447194/original/file-20220218-21-cr29nj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">African Union leaders and their European Union counterparts held their 6th Summit meeting in Brussels. DOMINIQUE FAGET/AFP via </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/view-of-the-berlaymont-building-headquarters-of-the-news-photo/74843768?adppopup=true">Getty Images</a></span></figcaption></figure><p>Five years since the African Union (AU) leaders and their European Union (EU) counterparts held their 5th meeting in 2017, the two regional organisations have met again. The February 2022 meeting – 16 months overdue because of COVID – was significant given the actual and potential size of the two blocs. </p>
<p>The relationship between the two continents (the subject of a <a href="https://www.routledge.com/Africa-Europe-Relationship-A-Multistakeholder-Perspective/Marchetti/p/book/9780367467197">book</a> I have edited) has been tested in recent months. Africa has felt neglected by Europe as it struggled to <a href="https://www.africa-newsroom.com/press/au-statement-on-au-vaccines-financing-strategy">access COVID vaccines</a>. Europe has been <a href="https://www.europarl.europa.eu/RegData/etudes/IDAN/2015/549031/EXPO_IDA(2015)549031_EN.pdf">uncomfortable</a> with China’s rising influence in Africa.<br>
But their future depends on the relationship. The current dialogue between the two blocs is about priority areas of economic cooperation, job creation and climate change. Others are migration management, investment in youth, and peace and security.</p>
<p>If they can build real partnerships, both continents can prosper. Conversely, entering into a competitive relationship or seeking partnership elsewhere represents a significant loss of opportunity.</p>
<h2>Important connections</h2>
<p>Europe remains Africa’s largest foreign aid provider. The flow of <a href="https://www.routledge.com/An-Emerging-Africa-in-the-Age-of-Globalisation/Mudida/p/book/9780367673871">trade and investments</a> between the two continents is high. Africa’s exports to <a href="https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Africa-EU_-_international_trade_in_goods_statistics">the European Union</a>, for instance, totalled US$146 billion in 2021 compared to its imports of US$142 billion. </p>
<p>Technological transfer is similarly robust, with recent new lines open on <a href="https://ec.europa.eu/commission/presscorner/detail/en/STATEMENT_22_1184">pharmaceuticals</a>. Africa provides a significant amount of raw materials and labour to Europe. Much of Africa’s diaspora population live in Europe. </p>
<p>The two continents are also connected in <a href="https://www.uclga.org/news/intensification-of-cultural-exchange-between-african-cities-and-european-capitals-of-culture-call-for-participation/">cultural terms</a>, at times passing through the <a href="https://www.press.umich.edu/11991803/city_diplomacy">city cultural diplomacy</a>. The level of cultural exchange is remarkable: from university system to religious integration; and from a linguistic commonality to the arts scene. </p>
<p>Security threats are also shared by the two continents. From terrorism to cyber-attacks, Africa and Europe face <a href="https://www.theparliamentmagazine.eu/news/article/africa-and-europe-facing-common-challenges">common problems</a>, and need to find common responses. </p>
<p>In short, Africa needs Europe, just as Europe needs Africa.</p>
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Read more:
<a href="https://theconversation.com/the-eu-africa-summit-is-now-the-au-eu-summit-why-the-upgrade-matters-88185">The EU-Africa summit is now the AU-EU summit. Why the upgrade matters</a>
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<p>The Africa Union-European Union meeting in Brussels stated its areas of focus as: growth financing; health systems and vaccine production, agriculture and sustainable development; education, culture and vocational training; migration and mobility; private sector support and economic integration; peace, security and governance; climate change and energy transition, and digital and transport connectivity.</p>
<p>These focus areas are well chosen but the question is how best to unlock the potential of this partnership.</p>
<h2>What’s missing?</h2>
<p>With the signing of the <a href="https://afcfta.au.int/en">African Continental Free Trade Area</a> in 2018, the continent laid the ground for significant growth through trade. The COVID pandemic that delayed this growth is <a href="https://news.un.org/en/story/2021/10/1102282">slowly</a> fading away. The time is ripe for a takeoff. </p>
<p>The <a href="https://www.worldbank.org/en/region/afr/overview#1">African market</a> of 1.2 billion people, with an average age of 27 and a gross domestic product of more than US$3,000 billion, is ready for an enabling partnership.</p>
<p>Beyond political cohesion and stability, Africa lacks growth financing and active support of its private sector. Governments and international organisations can certainly support regional growth. But in my opinion it is from partnerships with the private sector that most resources can be generated.</p>
<p>Local companies should make long-term investments to enhance their capabilities and position themselves as key players in national development. But this cannot happen until governments set up adequate normative frameworks for good business practices. For instance, Kenya has a <a href="https://ppp.worldbank.org/public-private-partnership/library/ppp-legal-framework-snapshot-kenya">public-private partnership</a> law that gives incentives and guarantees continuity (in case of political transition) to investors who put money in public projects. </p>
<p>Such interventions would swell the middle class to drive growth. That, in turn, could deliver economic and political stability, as the history of modern state building shows.</p>
<p><a href="https://theconversation.com/why-africa-should-turn-to-capital-markets-to-fund-its-infrastructure-deficit-50782">Infrastructure development</a> is another key area for investment. Land, air, and maritime transportation is still severely limited across the continent. More roads, rails and flight connections are needed in order to achieve the full potential of economic growth in the region. </p>
<p>Strengthening of intercontinental value chains (step-by-step activities that transform raw material or ideas into products) is a priority area for the partnership between Africa and Europe. Functioning value chains could have spillover effects on the domestic industrial sector, and help boost national self-sufficiency. This is particularly critical for sectors such as pharmaceuticals where the COVID pandemic has <a href="https://theconversation.com/south-african-case-study-sheds-light-on-how-vaccine-manufacturing-can-be-developed-158436">exposed</a> weakness. </p>
<p>The continental project for free trade is an <a href="https://theconversation.com/why-africas-free-trade-area-offers-so-much-promise-93827">essential component</a> for the growth and industrial transformation of Africa. Its building blocks are the various <a href="https://au.int/en/organs/recs">regional economic communities</a> that currently exist across Africa. The cooperation between Africa and Europe needs to strengthen these groupings.</p>
<p>Connected to the search for a single market is the need for investment in human capital. Empowering young people could bring <a href="https://www.imf.org/external/pubs/ft/fandd/2006/09/basics.htm">demographic dividends</a> (economic growth resulting from a change in the age structure of a population). This can be accelerated through mobility between the two continents, and collaboration between European and African universities. </p>
<h2>Genuine cooperation</h2>
<p>Genuine cooperation between Europe and Africa must be inclusive and mutually beneficial. Otherwise, the partnership will not hold. </p>
<p>If properly developed, the relationship between Africa and Europe could constitute a very significant component of <a href="https://rowman.com/ISBN/9781498510134/Global-Strategic-Engagement-States-and-Non-State-Actors-in-Global-Governance">global inclusive development</a>.</p><img src="https://counter.theconversation.com/content/177427/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Raffaele Marchetti does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The cooperation should strengthen institutions and rally private entities to fund public projects.Raffaele Marchetti, Deputy Rector for Internationalization and Full Professor of International Relations, LUISS Universita Guido CarliLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1312102020-02-17T18:54:41Z2020-02-17T18:54:41ZWest Gate Tunnel saga shows risk of ‘lock-in’ on mega-projects pitched by business<p>Victoria’s government <a href="https://www.theage.com.au/national/victoria/west-gate-tunnel-builders-threaten-to-tear-up-contract-over-soil-contamination-20200129-p53vo2.html">finds itself in a big hole</a> with its <a href="http://westgatetunnelproject.vic.gov.au/">West Gate Tunnel project</a>. As diggers lie idle in a dispute over what to do with contaminated soil, it’s facing <a href="https://www.theage.com.au/national/victoria/transurban-says-west-gate-tunnel-deadline-is-under-review-20200211-p53zmj.html">long delays</a> and <a href="https://www.theage.com.au/national/victoria/premier-doesn-t-rule-out-spending-more-money-on-west-gate-tunnel-20200204-p53xmm.html">billions in extra costs</a>. But the government appears locked into a <a href="https://www.themandarin.com.au/121515-vic-treasurer-and-his-top-bureaucrat-not-happy-with-latest-audit-report/">contentious project</a> that was put to it as a market-led proposal, an arrangement that <a href="https://www.afr.com/politics/unsolicited-proposals-could-be-worse-for-taxpayers-accc-warns-20180830-h14pw2">bedevils transport projects across Australia</a>.</p>
<p>Australian governments look increasingly to <a href="http://www.projectmanagement.ie/blog/megaprojects-10-facts-you-should-know">mega-projects</a> to solve urban and regional transport problems. These projects are city-shaping. They can transform how entire urban regions function. </p>
<p>The public has a clear stake in these projects, but unsolicited market-led proposals are subverting planning processes that are meant to protect the public interest.</p>
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<a href="https://theconversation.com/market-led-infrastructure-may-sound-good-but-not-if-it-short-changes-the-public-127603">Market-led infrastructure may sound good but not if it short-changes the public</a>
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<p>Market-led proposals are <a href="https://www.claytonutz.com/knowledge/2014/february/victoria-releases-new-unsolicited-proposal-guideline-for-projects-and-services">unsolicited bids</a> to government by private firms to provide public services or infrastructure. Policies governing market-led proposals were <a href="https://graduates.corrs.com.au/assets/thinking/downloads/whats-next-market-led-proposals-in-aus.pdf">introduced in 2014 and 2015</a> by state governments across Australia to promote innovation in service delivery and value for money for taxpayers.</p>
<p>The <a href="https://thelawreviews.co.uk/edition/the-public-private-partnership-law-review-edition-5/1189694/australia">increasing use</a> of <a href="https://www.dtf.vic.gov.au/infrastructure-investment/market-led-proposals">market-led proposals</a> for transport mega-projects raises important questions. How are policies governing these managed, to what end, and for whose benefit?</p>
<p>In Melbourne, the <a href="https://www.theage.com.au/politics/victoria/tunnel-trouble-dan-andrews-and-transurban-face-a-parting-of-the-ways-20200131-p53wjo.html">tensions</a> between toll road operator Transurban and the Victorian government over the West Gate Tunnel highlight a fundamental shortcoming of market-led proposals. Bluntly, these are not suited to the planning of transport mega-projects because governments can become “locked in” with <a href="https://theconversation.com/impending-traffic-chaos-beware-the-problematic-west-gate-tunnel-forecasts-79331">questionable benefits</a>. Lock-in has been <a href="https://journals.sagepub.com/doi/10.1068/b36017">defined</a> as “the escalating commitment of decision-makers to an ineffective course of action”. </p>
<h2>The case of the West Gate Tunnel</h2>
<p>Transurban’s builders of the West Gate Tunnel, John Holland and CPB Contractors, <a href="https://www.theage.com.au/national/victoria/more-than-100-west-gate-tunnel-workers-set-to-be-laid-off-20200113-p53r1a.html">laid off 137 workers</a> last month in a dispute about liability for contaminated soil. This is bad press for the state government, which touted <a href="http://westgatetunnelproject.vic.gov.au/about/faqs/west-gate-tunnel/what-job-opportunities-are-there">job creation and training</a> as key project benefits.</p>
<p>The dispute could add to delays and costs on top of two earlier changes related to the project. The first was a ten-year extension to Transurban’s <a href="https://en.wikipedia.org/wiki/CityLink">CityLink tolling concession</a> that will cost road users <a href="https://www.abc.net.au/news/2019-03-19/cost-to-motorists-of-westgate-tunnel-deal-revealed/10915998">billions of dollars</a>. The second was an increase in construction costs from <a href="https://www.abc.net.au/news/2017-12-12/melbournes-west-gate-tunnel-project-cost-blows-out/9248994">A$5.5 billion to A$6.7 billion</a> to extend tunnels to <a href="https://www.theage.com.au/national/victoria/western-distributor-longer-tunnel-chosen-for-second-river-crossing-project-20160709-gq24uf.html">save a public park</a>.</p>
<p>Explanations for the dispute include the Environmental Protection Authority <a href="https://www.theage.com.au/national/victoria/west-gate-tunnel-builders-threaten-to-tear-up-contract-over-soil-contamination-20200129-p53vo2.html">tightening soil disposal requirements</a>, <a href="https://www.theage.com.au/national/victoria/west-gate-tunnel-in-limbo-as-government-companies-argue-over-contaminated-soil-20200122-p53tnm.html">difficulties determining site conditions</a> during the environmental assessment process, and <a href="https://www.abc.net.au/news/2020-01-29/west-gate-tunnel-builders-seek-to-terminate-contract-over-pfas/11909402">insufficient foresight and planning for these risks</a>.</p>
<p>Another explanation for what happened is “lock-in”. Evidence of lock-in on the West Gate Tunnel points to deeper systemic problems with market-led proposals for transport mega-projects in general.</p>
<h2>How does lock-in happen?</h2>
<p>Lock-in can occur when powerful corporations partner with governments in circumstances that enable them to exploit vulnerabilities in our public institutions. Some of these vulnerabilities include increasing reliance by governments on private finance, and the short period between elections compared to the time it takes to deliver bold public works programs.</p>
<p>Lock-in happens when the real decision to build a project is made well in advance of processes that are publicly declared to inform that decision. Once governments are locked in to a project, it can make alternatives appear increasingly unviable, if not unthinkable.</p>
<p>There is strong evidence to suggest this happened with the West Gate Tunnel. <a href="https://www.theage.com.au/national/victoria/melbourne-an-international-pariah-on-west-gate-tunnel-experts-warn-20171207-h00use.html">Significant concerns</a> were raised early on that the project might not provide its claimed public benefits. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/impending-traffic-chaos-beware-the-problematic-west-gate-tunnel-forecasts-79331">Impending traffic chaos? Beware the problematic West Gate Tunnel forecasts</a>
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</em>
</p>
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<h2>What makes market-led proposals different?</h2>
<p>Market-led proposals differ from government-led projects because planning is effectively outsourced to the private sector. </p>
<p>Market-led proposals also differ from <a href="https://www.investopedia.com/terms/p/public-private-partnerships.asp">public-private partnerships</a>, like Melbourne’s CityLink tollway. In such cases, government plans these projects, but private firms deliver and operate them. (At least CityLink was part of a <a href="https://theconversation.com/50-years-on-from-the-melbourne-transportation-plan-what-can-we-learn-from-its-legacy-127721">long-standing, if largely discredited, strategic plan</a>.)</p>
<p>Revelations that Transurban acted in <a href="https://www.theage.com.au/politics/victoria/tunnel-trouble-dan-andrews-and-transurban-face-a-parting-of-the-ways-20200131-p53wjo.html">secretive and strategic ways</a> to secure support for its West Gate Tunnel raise serious ethical questions. What does it mean to be a “good partner” to government? How should powerful private corporations obtain a “social licence” to operate? </p>
<p>These questions draw attention to problems inherent in Victoria’s opaque market-led proposal process. The government’s caution about the AirRail consortium’s <a href="https://theconversation.com/market-led-infrastructure-may-sound-good-but-not-if-it-short-changes-the-public-127603">unsolicited bid for Melbourne’s airport rail link</a> points toward some of these dangers.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/transurbans-west-gate-tollway-is-a-road-into-uncharted-territory-89164">Transurban's West Gate tollway is a road into uncharted territory</a>
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<h2>What’s wrong with this approach?</h2>
<p>Government policies for assessing market-led proposals give <a href="https://www.theage.com.au/national/victoria/transurban-the-making-of-a-monster-20160512-gotjm9.html">powerful private firms like Transurban</a> influence over strategic planning. This contrasts with the relatively limited influence granted to affected communities and stakeholder groups advocating for sustainable transport solutions.</p>
<p>Acceptance of Transurban’s bid allowed a multi-billion-dollar toll road to override plans that had been <a href="https://www.viclabor.com.au/wp-content/uploads/2014/05/Victorian-Labor-Platform-2014.pdf">taken to an election</a>. These plans were simpler and far less expensive. The plans had been developed with the local community to better manage freight traffic by <a href="https://www.viclabor.com.au/wp-content/uploads/2014/05/Victorian-Labor-Platform-2014.pdf">upgrading access to existing freeways</a>.</p>
<p>The West Gate Tunnel process involved expedited planning that bypassed broad-based community consultation. John Holland and CPB Contractors were selected in April 2017 “<a href="https://www.premier.vic.gov.au/only-the-best-for-the-west-with-6000-new-jobs/">to get to work</a>” on the project. That was five months before <a href="http://westgatetunnelproject.vic.gov.au/library/environment-effects-statement">public hearings</a> concluded in September. Over 500 submissions were received.</p>
<p>Add to this the suppression of <a href="https://www.theage.com.au/national/victoria/expert-cut-from-toll-road-project-after-warning-tim-pallas-it-did-not-stack-up-20170803-gxoohi.html">independent and critical oversight</a> and a <a href="https://www.theage.com.au/politics/victoria/voters-need-to-see-light-at-start-of-west-gate-tunnel-20180219-h0wawa.html">heavily redacted</a> business case, and a very concerning picture of Victoria’s market-led process emerges.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/sidelining-citizens-when-deciding-on-transport-projects-is-asking-for-trouble-92840">Sidelining citizens when deciding on transport projects is asking for trouble</a>
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</em>
</p>
<hr>
<h2>Wanted: an integrated transport plan</h2>
<p>Because governments are ultimately responsible for their partnerships, the Victorian government should demonstrate stronger accountability and leadership. Victorians are still waiting for an integrated transport plan, as is required to be prepared under the <a href="https://transport.vic.gov.au/about/legislation">2010 Transport Integration Act</a>. Instead of outsourcing transport problems to private firms, the government should develop a statewide, genuinely consultative, evidence-based plan.</p>
<p>An integrated transport plan would allow Victorians to see how future mega-projects, regardless of who proposes them, might serve everyone’s interests.</p><img src="https://counter.theconversation.com/content/131210/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>James Whitten has been affiliated with advocacy groups in the planning and transport sector.</span></em></p><p class="fine-print"><em><span>Crystal Legacy has previously received funding from the Australian Research Council.</span></em></p><p class="fine-print"><em><span>Ian Woodcock conducts independent academic research funded by government and industry. He is affiliated with a number of advocacy groups in the planning and transport sector.</span></em></p>States across Australia are increasingly using market-led proposals to build infrastructure. The emerging problems reflect the inherent risks of projects that bypass proper public planning processes.James Whitten, Ph.D Candidate, Faculty of Architecture, Building and Planning, The University of MelbourneCrystal Legacy, Senior Lecturer in Urban Planning, The University of MelbourneIan Woodcock, Senior Lecturer, Director of Urban Design, Swinburne University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1126492019-03-06T11:38:19Z2019-03-06T11:38:19ZOpioid crisis shows partnering with industry can be bad for public health<figure><img src="https://images.theconversation.com/files/262289/original/file-20190305-48423-1nk343s.jpg?ixlib=rb-1.1.0&rect=409%2C122%2C4800%2C3268&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">What is each partner looking to get?</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/doctor-receiving-patient-office-296666489">Africa Studio/Shutterstock.com</a></span></figcaption></figure><p>“Show me the bodies!” someone demanded at the end of my lecture a few years ago.</p>
<p>As a <a href="https://scholar.google.com/citations?user=MpKuUlkAAAAJ&hl=en&oi=ao">scholar of public health ethics, law and policy</a>, I had just warned an audience of professors and university administrators about the perils of partnering with, or taking money from, corporations – <a href="https://global.oup.com/academic/product/the-perils-of-partnership-9780190907082">a common practice in public health research and policymaking</a>.</p>
<p>It’s not always possible to prove harm like that, I said. But there are other reasons for government, the academy and public health organizations to maintain arm’s length relationships with corporations. Among them, preserving integrity and public trust.</p>
<p>As I document extensively in my <a href="https://global.oup.com/academic/product/the-perils-of-partnership-9780190907082">book on corporate influence in public health</a>, partnerships distort research agendas, not merely of individual researchers but of entire fields of research. They also reinforce the framing of public health problems and their solutions in ways that are most favorable to the corporate partners.</p>
<p>These concerns are most acute when corporations are creating or exacerbating a public health problem. Think of a soda company <a href="https://www.parklives.com/">sponsoring exercise initiatives</a> to burnish its reputation and deflect attention from the role of its brands in the obesity epidemic. But close relationships with corporations can be problematic even when companies are working on medicines or other potential solutions to health problems.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/262291/original/file-20190305-48420-8prxca.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/262291/original/file-20190305-48420-8prxca.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/262291/original/file-20190305-48420-8prxca.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/262291/original/file-20190305-48420-8prxca.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/262291/original/file-20190305-48420-8prxca.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/262291/original/file-20190305-48420-8prxca.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/262291/original/file-20190305-48420-8prxca.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/262291/original/file-20190305-48420-8prxca.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Not surprisingly, opioid manufacturers want to sell more opioids.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Opioids-Governors/9c89d0059c8e4dbba46b71391b21cfdc/1/0">AP Photo/Toby Talbot</a></span>
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<p>I failed to convince that skeptical audience member. But recent research found the bodies, or, at the very least, pointed to one place where we might start digging: <a href="https://www.cdc.gov/drugoverdose/epidemic/index.html">the opioid crisis</a>. The new study concluded that drug companies’ marketing of opioids to physicians was “<a href="https://doi.org/10.1001/jamanetworkopen.2018.6007">associated with increased opioid prescribing</a> and, subsequently, with elevated mortality from overdoses.” Recent court filings also suggest that doctors who met with opioid drug reps were <a href="https://www.documentcloud.org/documents/5715954-Massachusetts-AGO-Amended-Complaint-2019-01-31.html">10 times more likely</a> to have prescribed opioids to patients who later died of an overdose.</p>
<p>Marketing to physicians is only one of the strategies employed by opioid manufacturers. Between 2012 and 2017, <a href="https://www.hsgac.senate.gov/imo/media/doc/REPORT-Fueling%20an%20Epidemic-Exposing%20the%20Financial%20Ties%20Between%20Opioid%20Manufacturers%20and%20Third%20Party%20Advocacy%20Groups.pdf">five opioid manufacturers gave nearly US$9 million</a> to 14 patient advocacy groups and medical societies. Although this sum is a drop in the ocean for drug companies with billions of dollars in opioid revenues, these were substantial sums for the recipients. And the companies’ investments paid off.</p>
<p>Many of the groups <a href="https://www.hsgac.senate.gov/imo/media/doc/REPORT-Fueling%20an%20Epidemic-Exposing%20the%20Financial%20Ties%20Between%20Opioid%20Manufacturers%20and%20Third%20Party%20Advocacy%20Groups.pdf">issued guidelines</a> minimizing the addiction risks of prescription opioids. They also <a href="https://www.hsgac.senate.gov/imo/media/doc/REPORT-Fueling%20an%20Epidemic-Exposing%20the%20Financial%20Ties%20Between%20Opioid%20Manufacturers%20and%20Third%20Party%20Advocacy%20Groups.pdf">lobbied extensively</a> to defeat legislation restricting opioid prescribing. When the CDC issued its draft guidelines to limit opioid use in 2016, opposition was significantly higher among <a href="https://doi.org/10.1001/jamainternmed.2016.8471">organizations that had received industry funding</a>.</p>
<p>The most commonly touted solution to financial conflicts of interest is disclosure of the conflict. The <a href="https://www.healthaffairs.org/do/10.1377/hpb20141002.272302/full/">Physician Payments Sunshine Act of 2010</a> requires drug companies to disclose gifts to physicians and teaching hospitals. Democratic senator Claire McCaskill has <a href="https://www.congress.gov/bill/115th-congress/senate-bill/3565">introduced a bill</a> to extend these provisions to cover payments made to patient advocacy groups.</p>
<p>But disclosure, while necessary, is not sufficient for addressing corporate influence in science, medicine and public health. While researching my book, I found plenty of evidence that drug, food and soda companies – among others – weave powerful webs of influence when they support the work of public health agencies, universities, patient advocacy groups and health professional associations.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/262290/original/file-20190305-48444-840lcv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/262290/original/file-20190305-48444-840lcv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/262290/original/file-20190305-48444-840lcv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/262290/original/file-20190305-48444-840lcv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/262290/original/file-20190305-48444-840lcv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/262290/original/file-20190305-48444-840lcv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/262290/original/file-20190305-48444-840lcv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/262290/original/file-20190305-48444-840lcv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Government and academia have responsibilities that conflict with corporate profit.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/pillars-black-white-393090355">Brandon Bourdages/Shutterstock.com</a></span>
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<p>It’s reasonable to expect corporations to exercise influence to the full extent permitted by law. But I believe governments have a responsibility to insulate themselves from corporate influence. Only by doing so can they meet their obligations to protect and promote public health. And universities should do likewise in order to protect scientific integrity. By inviting companies to partner, government and the academy play into corporate strategies of influence, imperiling their own integrity as well as science and public health.</p>
<p>When the National Institutes of Health launched a partnership initiative to address the opioid crisis in 2017, it <a href="https://www.nih.gov/research-training/medical-research-initiatives/heal-initiative/participant-list-development-safe-effective-non-addictive-pain-treatments">turned to drug companies</a> for guidance. They included an opioid company that <a href="https://www.nytimes.com/2007/05/10/business/11drug-web.html">pleaded guilty in 2007</a> to misleading regulators, doctors and patients about addiction risks and potential for abuse – and then continued its aggressive marketing for another decade, according to <a href="https://www.nytimes.com/2019/02/01/business/purdue-pharma-mckinsey-oxycontin-opiods.html">recent court filings</a>. These documents also indicate that, while running <a href="https://www.statnews.com/2017/12/22/purdue-ad-campaign/">newspaper ads in 2017</a> claiming that it was a “partner” in the fight against the opioid crisis, the company was still working on plans to expand the opioid market.</p>
<p><a href="https://doi.org/10.2105/AJPH.2018.304881">The world needs better options for pain management</a>. And the opioid industry may play a role developing some of these options. But partnering with industry is hazardous – even if, as its director has pledged, the NIH enters these arrangements “<a href="https://www.nih.gov/about-nih/who-we-are/nih-director/statements/statement-public-private-partnerships-part-nih-heal-initiative">with the utmost transparency</a>,” and does not take cash payments.</p>
<p>Money need not change hands for partnerships to create reciprocity and influence, burnish the reputation of drug companies, and defuse support for more effective regulation of the marketing and prescribing of drugs. Collaboration may also lead to the neglect of other potential solutions to the opioid crisis – and other potential pain remedies beyond drug therapies.</p>
<p>If the opioid crisis has taught people anything, it’s that the interests of pharmaceutical companies and public health inevitably diverge. While opioid manufacturers and distributors were making billions of dollars, they were sowing the seeds of a crisis that has contributed to the <a href="https://www.cdc.gov/drugoverdose/data/prescribing.html?CDC_AA_refVal=https%3A%2F%2Fwww.cdc.gov%2Fdrugoverdose%2Fdata%2Foverdose.html">deaths of more than 218,000 Americans</a> and counting. In addition, the total societal <a href="https://www.whitehouse.gov/sites/whitehouse.gov/files/images/The%20Underestimated%20Cost%20of%20the%20Opioid%20Crisis.pdf">costs of the opioid epidemic</a> exceed half-a-trillion dollars per year.</p>
<p>Given these catastrophic costs, policymakers cannot afford to repeat and compound the errors of the past. While tackling pain management and opioid addiction, they must not neglect a third public health challenge: their own “addiction” to partnerships with the private sector. But, before public health officials can wean themselves off these collaborations, they must first acknowledge that they have a problem.</p><img src="https://counter.theconversation.com/content/112649/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jonathan H. Marks does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The interests of pharmaceutical companies and public health are not the same. Industry dollars can distort research agendas, while framing health challenges and solutions in ways that benefit corporations.Jonathan H. Marks, Director of the Bioethics Program and affiliate faculty in Law and International Affairs, Penn StateLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/988042018-08-09T11:33:39Z2018-08-09T11:33:39ZWhy hospital architects need to talk to nurses<figure><img src="https://images.theconversation.com/files/231070/original/file-20180808-191031-1s4xmw3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Hospital building work in East Sussex.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/brighton-east-sussex-england-march-21st-1051068410?src=ASW2immiqml_mUmzI6NAGw-1-13">Shutterstock</a></span></figcaption></figure><p>Many of us pay close attention to how our taxes are spent, and how well governments invest in infrastructure projects such as roads, schools and hospitals. Value for money is key. Yet horror stories of waste, lateness and poor quality are common. </p>
<p>To develop and finance public services and infrastructure, governments around the world (but especially in Europe) have become increasingly keen on private sector involvement. These cross-sector collaborations can help provide value for money for taxpayers – but they are also at risk of wasting it.</p>
<p>In health care, collaborations between public and private partners have a direct impact on society. This is why it is important for health care professionals like doctors and nurses to talk directly to the designers and builders of a new hospital. It ensures that these projects not only deliver economic value for the private companies building the hospital – but also social value for the doctors, nurses and patients who will use the hospital for decades to come. </p>
<p>For instance, in one recently built British hospital, medical staff were able to bring valuable insight to the design process. A visit by some of the hospital’s senior nurses to a children’s hospital in the US led to the replication of a lighting design on the ceiling of a children’s ward so that it mimicked a starry night sky. As one of the nurses explained to me afterwards: </p>
<blockquote>
<p>It might sound like a small change, but it provides a much more homely surrounding than the normal NHS lighting. This is important for our young patients [providing a] less scary, hospital experience which positively impacts on the healing process. […] It creates a much nicer environment in which our little patients can recover. </p>
</blockquote>
<p>In another hospital, input from senior nurses helped to establish a ward design that most suited their professional needs – right down to the placement of plumbing. This saved large amounts of money that might have been spent on undoing unnecessary building work had the nurses not been consulted. </p>
<p>As one project manager of the construction company told me: “Thanks to [the senior nurses’] input and telling us how they intend to use wards, we changed the ward layout, such as the position of sinks. This may seem to be a minor issue, but may have a huge impact when caring for a patient.” </p>
<p>To see how social value can be best achieved through cross-sector collaborations we <a href="https://doi.org/10.1111/joms.12268">looked into</a> the key building blocks that go beyond a mere focus on contracts. </p>
<p>An organisations’ prior experience of cross sector collaboration and a supportive climate is vital in creating social value. It also helps to have had some exposure to previous projects (good and bad). But a major ingredient is the individual employees in both public and private sector organisations. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/231076/original/file-20180808-191044-5pww4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/231076/original/file-20180808-191044-5pww4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=365&fit=crop&dpr=1 600w, https://images.theconversation.com/files/231076/original/file-20180808-191044-5pww4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=365&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/231076/original/file-20180808-191044-5pww4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=365&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/231076/original/file-20180808-191044-5pww4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=459&fit=crop&dpr=1 754w, https://images.theconversation.com/files/231076/original/file-20180808-191044-5pww4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=459&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/231076/original/file-20180808-191044-5pww4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=459&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">We need a starry sky ceiling right there.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/businessman-planning-construction-project-1150868216?src=lIgrAtsOu8E7M7JgOlE4oA-1-39">Shutterstock</a></span>
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<p>Building mutual knowledge and aligning goals between doctors, nurses and design and construction professionals is key, as public and private sector employees often have different objectives for projects (making a profit vs healing patients). A shared understanding can come through listening to and appreciating the other parties’ professional language and the expertise that language expresses. </p>
<h2>Joint expertise</h2>
<p>Beyond an understanding of the other parties’ expertise, practical matters of shared goals and jointly developed timelines are necessary. Coordinating efforts between the two sectors needs to take priority at the outset – rather than emphasising project speed and completion. </p>
<p>To encourage these positive outcomes, the key people need to meet frequently to exchange information, address problems and discuss plans. Without this kind of coordination and collaboration, it will be impossible to make the most of both sides’ specialist knowledge. </p>
<p>So when it comes to hospitals and clinics, the private company needs to actively seek the involvement of doctors and nurses in the design and construction phases. Similarly, doctors and nurses should not be threatened by private companies, but instead seek to become actively engaged. This will help drive creative design innovations such as the “night sky” ceiling in the children’s ward. </p>
<p>It takes time and resources, but this kind of collaboration and coordination between public and private sectors provides an opportunity to increase value – both economic and social. And that’s something that not only benefits construction companies and health care professionals – but patients and taxpayers, too.</p><img src="https://counter.theconversation.com/content/98804/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jens Roehrich received funding from the Engineering and Physical Research Council (EPSRC) and the Economic
and Social Research Council (ESRC) as part of the Knowledge and Information Management (KIM) Through-Life Grand Challenge project.</span></em></p>Collaboration is key to successful partnerships.Jens Roehrich, Professor of Supply Chain Innovation, University of BathLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/987162018-07-01T09:20:51Z2018-07-01T09:20:51ZHow to make a ‘place-based’ industrial strategy work<figure><img src="https://images.theconversation.com/files/225463/original/file-20180629-117371-8p65r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Growing vines in Kent, part of a cluster of wineries making a success out of white and sparkling wines in southern England.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/vineyar-near-lamberhurst-kent-england-145770932?src=g6uIEzIrpRDclwd1dwftzw-1-21">Shutterstock</a></span></figcaption></figure><p>Some locations become well known for the kinds of industry that have once thrived there – tin mining in Cornwall, steel in Sheffield, shipbuilding in Glasgow. But the industrial landscape is not set in stone – it changes. And in order to boost local and national economies, plans need to be made and strategies invented.</p>
<p>One idea that has become popular with politicians is what is known as a <a href="http://www.bath.ac.uk/publications/place-based-perspectives-on-the-uk-industrial-strategy/attachments/Industrial_strategy6.pdf">“place-based” industrial strategy</a>. It is a key component of the European Union’s 2020 <a href="http://s3platform.jrc.ec.europa.eu/s3-guide">innovation programme</a>, and features heavily in the UK government’s <a href="https://www.gov.uk/government/publications/industrial-strategy-building-a-britain-fit-for-the-future">plans for British industry</a>. </p>
<p>Put simply, “place-based” strategies are specifically tailored towards developing a place’s existing advantages, specialisms and capabilities, and diversifying them onto new growth trajectories. These in turn are rooted in a location’s history, culture and geography. </p>
<p>It could mean, for instance, <a href="https://theconversation.com/how-englands-broken-ceramics-industry-put-itself-back-together-48196">supporting the ceramics industry</a> in Stoke on Trent in the UK, to diversify into related technological fields such as <a href="https://www.sheffield.ac.uk/materials/what">materials science</a>, where new market opportunities lie. </p>
<p>With this approach, the emphasis is upon place – and knowledge – rather than particular sectors. It aims to encourage entrepreneurship and innovation that cuts across traditional sector boundaries. </p>
<p>In this sense, place-based industrial strategies are different to previous “top-down” policies, in which central governments pursue a one-size-fits all solution (such as universal training programmes or tax credits) to spur growth. Instead, policies are geared towards a place’s specific characteristics to spur local – and <a href="https://www.jrf.org.uk/blog/what-inclusive-growth-and-why-does-it-matter">inclusive</a> – growth. </p>
<h2>Local money for local people</h2>
<p>The problem is that all industrial strategies require funding. And in a global economy the benefits of publicly funded projects may end up being captured by large private firms – multinational corporations with no allegiance to specific places. </p>
<p>So how can a place-based industrial strategy ensure that the benefits of publicly funded projects are retained within a region – and shared in a way that delivers sustainable and inclusive economic growth? In a forthcoming article in the <a href="https://academic.oup.com/cje">Cambridge Journal of Economics</a>, we propose the <a href="https://academic.oup.com/cje/advance-article/doi/10.1093/cje/bey019/5050584?guestAccessKey=478a1aa7-2089-4543-b889-4f5c6c08d3e2">following solution</a>.</p>
<p>Firstly, regional policy makers and businesses need to identify their current (and possible new) competitive advantages. New specialisms often emerge by fusing new technologies with existing expertise and capabilities. For instance in Italy, <a href="http://thepackagingvalley.com/web/">Emilia Romagna’s machine packaging industry</a> has retained its international competitive position by continually integrating new electronics, information and communication technologies with its traditional mechanical systems. This has opened up profitable opportunities in new (but related) market segments such as pharmaceutical machine packaging. </p>
<p>Regions then need to build platforms which foster growth. These could include establishing strong business and knowledge networks to drive innovation. There is a key role here for large private and public sector “<a href="https://ukces.blog.gov.uk/2015/03/19/ukces-explains-what-is-an-anchor-institution/">anchor institutions</a>” – embedded in the region – which heavily engage in research and development and can facilitate such network links. The <a href="https://www.fraunhofer.de/en/institutes/institutes-and-research-establishments-in-germany.html">Fraunhofer institutes</a> have long played this role in driving innovation within German regions – and it is hoped that similar initiatives in the UK, such as the new <a href="https://catapult.org.uk/">Catapult Centres</a> will bring similar results. </p>
<h2>The right formula</h2>
<p>It is also important for regions to develop a “place brand”. To be internationally competitive, places need to differentiate themselves and offer unique qualities and bespoke products and services. <a href="https://www.bbc.co.uk/sport/formula1/23048643">Motor Sport Valley</a> in Northamptonshire for instance, has established a global reputation for innovation in Formula One. And emerging clusters such as <a href="http://www.kentvineyards.com/">English sparkling wines</a> in Sussex and Kent, have begun to distinguish themselves with their high-quality award-winning wineries.</p>
<p>Regions then need to create “place specific” strengths which are not vulnerable to offshoring and low-cost competition. This may mean local firms developing niche specialisms that are difficult to imitate elsewhere. </p>
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<p>Local policy should aim to help firms identify and support the development of such expertise. Highly specialised advanced manufacturing SMEs in the <a href="https://www.telegraph.co.uk/connect/small-business/driving-growth/secrets-growth-power-of-germany-mittelstand/">German Mittelstand</a> (the German small and medium sized businesses) have long benefited from such a strategy. </p>
<p>Regional governments ought to consider supporting SME networks that cut across regional and national boundaries to build international collaboration. This is particularly important for firms in peripheral regions, especially if they can forge new relationships with innovators in more advanced parts of the world. This allows knowledge sharing and spurs innovation, which can allow lagging regions to catch up. </p>
<p>Finally, to foster sustainable regional growth, these steps should not be implemented in isolation. They need to be integrated in a long-term strategy and subject to continual review with a strong component of <a href="http://ec.europa.eu/competition/antitrust/overview_en.html">competition law</a> to ensure continued innovation and fairness. Following all these steps will make the strategy more resilient and sustainable – and keep everything firmly in place.</p><img src="https://counter.theconversation.com/content/98716/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Phil Tomlinson receives funding under the Regional Studies Association Expo grant scheme for a project on ‘Smart Specialisation and Industry 4.0 in peripheral regions’. He also receives funding under the European Regional Development Fund (ERDF) to establish two business acceleration hubs in the South West of England. </span></em></p><p class="fine-print"><em><span>David Bailey receives funding under the EU Horizon 2020 project MAKERS - Smart Manufacturing for EU Growth and Prosperity, a project funded by the Horizon 2020 Research and Innovation Staff Exchange Programme, under the Marie Sklodowska-Curie Actions, grant agreement number 691192: <a href="http://www.makers-rise.org/">http://www.makers-rise.org/</a> and also via the Regional Studies Association's 'MAKERS of Regions' research network.
</span></em></p><p class="fine-print"><em><span>Christos Pitelis does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Location counts when it comes to sustainable development.Phil Tomlinson, Associate Professor in Business Economics, Deputy Director Centre for Governance, Regulation and Industrial Strategy (CGR&IS), University of BathChristos Pitelis, Professor of Strategy and Sustainable Competitiveness, Brunel University LondonDavid Bailey, Professor of Industry, Aston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/936552018-04-11T20:03:40Z2018-04-11T20:03:40ZVoices of residents missing in a time of crisis for public housing<figure><img src="https://images.theconversation.com/files/212564/original/file-20180329-189795-12zb0jr.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Will Gwynne walks through one of the nine Melbourne estates that is being sold in the public housing 'renewal' program.</span> <span class="attribution"><span class="source">David Kelly</span>, <span class="license">Author provided</span></span></figcaption></figure><p>The <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/2049.0">30% increase in the number of homeless people</a> between the 2006 and 2016 censuses is <a href="https://theconversation.com/homeless-numbers-will-keep-rising-until-governments-change-course-on-housing-93417">likely to continue in the absence of evidence-based public housing policy</a>. We need to rapidly extend public housing and services, according to <a href="https://theconversation.com/australia-needs-to-reboot-affordable-housing-funding-not-scrap-it-72861">housing</a> and <a href="https://theconversation.com/budget-2017-charts-new-social-and-affordable-housing-agenda-76794">homelessness</a> <a href="https://theconversation.com/affordable-housing-finger-pointing-politics-and-possible-policy-solutions-75703">research</a>. </p>
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Read more:
<a href="https://theconversation.com/homeless-numbers-will-keep-rising-until-governments-change-course-on-housing-93417">Homeless numbers will keep rising until governments change course on housing</a>
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<p>Despite this research, the common approach by governments, in Australia and overseas, is to adopt a program of “renewal” and “regeneration” funded by the transfer of public lands to private hands. Housing estates are sold, transferred or redeveloped in partnership with a private developer. This often results in a shift of social housing dwellings from 100% publicly owned to mixed forms of tenure. </p>
<p>For public housing residents, being told that their estate is to be “renewed” is destabilising and can cause extreme stress. A lack of clarity about relocation timelines and processes compounds this. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/212559/original/file-20180329-189816-orifz6.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/212559/original/file-20180329-189816-orifz6.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/212559/original/file-20180329-189816-orifz6.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/212559/original/file-20180329-189816-orifz6.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/212559/original/file-20180329-189816-orifz6.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/212559/original/file-20180329-189816-orifz6.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/212559/original/file-20180329-189816-orifz6.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The Northcote housing estate in Melbourne occupies prime real estate along Merri Creek.</span>
<span class="attribution"><span class="source">David Kelly</span></span>
</figcaption>
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<h2>Similar issues in Sydney, Melbourne and London</h2>
<p>Residents’ acceptance of this “renewal” approach varies greatly. While some are happy with the promise of a new home, opposition is growing in <a href="https://tenants.org.au/resource/tenant-action-groups">Australia</a> and <a href="http://radicalhousingnetwork.org/about/who-we-are/">internationally</a>. </p>
<p>The main issues being contested are planning approaches, consultation processes and the loss of public land overseen by housing authorities steering estate regeneration. </p>
<p>In Sydney, the government’s <a href="https://www.communitiesplus.com.au/">Communities Plus</a> program is redeveloping public housing assets and land through partnerships with not-for-profit and private developers.</p>
<p>The City of Melbourne recorded a <a href="https://www.melbourne.vic.gov.au/SiteCollectionDocuments/streetcount-2016-final-report.pdf">74% increase</a> in the numbers of people sleeping rough between 2014 and 2016. Opposition to the government’s <a href="https://www.vhhsba.vic.gov.au/housing-and-infrastructure/public-housing-renewal-program">public housing renewal program</a> is now growing in Melbourne. The government is relocating residents from nine inner-city housing estates, demolishing homes and transferring public land to private developers.</p>
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Read more:
<a href="https://theconversation.com/why-should-the-state-wriggle-out-of-providing-public-housing-79581">Why should the state wriggle out of providing public housing?</a>
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<p>In London, Harringey Council is <a href="http://www.haringey.gov.uk/regeneration/haringey-development-vehicle/haringey-development-vehicle-faqs/lendlease">working with</a> Australian developer Lendlease to transfer over £2 billion in council assets, including several housing estates across the borough. In response, the <a href="http://stophdv.com/">Stop-HDV</a> campaign is challenging the partnership and lack of community consultation through direct action, political campaigning, media representation and an ongoing legal challenge. </p>
<p>Opposition is fuelled by the redevelopment of the Heygate estate in Elephant and Castle. This has resulted in the <a href="http://www.southwark.gov.uk/news/2017/apr/regeneration-at-elephant-and-castle-and-affordable-homes">loss of over 1,000 social housing</a> units at council rental rates. </p>
<p>Affordable housing stock, rented at 80% of the standard market rate, replaced social housing. This makes it difficult for low-income residents to return to the estate. </p>
<h2>Residents struggle to be heard</h2>
<p>While government and developers undertake forms of consultation, residents affected by renewal repeatedly report that their voices are not being heard. This poses major problems for the reception of viable alternatives presented to development authorities by residents.</p>
<p>At a local scale, residents work to find other ways to make their voices heard. Visible across Sydney, a <a href="http://www.welivehere2017.com.au/">community light sculpture</a> at the Waterloo estate expressed residents’ feelings about the redevelopment of their homes through coloured lights. </p>
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Read more:
<a href="https://theconversation.com/we-live-here-how-do-residents-feel-about-public-housing-redevelopment-83422">We Live Here: how do residents feel about public housing redevelopment?</a>
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<p>Other responses to regeneration by estate residents include <a href="https://www.theguardian.com/stage/2016/aug/05/e15-edinburgh-festival-2016-review-newham-protest-focus-e15-campaign">theatre</a>, <a href="https://cressinghamvoices.wordpress.com/">book writing</a>, <a href="https://www.youtube.com/watch?v=NGcuNBxkN1Y">spoken word</a> and <a href="https://www.dailytelegraph.com.au/newslocal/central-sydney/79yearold-graffiti-artist-gives-government-a-spray/news-story/ec1654524fb0e0e244ccb65483e23d0f">street art</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/212561/original/file-20180329-189795-12antvi.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/212561/original/file-20180329-189795-12antvi.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/212561/original/file-20180329-189795-12antvi.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/212561/original/file-20180329-189795-12antvi.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/212561/original/file-20180329-189795-12antvi.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/212561/original/file-20180329-189795-12antvi.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/212561/original/file-20180329-189795-12antvi.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Graffiti protests against the sale of the Northcote estate.</span>
<span class="attribution"><span class="source">David Kelly</span></span>
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<p>In Melbourne, the government claims the “renewal” of the nine estates will result in an increase of 180 (10%) public housing dwellings. </p>
<p>This claim requires closer scrutiny. On the Northcote estate, for example, there are 85 dwellings with 201 bedrooms. According to a government-commissioned <a href="https://www.planning.vic.gov.au/__data/assets/pdf_file/0016/84130/SH4-03.-Social-Infrastructure-Assessment.pdf">report</a> from September 2017, the public component of the redevelopment will have 96 properties with 139 bedrooms. That’s an 11% increase in dwellings, but a 31% decrease in bedrooms. </p>
<p>Even if the overall number of public housing bedrooms increased by 10%, this would not be enough. According to the <a href="http://housing.vic.gov.au/public-housing-waiting-list">Victorian Housing Register</a>, in December 2017 there were over 36,000 applications for public housing and over 7,000 waiting for more adequate housing. </p>
<h2>Alternatives need to be heard</h2>
<p>One of the underpinning assumptions made by government is that dispersing disadvantage will lead to better outcomes for public housing residents. </p>
<p>This, and the resulting <a href="https://theconversation.com/class-divide-defies-social-mixing-and-keeps-public-housing-stigma-alive-81560">social mix</a>, is the rationale for the program. This assumption is completely flawed. It imagines a fallacy of trickle-down socioeconomics achieved through minimal government spending. </p>
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<img alt="" src="https://images.theconversation.com/files/212560/original/file-20180329-189795-h4y7xt.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/212560/original/file-20180329-189795-h4y7xt.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/212560/original/file-20180329-189795-h4y7xt.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/212560/original/file-20180329-189795-h4y7xt.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/212560/original/file-20180329-189795-h4y7xt.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/212560/original/file-20180329-189795-h4y7xt.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/212560/original/file-20180329-189795-h4y7xt.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">A boarded-up public housing residence on the Northcote estate.</span>
<span class="attribution"><span class="source">David Kelly</span></span>
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<p>Academic experts and public housing resident activists continually express their objections to the rhetoric of renewal. Kate Shaw, an urban geographer with expertise in housing and planning, <a href="https://www.theguardian.com/australia-news/2018/feb/25/lives-in-limbo-public-housing-residents-face-eviction-in-victoria">says</a>:</p>
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<p>Pretty much everything about the program in its current approach is wrong.</p>
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Read more:
<a href="https://theconversation.com/social-mix-in-housing-one-size-doesnt-fit-all-as-new-projects-show-80956">Social mix in housing? One size doesn't fit all, as new projects show</a>
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<p>Delegates at a December 2017 <a href="https://www.eventbrite.com.au/e/maximising-the-social-benefits-of-public-housing-renewal-tickets-38567970839#">public housing forum</a> in Melbourne called on the government to impose a moratorium on the process so alternatives can be heard. Yet voices continue to be ignored.</p>
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Read more:
<a href="https://theconversation.com/governments-have-no-excuse-for-keeping-public-in-the-dark-on-public-housing-deals-90847">Governments have no excuse for keeping public in the dark on public housing deals</a>
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<p>The progressive rhetoric of renewal obscures the displacement of residents, the fragmentation of lives and the privatisation of the public realm. Narratives of improvement drown out objections by residents and the wider public. Any argument against renewal is falsely equated with an argument against improving the lives of public housing residents.</p>
<p>This misdirection infects the public discourse around housing more generally. We are witnessing the complete reorganisation of the home. We think of homes as exchangeable stock. </p>
<p>For residents of public housing estates, the public realm is home, and home is a place of sanctuary and respite. The voices of residents need to be to the fore in the conversation if evidence-based public housing policy is to prevail. Retaining public places should be of interest to all who count themselves as part of the public. </p>
<hr>
<p><em>This article was written in conversation with public housing advocate and resident William Gwynne. The author thanks William for his integral insights.</em></p><img src="https://counter.theconversation.com/content/93655/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Kelly does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The problem with most public housing ‘renewal’ programs is that the residents have the least say in what happens to the places they call home. The evidence of housing research is also being ignored.David Kelly, PhD Candidate, Alfred Deakin Institute for Citizenship and Globalisation, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/920072018-02-27T11:29:25Z2018-02-27T11:29:25ZWhy Trump may usher in the biggest gas tax hike ever<figure><img src="https://images.theconversation.com/files/207747/original/file-20180224-108113-6ft582.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Pres. Dwight Eisenhower, right, looking at a map in 1955 of highways to be built with federal funds that retired Gen. Lucius Clay, left, had outlined.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Watchf-Associated-Press-Domestic-News-Dist-of-/6a172be221884de784a6de404a46db81/24/0">AP Photo/Byron Rollins</a></span></figcaption></figure><p>The White House aims to boost what the federal government spends on big public works projects by about <a href="https://www.whitehouse.gov/wp-content/uploads/2018/02/INFRASTRUCTURE-211.pdf">US$200 billion</a> over the next decade as a part of its plan to fix the nation’s ailing infrastructure. So far, it’s unclear how the Trump administration plans to pay for most of this spending surge at a time when revenue is about to fall due to <a href="https://www.cbo.gov/publication/53437">massive tax cuts</a>.</p>
<p>As the director of energy studies at the University of Florida’s Public Utility Research Center, I’ve studied both <a href="http://warrington.ufl.edu/centers/purc/purcdocs/papers/1312_Kury_ChallengesInQuantifyingOptimalCO2EmissionsPolicy.pdf">taxes on energy</a> and <a href="http://go.pardot.com/l/287662/2018-01-01/b11h9">how the government leverages</a> <a href="http://warrington.ufl.edu/centers/purc/training/p3-certification.asp">what it spends on infrastructure</a> through public-private partnerships. I believe there’s a chance President Donald Trump will usher in the first federal gas tax increase in 25 years to cover the cost of new roads and bridges. </p>
<p>He has, after all, already said he supports a <a href="http://thehill.com/homenews/house/374291-trump-talk-riles-advocates-on-both-sides-of-gas-tax">25-cent-per-gallon increase</a> the <a href="https://www.uschamber.com/above-the-fold/its-time-raise-the-federal-gas-tax">U.S Chamber of Commerce is backing</a>, even if that sounds hard to sell to <a href="https://www.bloomberg.com/news/articles/2018-02-20/gas-tax-increase-would-hit-trump-states-hardest-koch-groups-say">his own political base</a> and other conservatives.</p>
<p>To explain why the government may finally adjust the <a href="https://www.reuters.com/article/us-usa-trump-infrastructure/trump-backs-25-cent-a-gallon-gasoline-tax-hike-senator-idUSKCN1FY33T">18.4-cent-a-gallon tax</a>, here’s a historical snapshot.</p>
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<h2>The first 40 years</h2>
<p>This resilient levy is a major source of U.S. funding for roads and transit today. It <a href="https://fraser.stlouisfed.org/files/docs/publications/treasar/pages/59359_1930-1934.pdf">originated</a> during the Great Depression as a “temporary” penny-per-gallon gasoline tax. At the time, a gallon <a href="https://energy.gov/eere/vehicles/fact-915-march-7-2016-average-historical-annual-gasoline-pump-price-1929-2015">cost about 18 cents</a>, or $2.61 in 2015 dollars.</p>
<p>As he signed the <a href="https://fraser.stlouisfed.org/files/docs/publications/treasar/pages/59359_1930-1934.pdf">Revenue Act of 1932</a> into law, <a href="https://www.fhwa.dot.gov/infrastructure/gastax.cfm">President Herbert Hoover</a> lauded “the willingness of our people to accept this added burden in these times in order impregnably to establish the credit of the federal government.”</p>
<p>The original gas tax, an emergency measure intended to <a href="https://itep.org/wp-content/uploads/pb43fedgastax.pdf">bolster the budget and fund national defense spending</a>, not meet transportation needs, was slated to expire in 1933. Instead, it <a href="https://www.fhwa.dot.gov/infrastructure/gastax.cfm">remained in force throughout Franklin D. Roosevelt’s administration</a> over the objections of the oil, automotive and travel industries due to <a href="https://fas.org/sgp/crs/misc/RL30304.pdf">persistent budget deficits throughout the New Deal and World War II</a>. It became a <a href="https://www.thoughtco.com/history-of-the-us-federal-gas-tax-3321598">permanent 1.5-cent levy in 1941</a>.</p>
<p>Multiple efforts to do away with the gas tax ever since have failed.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/207748/original/file-20180224-108128-1w10vu6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/207748/original/file-20180224-108128-1w10vu6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/207748/original/file-20180224-108128-1w10vu6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=402&fit=crop&dpr=1 600w, https://images.theconversation.com/files/207748/original/file-20180224-108128-1w10vu6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=402&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/207748/original/file-20180224-108128-1w10vu6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=402&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/207748/original/file-20180224-108128-1w10vu6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=505&fit=crop&dpr=1 754w, https://images.theconversation.com/files/207748/original/file-20180224-108128-1w10vu6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=505&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/207748/original/file-20180224-108128-1w10vu6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=505&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The first gas tax had been in effect for seven years before this 1939 photo of a Waco, Texas, gas station was shot.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-illustration/gardeners-cut-rate-package-house-sign-245961319?src=r2GwOO0LZRZYOfm9HqkACQ-1-4">Everett Historical</a></span>
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</figure>
<p>For example, <a href="https://www.govtrack.us/congress/bills/82/hr4473/text">Congress again scheduled the tax’s repeal in 1951</a> when it increased it to 2 cents as source of revenue related to the Korean War. Instead, lawmakers agreed to keep the tax on the books to help pay for one of President Dwight D. Eisenhower’s top priorities, the <a href="https://www.transportation.gov/content/celebrating-50-years-eisenhower-interstate-highway-system">national interstate highway system</a>.</p>
<p><a href="http://www.history.com/topics/interstate-highway-system">In 1956</a> the levy rose once more, to 3 cents, when Americans were paying about <a href="https://energy.gov/eere/vehicles/fact-915-march-7-2016-average-historical-annual-gasoline-pump-price-1929-2015">30 cents for a gallon of gas</a>. At the same time, the government established the <a href="https://www.fhwa.dot.gov/policy/olsp/fundingfederalaid/07.cfm">Highway Trust Fund</a> to pay for building and maintaining the new interstates.</p>
<p>The tax rose to <a href="https://www.finance.senate.gov/imo/media/doc/Rpt87-367.pdf">4 cents per gallon in 1959</a> and froze at that level for more than two decades.</p>
<h2>Running on empty</h2>
<p>Gas tax revenue stopped keeping up with the expenses it was supposed to cover in the early 1970s following a severe <a href="https://www.investopedia.com/articles/economics/09/1970s-great-inflation.asp">bout of inflation</a> and OPEC’s <a href="https://www.thebalance.com/opec-oil-embargo-causes-and-effects-of-the-crisis-3305806">oil embargo</a>. U.S. gas prices soared from about 36 cents per gallon in 1972 to $1.31 in 1981.</p>
<p>Responding to what members of both major political parties saw as a <a href="https://www.reaganlibrary.gov/sites/default/files/archives/speeches/1983/10683a.htm">transportation infrastructure crisis</a>, Congress more than doubled the tax to 9 cents per gallon as part of the <a href="https://www.govtrack.us/congress/bills/97/hr6211">Surface Transportation Assistance Act of 1982</a>. The same law split the Highway Trust Fund and its revenue stream into two parts: The first 8 cents would finance roadwork while the other penny would finance mass transit projects.</p>
<p>Nine cents may have struck drivers as a sharp increase, but public spending on transportation infrastructure would continue to <a href="https://www.cbo.gov/publication/49910">fall as a percentage of all outlays</a>. </p>
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<p>In 1984, Congress increased spending on highways by funneling proceeds from fines and other penalties that <a href="https://www.ccjdigital.com/fmcsa-expands-out-of-service-order-ability-increases-fines-for-violations/">businesses pay for safety violations</a>, such as failing to label hazardous materials or forcing drivers to work too many hours in a row. </p>
<p>Congress boosted the tax twice more in the 1990s but primarily to <a href="https://www.congress.gov/bill/101st-congress/house-bill/5835">reduce the then-ballooning federal deficit</a>. Only half of a 5-cent increase in 1990 went to highways and transit, while a 4.3-cent lift three years later went entirely to lowering the deficit. </p>
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<a href="https://images.theconversation.com/files/207183/original/file-20180220-116327-czd1u8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/207183/original/file-20180220-116327-czd1u8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/207183/original/file-20180220-116327-czd1u8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=912&fit=crop&dpr=1 600w, https://images.theconversation.com/files/207183/original/file-20180220-116327-czd1u8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=912&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/207183/original/file-20180220-116327-czd1u8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=912&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/207183/original/file-20180220-116327-czd1u8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1146&fit=crop&dpr=1 754w, https://images.theconversation.com/files/207183/original/file-20180220-116327-czd1u8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1146&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/207183/original/file-20180220-116327-czd1u8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1146&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Newt Gingrich, right, in 1996. The then-House speaker was predicting incorrectly that Congress might repeal a gasoline tax hike that took effect three years earlier.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Watchf-AP-A-CA-USA-APHS252606-Gingrich-Gas-1996/b57cb858a43b4320b981372d62f83e56/1/0">AP Photo/Tammy Lechner</a></span>
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</figure>
<p>By 1997, the government had <a href="https://fas.org/sgp/crs/misc/RL30304.pdf">redirected all gas tax revenue reserved for deficit reduction</a> to the <a href="https://www.fhwa.dot.gov/infrastructure/gastax.cfm">Highway Trust Fund</a>, where it still flows today.</p>
<p>Along the way, <a href="https://www.fhwa.dot.gov/infrastructure/gastax.cfm">other federal fuel taxes</a> arose, including a 24.4 cent-per-gallon diesel tax and taxes on methanol and compressed natural gas. And <a href="https://www.taxadmin.org/assets/docs/Research/Rates/mf.pdf">state fuel taxes</a>, which in most cases <a href="https://fas.org/sgp/crs/misc/RL30304.pdf">began before the federal gas tax</a>, range from as low as 8.95 cents per gallon in Alaska to as high as 57.6 cents per gallon in Pennsylvania.</p>
<h2>Making do</h2>
<p>Since 1993, when the federal gas tax was first parked at 18.4 cents, inflation and <a href="https://edzarenski.com/2016/01/31/construction-inflation-cost-index/">rising construction costs</a> have eroded its effectiveness as a transportation-related revenue source. In addition, U.S. <a href="https://www.wired.com/2015/04/electric-cars-intensifying-highway-funding-fiasco/">vehicles have grown more fuel-efficient</a> overall – which means Americans <a href="https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=A103600001&f=A">use less fuel</a> for every mile they drive.</p>
<p>As a result, highway and transit spending have significantly outpaced the revenue collected from the gas tax and other sources. Since 2008, the government has spent <a href="https://www.fhwa.dot.gov/highwaytrustfund/docs/fe-1_dec18.pdf">$80 billion</a> on highways that it had to take from other sources. </p>
<p>But it’s still not enough. The <a href="https://www.infrastructurereportcard.org/cat-item/roads/">American Society of Civil Engineers</a>, which gives U.S. infrastructure a D+, is calling on the government and private sector to increase spending on roads and bridges by at least $1 trillion within a decade.</p>
<h2>Unusual politics</h2>
<p>Like the sharp gas tax increase during the Reagan administration, a 25-cent hike that Trump might sign into law would come at a time when the tax is relatively low as a percentage of the retail price of gasoline. </p>
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<p>And like that <a href="http://cstl-cla.semo.edu/rdrenka/ui320-75/presandcongress.asp">early 1980s precedent</a>, it would come at a politically surprising moment. Anti-tax conservatives were ascendant then. Now, Republicans, who say they believe in <a href="https://prod-static-ngop-pbl.s3.amazonaws.com/media/documents/DRAFT_12_FINAL%5b1%5d-ben_1468872234.pdf?mid=76323&rid=13483726">keeping taxes low</a>, control the White House and Congress.</p>
<p>However, Trump has pledged to spend billions of federal dollars on <a href="https://theconversation.com/trumps-infrastructure-plan-rests-on-some-rickety-assumptions-91712">new roads</a> and bridges when there’s no money in the Highway Trust Fund for that. The money has to come from somewhere, and the <a href="https://www.uschamber.com/speech/america-s-infrastructure-summit-time-modernize">Chamber of Commerce projects</a> that raising the tax by a quarter could generate more than $375 billion in new revenue over a decade.</p><img src="https://counter.theconversation.com/content/92007/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Theodore Kury, Ph. D. is the Director of Energy Studies at the University of Florida’s Public Utility Research Center where he studies the economic impacts of energy policy. The Public Utility Research Center is sponsored in part by the Florida electric and gas utilities and the Florida Public Service Commission, neither of which has editorial control of any of the content produced by the Center.</span></em></p>Despite all their anti-tax sentiments, Republicans from Hoover to Trump have embraced this levy on sales at the pump.Theodore J. Kury, Director of Energy Studies, University of FloridaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/917122018-02-12T19:06:25Z2018-02-12T19:06:25ZTrump’s infrastructure plan rests on some rickety assumptions<figure><img src="https://images.theconversation.com/files/206012/original/file-20180212-58315-zu37lf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The new plan is supposed to boost the construction of new roads, bridges and other public works projects.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Closer-Look-Road-Projects/31ac874ef44c492ca9bffa712faabcb2/75/0">AP Photo/Seth Perlman</a></span></figcaption></figure><p>Experts greeted the long-awaited details of President Donald Trump’s promise to unleash a <a href="https://www.whitehouse.gov/wp-content/uploads/2018/02/INFRASTRUCTURE-211.pdf">US$1.5 trillion wave of new infrastructure</a> spending <a href="https://www.politico.com/newsletters/morning-tax/2018/02/12/infrastructure-week-100656">with skepticism</a>.</p>
<p>There’s widespread concern about whether his plan can deliver because it puts only <a href="https://www.whitehouse.gov/briefings-statements/building-stronger-america-president-donald-j-trumps-american-infrastructure-initiative/">$200 billion in federal funding</a> on the table, which Democrats say is roughly <a href="https://s3.amazonaws.com/s3.boldprogressives.org/images/Trump_Budget_Infrastructure_Analysis.pdf">equal to the money that the White House has been trying to cut</a> from similar programs, such as the Highway Trust Fund. There are also <a href="http://thehill.com/policy/transportation/371790-lawmakers-left-with-more-questions-than-answers-on-trump-infrastructure">ample questions</a>
from the <a href="https://www.reuters.com/article/us-usa-trump-infrastructure/trump-urges-congress-to-help-stimulate-1-5-trillion-in-infrastructure-spending-idUSKBN1FK0C7">lawmakers who need to approve that money</a> about where even that sum will come from.</p>
<p>As expected, <a href="http://fox40.com/2018/02/12/trump-infrastructure-plan-relies-on-state-local-funding/">Trump wants</a> to rely on states, local governments and, most importantly, <a href="https://www.citylab.com/transportation/2018/01/so-much-for-that-bipartisan-infrastructure-plan/551849/">private investors</a> to foot most of the bill. As researchers studying ways to boost private infrastructure spending, we believe that it will fall short of the target investment because it does not address private investors’ key concerns, and it would not work for many kinds of high-priority projects.</p>
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<h2>Matching and mismatching</h2>
<p>Half the proposed new federal funding – $100 billion – would cover the cost of making direct grants to local governments intended to spur more infrastructure spending. Another $50 billion would cover the cost of new block grants for rural projects. Some $20 billion would support what the White House calls new “<a href="http://www.businessinsider.com/trump-infrastructure-plan-details-bill-2018-2">transformative projects</a>.” The remaining $30 billion would help pay for miscellaneous existing infrastructure programs.</p>
<p>Trump’s plan would also streamline and expedite the process now required for legally mandated <a href="https://www.bna.com/trump-call-faster-n57982088327/">environmental reviews</a>. It would also make it easier for states to raise money through tolls, user fees and the sale of land and other assets.</p>
<p>Overall, the plan rests on the premise that the government can <a href="https://www.usnews.com/opinion/economic-intelligence/articles/2018-01-31/trumps-infrastructure-pledge-in-state-of-the-union-raises-many-questions">leverage private investment</a> to help pay the nation’s infrastructure bill. </p>
<p>That is why <a href="https://www.bloomberg.com/news/articles/2018-02-12/trump-unveils-long-promised-plan-for-upgrading-u-s-public-works">his plan favors</a> “<a href="https://theconversation.com/heres-how-to-fix-americas-crumbling-bridges-33781">public-private partnerships</a>,” or P3s, the most common way governments attract and <a href="https://iconsofinfrastructure.com/will-trump-use-p3-help-infrastructure-take-off/">leverage private investment</a>.</p>
<p>Here’s <a href="https://www.brookings.edu/wp-content/uploads/2016/06/1208_transportation_istrate_puentes.pdf">how they work</a>. A public sponsor – either the federal government agency or a state or local government agency – contracts out part or all of the financing, construction, maintenance and operation of a project to a group of private companies following a competitive bidding process.</p>
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<h2>P3 bottlenecks</h2>
<p>The amount of infrastructure money in new U.S. P3s has waned in recent years. It fell to <a href="https://home.kpmg.com/au/en/home/insights/2015/06/public-private-partnerships-global-trends.html">$710 million between 2011 and 2014</a> from higher levels seen a few years earlier, the most recent period for which data is available. And P3s only facilitated about <a href="https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/reports/45157-PublicPrivatePartnerships.pdf">1.5 percent</a> of the $4 trillion all levels of government spent on highways between 1989 and 2013, according to the nonpartisan Congressional Budget Office.</p>
<p>However, the number of pension funds and other <a href="https://www.investopedia.com/terms/i/institutionalinvestor.asp">institutional investors</a> putting money into infrastructure <a href="https://www.reuters.com/article/us-usa-infrastructure-pensions/public-pension-funds-seek-infrastructure-as-market-heats-up-idUSKCN0YZ22J">has doubled</a>.</p>
<p>What’s been holding things up?</p>
<p>Investors do not typically say that a lack of federal subsidies, like the $200 billion Trump seeks, is a <a href="https://www.oecd.org/daf/fin/private-pensions/Private-financing-and-government-support-to-promote-LTI-in-infrastructure.pdf">big bottleneck</a>. Instead, to draw much more private investment, the U.S. needs <a href="https://www.oecd.org/daf/fin/private-pensions/Private-financing-and-government-support-to-promote-LTI-in-infrastructure.pdf">clear, consistent regulations</a> that will help make projects more likely to withstand any shifts in political power – such as when the majority party changes at any level of government.</p>
<p>Establishing a more successful track record for these partnerships, which have <a href="https://www.ncppp.org/wp-content/uploads/2013/02/CRS-Insights-Indiana-Toll-Road-Bankruptcy-Chills-Climate-for-P3s.pdf">often faltered</a>, will also help.</p>
<p>These proposed changes could help raise money, but they would not help state or local governments reassure their constituents that P3s serve their best interest.</p>
<p>One step the U.S. could take now is to follow the examples set by <a href="https://www.vic.gov.au/publicsectorreform/people/office-of-projects-victoria.html">Australia</a> and <a href="http://www.p3canada.ca/en/about-p3s/">Canada</a>, where more infrastructure is being built through these partnerships.</p>
<p>Specialized P3 teams in those countries have developed uniform competitive bidding processes, standardized contracts and project pipelines all based on lessons learned from prior partnerships. They also help identify projects that will help the public the most, rather than those with the greatest potential to generate revenue.</p>
<h2>Californian precedents</h2>
<p>The spotty track record for some U.S. efforts to establish P3s underscores the importance of that kind of coordination.</p>
<p>California, for example, sought in 1989 to harness four of these partnerships as “<a href="http://www.dot.ca.gov/hq/innovfinance/public-private-partnerships/PPP_main.html">demonstration</a>” projects. It <a href="http://whoswholegal.com/news/features/article/30387/public-private-partnerships-successes-failures-plans-future">only completed two</a> of those four.</p>
<p>First, California’s transportation department created a <a href="https://www.transportation.gov/policy-initiatives/build-america/sr-91-express-lanes-orange-county-ca">P3 to build express lanes for its busy SR-91</a> highway to ease Orange County congestion near Los Angeles. </p>
<p>Because the department agreed to not build <a href="http://whoswholegal.com/news/features/article/30387/public-private-partnerships-successes-failures-plans-future">free roads running parallel to the tolled ones</a>, a public outcry ensued after the 10-mile-long road opened to traffic in 1995.</p>
<p><a href="https://www.transportation.gov/policy-initiatives/build-america/sr-91-express-lanes-orange-county-ca">Orange County</a> then bought out the private-sector partner stake in this project eight years later, cutting its long-term contract short.</p>
<p><a href="https://www.transportation.gov/policy-initiatives/build-america/south-bay-expressway-sr-125-san-diego-ca">Expanding the South Bay Expressway</a>, the other P3 California announced in 1989 that got done, took until 2007 to complete. Three years later, the project’s private partner <a href="http://medcraveonline.com/MOJCE/MOJCE-02-00030.php">declared bankruptcy</a>, largely because of years of litigation that delayed the onset of tolls – which then generated less revenue than expected.</p>
<p>These planning errors, which were due to lack of experience, <a href="http://www.texasturf.org/2012-06-01-03-09-30/latest-news/public-private-partnerships/1928-taxpayers-get-shafted-in-bankrupt-san-diego-tollway">undercut confidence</a> in the partnership approach for investors and the public alike. </p>
<p>We believe that unless the Trump administration – despite his <a href="https://www.politico.com/magazine/story/2017/01/how-trump-could-shrink-the-government-while-still-keeping-the-good-stuff-214679">disdain for bureaucracy</a> – establishes new government offices to oversee federally backed P3s, it is likely to repeat the errors that hampered California’s pioneering projects.</p>
<h2>If they build it</h2>
<p>With infrastructure, investors are looking for <a href="http://edhec.infrastructure.institute/wp-content/uploads/publications/blanc-brude_2016c.pdf">relatively stable returns</a> and less risk, more akin to bonds than stocks. This makes financing these partnerships attractive for pension funds and other institutional investors.</p>
<p>At the same time, it can make investors more eager to back projects that already exist and are generating revenue through user fees, such as toll roads, airports, ports and some rail projects with nearby land that can be sold or leased. </p>
<p>In the U.S., however, the government mainly needs the private sector’s help meeting other less profitable priorities, such as improving <a href="http://blogs.ei.columbia.edu/2017/06/13/rural-americas-drinking-water-crisis-no-help-from-trump-budget/">water quality</a>, expanding <a href="https://www.brookings.edu/blog/brookings-now/2015/06/03/the-10-u-s-metro-rail-systems-that-lose-the-most-money-per-passenger/">public transit</a> and building <a href="https://www.infrastructurereportcard.org/wp-content/uploads/2017/01/Levees-Final.pdf">levees</a>.</p>
<p>Although those projects may not be attractive to investors, they can stoke economic growth and productivity while <a href="https://ideas.repec.org/a/fip/fedbne/y1990isepp11-33.html">fostering a higher quality of life</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/205540/original/file-20180208-180836-12p98cz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/205540/original/file-20180208-180836-12p98cz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/205540/original/file-20180208-180836-12p98cz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/205540/original/file-20180208-180836-12p98cz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/205540/original/file-20180208-180836-12p98cz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/205540/original/file-20180208-180836-12p98cz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/205540/original/file-20180208-180836-12p98cz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/205540/original/file-20180208-180836-12p98cz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Dwayne Boudreaux Jr., owner of a Circle Food Store in New Orleans, shown dumping dirty water that was vacuumed up after a flood. His city needs more than $11 billion to update key parts of its infrastructure but has only about $2 billion in hand.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Trump-Infrastructure-New-Orleans/73f36bf2fcd74e549a0f0bafdbd919b5/12/0">AP Photo/Gerald Herbert</a></span>
</figcaption>
</figure>
<h2>India’s mixed results</h2>
<p>Interestingly, Trump’s $100 billion <a href="https://www.whitehouse.gov/briefings-statements/building-stronger-america-president-donald-j-trumps-american-infrastructure-initiative/">Infrastructure Incentives Program</a> resembles <a href="https://www.pppinindia.gov.in/schemes-for-financial-support">India’s approach</a>, which has had mixed results since its 2004 inception. There, the national government foots about 20 percent of the bill when it enters into <a href="http://journals.sagepub.com/doi/abs/10.1177/0974930613488295">public-private partnerships</a>, just as the White House proposes to do.</p>
<p>The Indian policy was intended for toll roads and airports for which the government fixed the user fees. The subsidy closed the gap between this regulated revenue stream and investors’ expectations. </p>
<p>However, India <a href="http://journals.sagepub.com/doi/abs/10.1177/0974930613488295">has failed to spend most of the money it budgeted</a> for this initiative, suggesting that it will take more than subsidies to entice private investment.</p>
<p>Between India’s track record and signals about insufficient federal guidance and support for public-private partnerships, we doubt that Trump’s plan can catalyze the infrastructure spending he envisions.</p>
<p><em>Editor’s note: This is an updated version of an article published on Feb. 9, 2018.</em></p><img src="https://counter.theconversation.com/content/91712/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The long-awaited $1.5 trillion plan fails to address some major obstacles to private investment.Caroline Nowacki, PhD Candidate, Global Projects Center, Stanford UniversityKate Gasparro, Graduate Research Fellow of Sustainable Design and Construction, Stanford UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/803502018-02-09T13:28:46Z2018-02-09T13:28:46ZWhy Trump’s infrastructure ambitions are likely to stall<figure><img src="https://images.theconversation.com/files/205165/original/file-20180206-88788-1aqw49g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The White House favors public-private partnerships for widening congested roads and getting other pricey projects done.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Commute-Travel/f721e0c7188340a49342ad08d5c08016/2/0">AP Photo/Charles Dharapak</a></span></figcaption></figure><p>President Donald Trump recently raised the ante with his promise to unleash a <a href="https://www.cnbc.com/2018/01/30/trump-advisor-cohn-president-to-focus-on-1-point-5-trillion-infrastructure-plan-tonight.html">wave of new infrastructure</a> spending. During his first <a href="https://www.youtube.com/watch?v=exsOim0Lyl4">State of Union address</a>, he conjured up images of “gleaming new roads, bridges, highways, railways and waterways all across our land” without getting into the details.</p>
<p>The <a href="https://www.cnbc.com/2018/02/06/trump-to-unveil-infrastructure-plan-monday--white-house-official.html">White House will soon unveil</a>
Trump’s “<a href="https://www.axios.com/draft-white-house-infrastructure-plan-1516644555-0d43f417-6ccd-43f7-9eae-3ccbe711314d.html">Infrastructure Incentives Initiative</a>,” which Trump now says will usher in at least <a href="https://www.bloomberg.com/news/articles/2017-09-27/trump-reverses-course-on-plan-to-rely-on-private-money-for-roads">US$1.5 trillion in spending</a>. That’s a 50 percent jump from the $1 trillion he had previously pledged and nearly triple the money he talked up on the <a href="http://thehill.com/policy/transportation/371790-lawmakers-left-with-more-questions-than-answers-on-trump-infrastructure">campaign trail</a>.</p>
<p>With only <a href="https://www.theatlantic.com/politics/archive/2018/02/infrastructure-week-is-always-next-week/552047/">$200 billion in federal funding</a> apparently on the table, and <a href="http://thehill.com/policy/transportation/371790-lawmakers-left-with-more-questions-than-answers-on-trump-infrastructure">ample questions</a>
from the <a href="https://www.reuters.com/article/us-usa-trump-infrastructure/trump-urges-congress-to-help-stimulate-1-5-trillion-in-infrastructure-spending-idUSKBN1FK0C7">lawmakers who need to approve that money</a> about where even that sum will come from, will the plan deliver?</p>
<p>A <a href="https://www.axios.com/draft-white-house-infrastructure-plan-1516644555-0d43f417-6ccd-43f7-9eae-3ccbe711314d.html">draft of his plan</a> indicates it would rely on states, local governments and, most importantly, <a href="https://www.citylab.com/transportation/2018/01/so-much-for-that-bipartisan-infrastructure-plan/551849/">private investors</a> to contribute the rest of the $1.5 trillion pie. As researchers studying ways to boost private infrastructure spending, we believe that it will fall short because it does not address private investors’ key concerns, and it would not work for many kinds of high-priority projects.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"956225056161624070"}"></div></p>
<h2>Matching and mismatching</h2>
<p>During his address, Trump repeated a message he’s made many times before: that <a href="https://www.usnews.com/opinion/economic-intelligence/articles/2018-01-31/trumps-infrastructure-pledge-in-state-of-the-union-raises-many-questions">private investment</a> should help pay the nation’s infrastructure bill. “Every federal dollar should be leveraged by partnering with state and local governments and, where appropriate, tapping into private-sector investment – to permanently fix the infrastructure deficit,” he said.</p>
<p>That makes it sound like he favors “<a href="https://theconversation.com/heres-how-to-fix-americas-crumbling-bridges-33781">public-private partnerships</a>,” or P3s, the most common way governments attract and <a href="https://iconsofinfrastructure.com/will-trump-use-p3-help-infrastructure-take-off/">leverage private investment</a>.</p>
<p>Here’s <a href="https://www.brookings.edu/wp-content/uploads/2016/06/1208_transportation_istrate_puentes.pdf">how they work</a>. A public sponsor – either the federal government agency or a state or local government agency – contracts out part or all of the financing, construction, maintenance and operation of a project to a group of private companies following a competitive bidding process.</p>
<p>The amount of infrastructure money in new U.S. P3s has waned in recent years. It fell to <a href="https://home.kpmg.com/au/en/home/insights/2015/06/public-private-partnerships-global-trends.html">$710 million between 2011 and 2014</a> from higher levels seen a few years earlier, the most recent period for which data is available. And P3s only facilitated about <a href="https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/reports/45157-PublicPrivatePartnerships.pdf">1.5 percent</a> of the $4 trillion all levels of government spent on highways between 1989 and 2013, according to the nonpartisan Congressional Budget Office.</p>
<p>However, the number of pension funds and other <a href="https://www.investopedia.com/terms/i/institutionalinvestor.asp">institutional investors</a> putting money into infrastructure <a href="https://www.reuters.com/article/us-usa-infrastructure-pensions/public-pension-funds-seek-infrastructure-as-market-heats-up-idUSKCN0YZ22J">has doubled</a>.</p>
<p>What’s holding things up?</p>
<p>Investors do not say that a lack of federal subsidies, like the <a href="https://www.theatlantic.com/politics/archive/2017/05/the-phantom-infrastructure-proposal-in-trumps-budget/527859/">$200 billion</a> Trump reportedly seeks, is a <a href="https://www.oecd.org/daf/fin/private-pensions/Private-financing-and-government-support-to-promote-LTI-in-infrastructure.pdf">big bottleneck</a>. Instead, to draw much more private investment, the U.S. needs <a href="https://www.oecd.org/daf/fin/private-pensions/Private-financing-and-government-support-to-promote-LTI-in-infrastructure.pdf">clear, consistent regulations</a> that will help make projects more likely to withstand any shifts in political power – such as when the majority party changes at any level of government.</p>
<p>Establishing a more successful track record for these partnerships, which have <a href="https://www.ncppp.org/wp-content/uploads/2013/02/CRS-Insights-Indiana-Toll-Road-Bankruptcy-Chills-Climate-for-P3s.pdf">often faltered</a>, will also help.</p>
<p>One step the U.S. could take now is to follow the examples set by <a href="https://www.vic.gov.au/publicsectorreform/people/office-of-projects-victoria.html">Australia</a> and <a href="http://www.p3canada.ca/en/about-p3s/">Canada</a>, where more infrastructure is being built through these partnerships. Specialized P3 teams in those countries have developed uniform competitive bidding processes, standardized contracts and project pipelines all based on lessons learned from prior partnerships.</p>
<h2>Californian precedents</h2>
<p>The spotty track record for some U.S. efforts to establish P3s underscores the importance of that kind of coordination.</p>
<p>California, for example, sought in 1989 to harness four of these partnerships as “<a href="http://www.dot.ca.gov/hq/innovfinance/public-private-partnerships/PPP_main.html">demonstration</a>” projects. It <a href="http://whoswholegal.com/news/features/article/30387/public-private-partnerships-successes-failures-plans-future">only completed two</a> of those four.</p>
<p>First, California’s transportation department created a <a href="https://www.transportation.gov/policy-initiatives/build-america/sr-91-express-lanes-orange-county-ca">P3 to build express lanes for its busy SR-91</a> highway to ease Orange County congestion near Los Angeles. </p>
<p>Because the department agreed to not build <a href="http://whoswholegal.com/news/features/article/30387/public-private-partnerships-successes-failures-plans-future">free roads running parallel to the tolled ones</a>, a public outcry ensued after the 10-mile-long road opened to traffic in 1995.</p>
<p><a href="https://www.transportation.gov/policy-initiatives/build-america/sr-91-express-lanes-orange-county-ca">Orange County</a> then bought out the private-sector partner stake in this project eight years later, cutting its long-term contract short.</p>
<p><a href="https://www.transportation.gov/policy-initiatives/build-america/south-bay-expressway-sr-125-san-diego-ca">Expanding the South Bay Expressway</a>, the other P3 California announced in 1989 that got done, took until 2007 to complete. Three years later, the project’s private partner <a href="http://medcraveonline.com/MOJCE/MOJCE-02-00030.php">declared bankruptcy</a>, largely because of years of litigation that delayed the onset of tolls – which then generated less revenue than expected.</p>
<p>These planning errors, which were due to lack of experience, <a href="http://www.texasturf.org/2012-06-01-03-09-30/latest-news/public-private-partnerships/1928-taxpayers-get-shafted-in-bankrupt-san-diego-tollway">undercut confidence</a> in the partnership approach for investors and the public alike. </p>
<p>But the Trump plan’s leaked preliminary details, such as an “<a href="https://www.axios.com/draft-white-house-infrastructure-plan-1516644555-0d43f417-6ccd-43f7-9eae-3ccbe711314d.html">interagency selection committee</a>” administered by the Commerce Department and “federal technical assistance” with “no funding provided,” sound like they will fall short of what’s required.</p>
<p>We believe that unless the Trump administration – despite his <a href="https://www.politico.com/magazine/story/2017/01/how-trump-could-shrink-the-government-while-still-keeping-the-good-stuff-214679">disdain for bureaucracy</a> – establishes new government offices to oversee federally backed P3s, it is likely to repeat the errors that hampered California’s pioneering projects.</p>
<h2>If they build it</h2>
<p>With infrastructure, investors are looking for <a href="http://edhec.infrastructure.institute/wp-content/uploads/publications/blanc-brude_2016c.pdf">relatively stable returns</a> and less risk, more akin to bonds than stocks. This makes financing these partnerships attractive for pension funds and other institutional investors.</p>
<p>At the same time, it makes investors more eager to back projects that already exist and are generating revenue through user fees, such as toll roads, airports, ports and some transit projects with nearby land that can be sold or leased. </p>
<p>In the U.S., however, the government mainly needs the private sector’s help meeting other less profitable priorities, such as improving <a href="http://blogs.ei.columbia.edu/2017/06/13/rural-americas-drinking-water-crisis-no-help-from-trump-budget/">water quality</a>, expanding <a href="https://www.brookings.edu/blog/brookings-now/2015/06/03/the-10-u-s-metro-rail-systems-that-lose-the-most-money-per-passenger/">public transit</a> and building <a href="https://www.infrastructurereportcard.org/wp-content/uploads/2017/01/Levees-Final.pdf">levees</a>.</p>
<p>Although those projects may not be attractive to investors, they can stoke economic growth and productivity while <a href="https://ideas.repec.org/a/fip/fedbne/y1990isepp11-33.html">fostering a higher quality of life</a>. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/205540/original/file-20180208-180836-12p98cz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/205540/original/file-20180208-180836-12p98cz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/205540/original/file-20180208-180836-12p98cz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/205540/original/file-20180208-180836-12p98cz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/205540/original/file-20180208-180836-12p98cz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/205540/original/file-20180208-180836-12p98cz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/205540/original/file-20180208-180836-12p98cz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/205540/original/file-20180208-180836-12p98cz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Dwayne Boudreaux Jr., owner of a Circle Food Store in New Orleans, shown dumping dirty water that was vacuumed up after a flood. His city needs more than $11 billion to update key parts of its infrastructure but has only about $2 billion in hand.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Trump-Infrastructure-New-Orleans/73f36bf2fcd74e549a0f0bafdbd919b5/12/0">AP Photo/Gerald Herbert</a></span>
</figcaption>
</figure>
<h2>India’s mixed results</h2>
<p>Interestingly, Trump’s infrastructure plan may resemble <a href="https://www.pppinindia.gov.in/schemes-for-financial-support">India’s approach</a>, which has had mixed results since its 2004 inception. There, the national government foots about 20 percent of the bill when it enters into <a href="http://journals.sagepub.com/doi/abs/10.1177/0974930613488295">public-private partnerships</a>, just as the White House proposes to do.</p>
<p>The Indian policy was intended for toll roads and airports for which the government fixed the user fees. The subsidy closed the gap between this regulated revenue stream and investors’ expectations. </p>
<p>However, India <a href="http://journals.sagepub.com/doi/abs/10.1177/0974930613488295">has failed to spend most of the money it budgeted</a> for this initiative, suggesting that it will take more than subsidies to entice private investment.</p>
<p>Between India’s track record and signals about insufficient federal guidance and support for public-private partnerships, we doubt that Trump’s plan, as drafted, would catalyze the $1.5 trillion in infrastructure spending he envisions.</p>
<p>What’s more, we’re concerned that Trump’s proposed plan would primarily aid the kinds of projects that already attract private dollars, leaving many big priorities without a federal assist.</p><img src="https://counter.theconversation.com/content/80350/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Caroline Nowacki's research is funded by the Stanford Global Projects Center</span></em></p><p class="fine-print"><em><span>Kate Gasparro receives funding from the National Science Foundation. </span></em></p>The $1.5 trillion plan he’s proposing would do the most for ventures that don’t really need the government’s help and ignores some major obstacles to private investment.Caroline Nowacki, PhD Candidate, Global Projects Center, Stanford UniversityKate Gasparro, Graduate Research Fellow of Sustainable Design and Construction, Stanford UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/773352017-05-16T16:14:30Z2017-05-16T16:14:30ZSouth Africa’s public-private school plans require healthy scepticism<figure><img src="https://images.theconversation.com/files/168717/original/file-20170510-28069-qi7s34.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Africa's public schools have problems, but charter schools and academies can't fix everything.</span> <span class="attribution"><span class="source">Matt Lucht/Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Public school systems across Africa are struggling. Some people believe that public-private partnerships are the <a href="http://www.economist.com/news/middle-east-and-africa/21717379-war-scorched-state-where-almost-nothing-works-tries-charter-schools-liberias">solution</a> to fixing ailing government education systems.</p>
<p>Public-private partnerships (PPPs) first took root in the form of charter schools in the US, and academies in the UK, arrangements where private entities take over the management of public schools, sometimes for profit, sometimes not. Such schools have now also sprung up in Liberia and Uganda. Now officials in the Western Cape province are working to explore the model in South Africa: in 2015, five fee-free schools were set up as pilot “<a href="https://www.westerncape.gov.za/news/how-collaboration-can-transform-under-performing-schools">Collaboration Schools</a>”. </p>
<p>The Western Cape Education Department hosted an information session in February 2017 to extol the virtues of PPPs to potential operating partners and philanthropic funders, with a view to expanding the project to 50 schools in the next few years.</p>
<p>Despite the project being designated a pilot, there’s already <a href="https://www.greengazette.co.za/pages/provincial-gazette-for-western-cape-7666-of-25-august-2016_20160825-WCP-07666-00012">draft legislation</a> that proposes giving the provincial education minister powers to reclassify any school as a Collaboration school. </p>
<p>It’s irrefutable that there are huge challenges in South Africa’s public schools. The question is whether using PPPs is the correct way to address them. A great deal of research evidence suggests that this approach should be treated with caution.</p>
<h2>An internationally contentious system</h2>
<p>The model that’s being proposed in the Western Cape is based on US charter schools and UK academies. Ark, one of the major organisations backing academies in the UK, and also a partner of the controversial Bridge schools, is acting as an advisor to guide the Western Cape’s arrangements. </p>
<p>But Bridge schools in Uganda have been ordered by the country’s courts to <a href="https://www.theguardian.com/global-development/2016/nov/04/judge-orders-closure-low-cost-bridge-international-academies-uganda">shut down</a> because of poor infrastructural conditions and under-qualified teachers. In April 2017 several groups <a href="http://www.aft.org/news/aft-leads-protest-against-world-bank-and-bridge-academies-0">protested against</a> the World Bank’s decision to advocate for Bridge Schools in Africa.</p>
<p>PPP schooling arrangements are <a href="https://theconversation.com/charter-schools-would-only-make-our-school-systems-problems-worse-46814">controversial</a> and give rise to several concerns. </p>
<p>The first is whether public schooling, should be directed and influenced so heavily by private parties. These parties have no public mandate that governs their actions. We know, too, that <a href="https://www.inthepublicinterest.org/wp-content/uploads/InthePublicInterest_Inequality_Sec5_Sept2016.pdf">private provision of what used to be public services often exacerbates inequality</a> – be it in the health care space or basic utilities. There’s no reason to believe the education space will be different.</p>
<p>Secondly, some (but not all) Charter operators enter the schooling arena because they perceive education as a new market for profit generation. Some scholars have questioned whether profit should be made in sectors such as <a href="https://www.scu.edu/ethics/focus-areas/bioethics/resources/a-healthy-bottom-line-profits-or-people/">health</a> and <a href="http://www.newfoundations.com/ETHICPROP/KellyF06.html">education</a>. These areas are critical to social development and directly related to basic fundamental human rights.</p>
<h2>The argument closer to home</h2>
<p>The proponents of PPPs offer three main arguments in support of the model being deployed in fee-free schools. </p>
<p>Firstly, they say schools are given more flexibility to govern and administrate according to pupils’ specific needs. They also say this model offers greater “accountability” by schools to government and parents, based primarily on something they term “Outcomes Based Assessment”. And finally, these schools, which may not legally charge fees and struggle to raise alternative funds, benefit from much needed extra resources supplied by the collaboration or philanthropic partner. </p>
<p>All these changes are alleged to offer improved teaching and learning – and to do so more efficiently than is currently the case.</p>
<p>Research evidence has contradicted these claims. A recent <a href="http://journals.sagepub.com/doi/abs/10.1177/0895904816681525?journalCode=epxa">large-scale study</a> compared state district, non-profit charter and for-profit charter schools across multiple states in the US. They showed learning outcomes vary broadly, with no conclusive evidence of charters of either type performing better than their public counterparts. </p>
<p>Trends identified in the same study showed that collaboration arrangements in school management resulted on average in a) more money per pupil being paid for administrative and management costs and b) less money per pupil being paid on instructional costs – that is, teaching and learning.</p>
<p>The researchers also found that, as a general trend, both for- and non-profit charters kept teacher salaries low by relying on younger, less experienced staff. They also experienced high staff turnover. Separate research has found that rapid teaching staff turnover correlates <a href="http://journals.sagepub.com/doi/pdf/10.3102/0002831212463813">negatively and significantly</a> with lower learning outcomes.</p>
<p>Such findings directly contradict the premise of efficiency that’s used to justify public-private partnerships as being superior to purely public schools.</p>
<p>If, in fact, instructional costs go down and management costs concomitantly go up, such arrangements could be viewed instead as a mechanism whereby private “managers” infiltrate struggling public schools and inadvertently redirect teaching salary funds towards themselves. This might not be the explicit intention, but it’s the overall net effect. </p>
<p>In the South Africa case, the PPP arrangement has tried to distance itself from the charter school model by insisting that PPP schools remain absolutely public. But there’s a real long-term risk of a similar shift in salary allocation like the US case, with substantial sums at play. The largest part of South Africa’s education budget, divided through equitable shares to the country’s nine provinces, goes to salaries. This is around <a href="http://www.timeslive.co.za/sundaytimes/stnews/2015/05/03/Overpaid-army-of-civil-servants-sucking-SA-dry1">80% of more than R200 billion</a>. </p>
<p>As has been the case in charter schools and academies, teachers in PPP schools will most likely experience <a href="https://www.usc.edu/dept/education/cegov/focus/charter-schools/publications/journals/Working%20Conditions%20in%20Charter%20Schools%20-%20What%27s%20the%20Appeal%20fo.pdf">decreased job security</a> under the auspices of “accountability” as measured by standardised test performance. Such pressures to pin student test scores on teachers ignore the fact that many of <a href="http://education.jhu.edu/coleman/prospectus">the factors</a> which determine a child’s school performance originate in the home, not the classroom. </p>
<p>While some PPP arrangements justify decreased job security with the claim they <a href="http://www.ncpa.org/pub/ba285">pay more</a> at comparative experience levels than their public counterparts, this obfuscates the youthful staffing that automatically decreases overall salary costs. The “<a href="http://www.slate.com/blogs/schooled/2015/04/27/charter_schools_and_churn_and_burn_how_they_re_trying_to_hold_on_to_teachers.html">churn and burn</a>” effect ensures teachers rarely stay at the school long enough to command a senior salary. </p>
<h2>Caution needed</h2>
<p>There’s a growing consensus that South Africa’s poorest performing schools <a href="http://www.groundup.org.za/article/school-funding-what-south-africa-can-learn-world/">are still under-funded</a>. So it seems pragmatic to source extra resources from NGOs, philanthropists and private operators, especially in light of a lean and over-stretched public fiscus.</p>
<p>But South Africa should carefully heed the lessons learnt from charter arrangements in the US and the current Bridge debacle in Uganda. Healthy scepticism is a good idea. While the project’s individual proponents may be well-intentioned, there’s a real risk of such models laying the country’s public education coffers vulnerable to capture by private interests.</p>
<p><em>Editor’s note: This article has been updated to reflect two changes. Initially it was stated schools governed according to private-public partnerships existed in Kenya. This is not the case. The statement “Many (but not all) Charter operators enter the schooling arena because they perceive education as a new market for profit generation” has been altered to read “some” after it was pointed out that the majority of such schools in the US and UK are not-for-profit.</em></p><img src="https://counter.theconversation.com/content/77335/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sara Muller works with a multi-university think group that includes the School of Education at the University of Cape Town, the Centre for International Teacher Development at CPUT, and the Institute for Social and Economic Research at Rhodes University. The group focuses on critical public scholarship about public and private schooling models and their implications. </span></em></p>There are huge challenges in South Africa’s public schools. The question is whether using public-private partnerships is the correct way to address them.Sara Black, Researcher: Teacher Development and Sociology of Education, University of Cape TownLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/768482017-05-08T00:53:28Z2017-05-08T00:53:28ZPeople don’t trust scientific research when companies are involved<figure><img src="https://images.theconversation.com/files/168205/original/file-20170507-19132-lu45yn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">People seem to think industry-funded research belongs in the garbage.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/hiv-testing-laboratory-singleuse-plastic-syringes-506118349">mllejules/Shutterstock.com</a></span></figcaption></figure><p>A soda company sponsoring <a href="https://well.blogs.nytimes.com/2015/08/09/coca-cola-funds-scientists-who-shift-blame-for-obesity-away-from-bad-diets/">nutrition research</a>. An oil conglomerate <a href="https://insideclimatenews.org/news/26052016/agu-american-geophysical-union-exxon-climate-change-denial-science-sponsorship">helping fund a climate-related research meeting</a>. Does the public care who’s paying for science?</p>
<p>In a word, yes. When industry funds science, credibility suffers. And this does not bode well for the types of public-private research partnerships that appear to be becoming <a href="http://www.rdmag.com/article/2015/04/how-academic-institutions-partner-private-industry">more prevalent</a> as <a href="https://www.nsf.gov/statistics/2016/nsb20161/#/report/chapter-4/recent-trends-in-u-s-r-d-performance">government funding for research and development lags</a>. </p>
<p>The recurring topic of conflict of interest has made headlines in recent weeks. The National Academies of Science, Engineering, and Medicine has <a href="http://www.the-scientist.com/?articles.view/articleNo/49331/title/National-Academies-Revise-Conflict-of-Interest-Policy/">revised its conflict of interest guidelines</a> following <a href="https://doi.org/10.1371/journal.pone.0172317">questions about whether members</a> of a recent expert panel on GMOs had industry ties or other financial conflicts that were not disclosed in the panel’s final report.</p>
<p><a href="https://doi.org/10.1371/journal.pone.0175643">Our own recent research</a> speaks to how hard it may be for the public to see research as useful when produced with an industry partner, even when that company is just one of several collaborators.</p>
<h2>What people think of funding sources</h2>
<p>We asked our study volunteers what they thought about a proposed research partnership to study the potential risks related to either genetically modified foods or trans fats.</p>
<p>We randomly assigned participants to each evaluate one of 15 different research partnership arrangements – various combinations of scientists from a university, a government agency, a nongovernmental organization and a large food company.</p>
<p>For example, 1/15th of participants were asked to consider a research collaboration that included only university researchers. Another 1/15th of participants considered a research partnership that included both university and government scientists, and so on. In total we presented four conditions where there was a single type of researcher, another six collaborations with two partners, four with three partners and one with all four partners. </p>
<p><iframe id="O9jF8" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/O9jF8/1/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>When a research team included an industry partner, our participants were generally less likely to think the scientists would consider a full range of evidence and listen to different voices. An industry partner also reduced how much participants believed any resulting data would provide meaningful guidance for making decisions.</p>
<p>At the outset of our work, we thought including a diverse array of partners in a research collaboration might mitigate the negative perceptions that come with industry involvement. But, while including scientists from a nonindustry organization (particularly a nongovernmental organization) made some difference, the effect was small. Adding a government partner provided no substantive additional benefit.</p>
<p>When we asked participants to describe what they thought about the research partnership in their own words, they were skeptical whether an industry partner could ever be trusted to release information that might hurt its profits.</p>
<p>Our results may be even more troubling because we chose a company with a good reputation. We used pretests to select particular examples – of a corporation, as well as a university, government agency and nongovernmental organization – that had relatively high positive ratings and relatively low negative ratings in a test sample.</p>
<h2>Can industry do valid science?</h2>
<p>You don’t have to look far for real-life examples of poorly conducted or intentionally misleading industry research. The <a href="https://www.justice.gov/opa/pr/glaxosmithkline-plead-guilty-and-pay-3-billion-resolve-fraud-allegations-and-failure-report">pharmaceutical</a>, <a href="https://www.theguardian.com/environment/2016/sep/22/pesticide-manufacturers-own-tests-reveal-serious-harm-to-honeybees">chemical</a>, <a href="https://www.nytimes.com/2016/09/13/well/eat/how-the-sugar-industry-shifted-blame-to-fat.html">nutrition</a> and <a href="https://www.theguardian.com/environment/2015/mar/25/fossil-fuel-firms-are-still-bankrolling-climate-denial-lobby-groups">petroleum</a> industries have all weathered criticism of their research integrity, and for good reason. These ethically questionable episodes no doubt fuel public skepticism of industry research. Stories of pharmaceutical companies conducting <a href="https://doi.org/10.1371/journal.pmed.0020138">less than rigorous clinical trials</a> for the benefit of their marketing departments, or the tobacco industry steadfastly denying the connection between smoking and cancer in the face of mounting evidence, help explain public concern about industry-funded science. </p>
<p>But industry generally has a long and impressive history of supporting scientific research and technical development. Industry-supported research has <a href="https://www.wired.com/2012/09/ff-corning-gorilla-glass/">generated widely adopted technologies</a>, <a href="http://www.economist.com/technology-quarterly/2016-03-12/after-moores-law">driven the evolution of entire economic sectors</a>, <a href="http://articles.latimes.com/2012/oct/20/local/la-me-stanford-ovshinsky-20121021">improved processes that were harmful to public health and the environment</a> and <a href="https://www.bell-labs.com/our-people/recognition/">won Nobel Prizes</a>. And as scientists not currently affiliated with industry scramble to fund their research in an era of tight budgets, big companies have money to underwrite science.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/168152/original/file-20170505-19116-145xhb5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/168152/original/file-20170505-19116-145xhb5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/168152/original/file-20170505-19116-145xhb5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/168152/original/file-20170505-19116-145xhb5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/168152/original/file-20170505-19116-145xhb5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/168152/original/file-20170505-19116-145xhb5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/168152/original/file-20170505-19116-145xhb5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/168152/original/file-20170505-19116-145xhb5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Does it matter within what kind of institution a researcher hangs her lab coat?</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/biologycourses/7006382260">Vivien Rolfe</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>Can this lack of trust be overcome? Moving forward, it will be essential to address incentives such as short-term profit or individual recognition that can encourage poor research – in any institutional context. By showing how quickly people may judge industry-funded research, our work indicates that it’s critical to think about how the results of that research can be communicated effectively. </p>
<p>Our results should worry those who want research to be evaluated largely on its scientific merits, rather than based upon the affiliations of those involved. </p>
<p>Although relatively little previous scholarship has investigated this topic, we expected to find that including multiple, nonindustry organizations in a scientific partnership might, at least partly, assuage participants’ concerns about industry involvement. This reflects our initial tentative belief that, given the resources and expertise within industry, there must be some way to create public-private partnerships that produce high-quality research which is perceived widely as such.</p>
<p><a href="http://msutoday.msu.edu/news/2017/public-skeptical-of-research-if-tied-to-a-company/">Our interdisciplinary team</a> – a risk communication scholar, a sociologist, a philosopher of science, a historian of science and a toxicologist – is also examining philosophical arguments and historical precedents for guidance on these issues.</p>
<p>Philosophy can tell us a great deal about how the values of investigators <a href="https://global.oup.com/academic/product/a-tapestry-of-values-9780190260811?lang=en&cc=us">can influence their results</a>. And history shows that not so long ago, up until a few decades after World War II, many considered industry support <a href="http://physicstoday.scitation.org/doi/10.1063/PT.3.3081">a way to uphold research integrity</a> by protecting it from government secrecy regimes.</p>
<p>Looking forward, we are planning additional social scientific experiments to examine how specific procedures that research partnerships sometimes use may affect public views about collaborations with industry partners. For example, perhaps open-data policies, transparency initiatives or external reviewer processes may alleviate bias concerns.</p>
<p>Given the central role that industry plays in scientific research and development, it is important to explore strategies for designing multi-sector research collaborations that can generate legitimate, high-quality results while being perceived as legitimate by the public.</p><img src="https://counter.theconversation.com/content/76848/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joseph D. Martin receives funding from the National Science Foundation.</span></em></p><p class="fine-print"><em><span>Aaron M. McCright, John C. Besley, Kevin Elliott, and Nagwan Zahry do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Scientists need funding to do their work. But a new study finds turning to industry partners taints perceptions of university research, and including other kinds of partners doesn’t really help.John C. Besley, Associate Professor of Advertising and Public Relations, Michigan State UniversityAaron M. McCright, Associate Professor of Sociology, Michigan State UniversityJoseph D. Martin, Fellow-in-Residence at the Consortium for History of Science, Technology, and Medicine and Visiting Research Fellow at the Centre for History and Philosophy of Science, University of LeedsKevin Elliott, Associate Professor of Fisheries & Wildlife and Philosophy, Michigan State UniversityNagwan Zahry, PhD Student in Media and Information Studies, Michigan State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/743252017-03-10T08:52:27Z2017-03-10T08:52:27ZSouth Africa’s grant scandal exposes myths about how the state should run things<figure><img src="https://images.theconversation.com/files/160286/original/image-20170310-3696-12kel8h.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">South Africans waiting in line to register for social grants.</span> <span class="attribution"><span class="source">EPA/Nic Bothma</span></span></figcaption></figure><p>The social grants <a href="https://theconversation.com/the-real-risks-behind-south-africas-social-grant-payment-crisis-73224">scandal</a> rocking South Africa has been greeted with understandable shock. It’s also challenged two popular ideas about how government should operate. </p>
<p>The first is that public-private partnerships <a href="http://www.ppp.gov.za/Pages/whatisppp.aspx">(PPP)</a> are efficient. The second is that national government is better at running things than provincial government (the equivalent of states or counties).</p>
<p>Both are so widely supported that they seem obviously true – but in the wake of the social grants’ saga their truth now seems far less obvious. Both are implicated in an unfolding scandal which threatens to disturb payment of social grants to about 17 million South Africans who depend on them.</p>
<p>The idea that PPPs are efficient needs another look. The principle behind them is well known. Because the government lacks the capacity to perform some of its functions, it needs the expertise of private, for-profit, companies who have the ability to do what it can’t, presumably because they wouldn’t be in business if they didn’t. </p>
<p>The second truism under a cloud is the view that, if you want something in government done, you must take it away from the provinces that are wasteful and incompetent. It’s firmly believed across the spectrum: even critics of national government often assume that, if there’s any chance people will be effectively served, it rests with the centre, not the provinces.</p>
<p>The unfolding social grant crisis has come to prove that these widely held assumptions could be misplaced.</p>
<h2>Public Private Partnerships</h2>
<p>At first glance the PPP model sounds like a classic ‘win-win’: government gets the expertise it needs while the private provider expands its business. Citizens also win because they get the service they need. What, besides ideology, could possibly prompt anyone to object? </p>
<p>Court <a href="http://www.heraldlive.co.za/news/2017/03/08/constitutional-court-wants-answers-sassa-department-payment-grants/">proceedings</a> confirm that the PPP between the government and <a href="http://www.net1.com/business-structure/transactional-solutions-cluster/cash-paymaster-services-(cps)/">Cash Paymaster Services</a>, the company contracted to distribute the grants, may have worked for both parties – but not for millions of grant beneficiaries. The private partner received more than its fee for distributing each grant. It also used its position to <a href="https://theconversation.com/the-real-risks-behind-south-africas-social-grant-payment-crisis-73224">market services</a> provided by a network of subsidiary companies: funeral policies, microloans, smart cards, airtime and insurance. </p>
<p>It’s also <a href="http://probonomatters.co.za/who-is-responsible-for-the-sassas-epic-social-grant-distribution-disaster/">claimed</a> that grant recipients are bombarded with sms messages selling these products. If they bite, the money is deducted from their grants. The company denies this but confirms that it uses its position to sell services. </p>
<p>Using PPPs to market products to a captive audience who may well believe that what they are being asked to buy has official sanction is not what the advocates of PPPs have in mind. The social development department and the South African Social Security Agency (<a href="http://www.sassa.gov.za/">SASSA</a>) did nothing to ensure that the poor and vulnerable were protected and so it’s not clear in what way this was a partnership. It seems more like a takeover by the private provider.</p>
<h2>The public interest</h2>
<p>This doesn’t mean that all PPPs should be tarred with the same brush: there clearly are cases in which government can increase its capacity by working with private providers. </p>
<p>But it does show that PPPs are not a guaranteed cure for government incapacity: unless government has the capacity to ensure that these arrangements serve the public, they are not partnerships, but surrenders to private interests. </p>
<p>Without the necessary controls, PPPs may do more to help the government and businesses than to serve citizens: since much corruption in this country stems from collusion between public and private actors at citizens’ expense, corruption could be seen as a particular popular type of PPP. </p>
<p>The capacity which governments need to ensure that PPPs are in the public interest is the ability to assess citizens’ needs and to ensure that the agreement will meet them. This requires an understanding of what citizens want and the will and ability to negotiate terms which will give it to them. Social Development and SASSA seemed to lack either the will or the ability to do either.</p>
<p>This should challenge the simplistic idea that, to do its job, government need simply call in private providers. PPPs will not achieve their stated purpose if they are buck-passing exercises: the government is still responsible for the service and it’s failing the public unless it can ensure that its private partner really is meeting the needs of citizens.</p>
<h2>The role of provinces</h2>
<p>Before SASSA was formed, social grants were distributed by provinces. In the Eastern Cape in particular, grants weren’t paid efficiently and the courts were forced to intervene. It was widely assumed that this showed the dangers of assigning grants to provinces – a single national distribution agency would, it was assumed, solve the problem.</p>
<p>SASSA was created in 2005. Twelve years later, it still lacks the capacity to distribute grants itself or to negotiate terms with the private provider which protects beneficiaries. While grant distribution seems more efficient, beneficiaries are now subject to commercial pressures they did not face when provinces distributed grants. The shift hasn’t been the magic bullet the country was promised.</p>
<p>There was, to be fair, one good reason for changing the provinces’ mandate to distribute grants. The amount to be paid and who was eligible for grants was fixed by national government – the provinces had no say. But provinces don’t levy taxes and so they receive a fixed sum from which they must fund all their obligations. Grants were a large and growing expense and, whenever they were raised, provinces had less to spend on their other needs. A system in which a government entity must provide a service but has no control over what it costs is unfair and unworkable.</p>
<p>But this problem need not have been solved by creating a single grants agency: provinces could have been given separate funding for grants so that other budget items were not affected. </p>
<p>The problems in the provinces are not an illusion – the bad press is often justified. But the SASSA case shows that they are not necessarily solved by taking provinces out of the equation.</p>
<p>Incompetence, patronage and indifference are not a provincial monopoly: which sphere of government provides a service may be less important than whether citizens have the muscle to ensure that it works for them. There’s no reason why this should be easier at a national than a provincial level (it is easier for organised interest groups to influence government at national level, but that doesn’t make citizens any more powerful). </p>
<p>Centralising government functions creates the illusion of greater effectiveness because it makes it easier to issue orders from the top. But it gives no guarantee of greater effectiveness: the orders may be no more reasonable and they may be ignored.</p>
<p>Fixing government is about increasing citizen power and ensuring that officials and politicians are more accountable. It’s not about shifting services to national level in the forlorn hope that officials will push buttons and all good things will follow. </p>
<p>In both cases, the ‘obvious’ needs another look. Bringing in private providers and excluding provinces are not automatic gateways to better government. The social grants scandal shows that improvement requires creative thinking, not relying on truisms which are less true than they seem.</p><img src="https://counter.theconversation.com/content/74325/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Steven Friedman does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>South Africa’s social grant scandal seems to back up highly regarded views on public governance that Public Private Partnerships aren’t naturally efficient.Steven Friedman, Professor of Political Studies, University of JohannesburgLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/638802016-10-18T23:15:07Z2016-10-18T23:15:07ZCan the private rental sector provide a secure, affordable housing solution?<figure><img src="https://images.theconversation.com/files/142105/original/image-20161018-12454-9bmo00.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">In the unregulated Australian rental housing market, rental leases are almost always short term.</span> <span class="attribution"><span class="source">AAP/David Crosling</span></span></figcaption></figure><p>Despite a relatively healthy supply-side picture for the general housing market, the expected trickle down of housing opportunities to low-income households in Australia has failed to materialise.</p>
<p>The UK Department for Communities and Local Government <a href="http://www.gov.uk/government/news/housing-starts-and-completions-hit-7-year-high">boasted this year</a> of a seven-year high in construction starting on new houses; in the 12 months to December 2015, there were a little over 143,500 housing starts. With a population of 54.3 million, the English housing sector is <a href="http://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/articles/overviewoftheukpopulation/february2016">adding one new dwelling</a> for every 380 persons. </p>
<p>Over the same period there were 231,411 housing approvals <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/8731.0Main+Features1Mar%202016?OpenDocument">in Australia</a>. With a population of 23.5 million in 2014, the Australian housing sector is adding one new dwelling for every 102 persons.</p>
<p>The supply of new housing has matched Australian population growth in recent times. The figure below profiles growth of the housing stock between 2006 and 2014, and compares it to population growth over the same period Australia-wide, as well as across the state capitals, Canberra and Darwin. </p>
<p>Growth in the national housing stock has kept pace with population growth for almost a decade.</p>
<iframe src="https://datawrapper.dwcdn.net/tssis/2/" frameborder="0" allowtransparency="true" allowfullscreen="allowfullscreen" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" oallowfullscreen="oallowfullscreen" msallowfullscreen="msallowfullscreen" width="100%" height="400"></iframe>
<p>However, the picture differs across state and territory capitals. In Perth and Sydney, increases in the housing stock are insufficient to match the increase in these state capitals’ populations. But there are different patterns underlying this common outcome.</p>
<p>In Perth, population growth was exceptionally strong. It was faster than any other city: its population soared (by 2014) to more than 28% above 2006 levels. Such rapid growth would stretch the capacity of most housing construction sectors, even in the absence of any supply-side impediments. </p>
<p>Sydney’s population growth (at 14%) is below the average across all cities (17%). Despite this relatively low increase in its population, housing supply failed to produce a matching increase in the housing stock. </p>
<h2>A housing system under pressure</h2>
<p>The balance between growth in population and expansion in housing stock through new housing supply is thought to be relevant to an understanding of housing affordability pressures. New housing construction that matches population growth should ease price and rent pressures, where all else is equal. </p>
<p>Although most new housing is built and sold in the higher price ranges and therefore purchased by higher-income groups, the housing they vacate will fall in price. It therefore becomes accessible to middle-income groups. And, as they shift upmarket, the housing they move out of falls in price and becomes accessible to lower-income households. </p>
<p>Eventually, this filtering process opens up new opportunities for the homeless.</p>
<p>Housing affordability is <a href="https://www.ahuri.edu.au/__data/assets/pdf_file/0013/2209/AHURI_Final_Report_No233_Housing-affordability-dynamics-new-insights-from-the-last-decade.pdf">generally thought</a> to be worsening, especially for low-income households. Homelessness numbers remain stubbornly high. And official figures for June 2015 <a href="http://www.pc.gov.au/research/ongoing/report-on-government-services/2016/housing-and-homelessness">reveal</a> there were 154,000 households on state housing authority waiting lists for public housing.</p>
<p>It is likely that the length of these waiting lists underestimates the need for public housing. We have modelled the income rules determining eligibility for public housing, and estimate that there are nearly 900,000 households satisfying these income eligibility criteria. </p>
<p>More than two-thirds of these households (650,000) contain one or more persons who:</p>
<ul>
<li><p>are aged 65 and over; </p></li>
<li><p>have a long-term health condition or disability; or</p></li>
<li><p>have children aged under 15.</p></li>
</ul>
<p>These are people who value the security of tenure that has typically been offered by public housing, but who are unlikely to be able to buy their own homes. There are nearly 1 million individuals in these households – a group that is currently ill-served by Australia’s housing system. </p>
<h2>Housing solutions through private-public partnerships</h2>
<p>The need for new housing solutions for these low-income groups is clearly a pressing requirement. However, raising the capital funding to expand public or social housing to meet their housing needs seems improbable. </p>
<p>Secure leasing is a private-public partnership option that offers a rent premium to those private landlords willing to offer long-term leases to those satisfying the income tests for public housing. They would also be either of pension age, disabled or caring for children. </p>
<p>In the unregulated Australian rental housing market, leases are almost always short term. This gives landlords the option to realise investments in the near term. Hence, a long-term lease proposal requires Australian governments to offer landlords a rent premium to compensate them for the money sacrificed when they enter into a long-term arrangement.</p>
<p>Consider a reform scenario in which landlords are given an incentive to offer five-year secure leases to households eligible for public housing who are now living in the private rental sector, with rent increases capped at increases in the consumer price index over the secure lease period.</p>
<p>We estimate that, over five years, the budgetary cost to the government to house these 650,000 households in secure lease arrangements is A$13.4 billion.</p>
<p>The uneven distribution of these households across states and territories means the program’s cost varies across the five most-populous states. Our estimates are $4.7 billion in New South Wales, $3 billion in Victoria, $2.5 billion in Queensland, $1 billion in South Australia, and $1.8 billion in Western Australia – with the remainder borne by Tasmania and the territories. </p>
<p>This cost is much more affordable than the capital funding required to expand the social housing stock through the construction of new social housing dwellings.</p>
<p>The Australian tax system currently provides indirect support for the supply of private rental housing through tax concessions such as negative gearing and capital gains tax discounts. Is it now time to harness some of the private investment stimulated by these concessions to help improve the supply of affordable and secure housing opportunities for low-income households.</p><img src="https://counter.theconversation.com/content/63880/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>This article draws from research funded by the Australian Housing and Urban Research Institute (AHURI) through grants 53039, 81070 and 81073. Gavin Wood is a Professorial Fellow in the Bankwest Curtin Economics Centre, an independent economic and social research organisation located within Curtin Business School at Curtin University. The centre was established in 2012 with support from Bankwest (a division of Commonwealth Bank of Australia) and Curtin University. The views in this article are those of the authors and do not represent the views of Curtin University and/or Bankwest or any of their affiliates.</span></em></p><p class="fine-print"><em><span>This article draws from research funded by the Australian Housing and Urban Research Institute (AHURI) through grants 53039, 81070 and 81073.
Rachel Ong is Deputy Director of the Bankwest Curtin Economics Centre, an independent economic and social research organisation located within Curtin Business School at Curtin University. The centre was established in 2012 with support from Bankwest (a division of Commonwealth Bank of Australia) and Curtin University. The views in this article are those of the authors and do not represent the views of Curtin University and/or Bankwest or any of their affiliates.</span></em></p>The need for new housing solutions for these low-income groups is clearly a pressing requirement.Gavin Wood, Professor of Housing, RMIT UniversityRachel Ong ViforJ, Deputy Director, Bankwest Curtin Economics Centre, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/553952016-02-25T09:04:51Z2016-02-25T09:04:51ZSouth Africa’s budget promises will require buckets of political capital<figure><img src="https://images.theconversation.com/files/112885/original/image-20160225-15134-ift2wd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Will South Africa's Deputy President Cyril Ramaphosa (left) and President Jacob Zuma support the commitments to reform the economy?</span> <span class="attribution"><span class="source">REUTERS/Mike Hutchings</span></span></figcaption></figure><p>The South African economy has been performing <a href="https://www.wider.unu.edu/publication/policy-co-ordination-and-growth-traps-middle-income-country-setting">very poorly</a>. Like other commodity exporters, export prices have weakened dramatically, company results have deteriorated and foreign and domestic investment have slowed down sharply. South Africa’s performance has been - and is expected to continue to be - worse than that of many other African economies, including commodity exporters. Africa’s anticipated growth rate for 2016 is 3.5% as against <a href="http://www.bdlive.co.za/economy/2016/01/19/imf-cuts-sas-economic-growth-outlook-to-lowest-on-record">South Africa’s 0.9%</a>.</p>
<p>The country’s performance is also worse than many other <a href="http://www.worldbank.org/en/country/mic">middle income</a> developing countries. Since 2013 the growth rate has been below the population growth rate — per capita income has been declining for three consecutive years. It will be four shrinking years by the end of 2016.</p>
<p>The fragility of the situation, which has been a matter of concern to economic analysts for some time, became clear to all with the events of December 2015.</p>
<p>Many commentators felt that President Jacob Zuma acknowledged in his State of the Nation <a href="http://www.bloomberg.com/news/articles/2016-02-11/zuma-pledges-to-woo-investors-in-speech-disrupted-by-opposition">Address</a> that there was a serious economic problem and was beginning to address it. A key admission was included. For the first time in many years the poor condition of the economy was attributed to domestic policy deficiencies, as well as to international conditions.</p>
<p>But the address was short on detail. This placed a great burden on the deliverer of the budget - one made even heavier by President Zuma’s surprising <a href="http://www.bdlive.co.za/national/2016/02/22/zuma-says-van-rooyen-was-administrations-most-qualified-finance-minister">endorsement</a> of the qualities of the 4-day finance minister, Des van Rooyen, days before the budget. The burden on Minister Gordhan was both to demonstrate, somehow, a real commitment by the government to key structural reforms, and to fill in some details.</p>
<h2>A good budget</h2>
<p>There are many good things about the budget. The commitment to cutting the government payroll by close to R25 billion over the next three years is important. The allocation of the burden of additional taxation was, progressively, mostly on the rich and the otherwise sinful. Bracket creep and the higher fuel levy will affect the middle classes and better-off parts of the working class too.</p>
<p>The shifts in allocation towards basic education, higher education, infrastructure expenditure, health and social protection are all welcome and necessary.</p>
<p>The specific references to private sector participation in South African Airways/SA Express, the ports and the freight rail sector are tantalising.</p>
<p>Also good are the frequent references to the need to revive social partnerships, indications of a resurrection of <a href="http://www.ppp.gov.za/Pages/whatisppp.aspx">public-private partnership</a> initiatives, and the repeated recognition of the need to improve the policy and regulatory environment for private investment.</p>
<h2>Promises to keep</h2>
<p>A frustrating thing about the budget is that many of the key commitments relating to how policies will support growth are, at best, pointers.</p>
<p>For example, the budget speech references the need for “structural reforms” to provide an environment for growth, but these reforms are not much elaborated in the speech or the Budget Review.</p>
<p>Similarly there are references to the need to remove uncertainties in government policies and regulations affecting investment and “institutional barriers to business investment and growth”, without specifically referring to the burning issues. In the <a href="http://www.treasury.gov.za/documents/national%20budget/2016/review/default.aspx">Budget Review</a> there is more detail, but barely enough.</p>
<p>There are references to phasing out state entities that are redundant without naming names.</p>
<p>There are welcome commitments to raising support to small business development, but little about how this will be done.</p>
<h2>Easing back into the saddle</h2>
<p>As Gordhan is barely two months into his <a href="http://www.thepresidency.gov.za/pebble.asp?relid=21231">new term</a> as Finance Minister, vagueness is understandable, even forgivable. It may take a few more months to for him be certain of how he wants to operationalise the commitments to support growth in the budget. But the immediate response of the markets to the budget suggests that he doesn’t have a lot of time before he needs to be more specific.</p>
<p>It is difficult to know how much the lack of detail in the growth strategy is due to the newness of the Minister, how much is due to political protocol (the need to consult further with cabinet colleagues), and how much is due to the fact that the limited degree of agreement within the governing party and the ruling alliance forms a constraint that he is still testing.</p>
<p>The signals over the next few weeks will be very important. Will the President, the Deputy President (Cyril Ramaphosa) and other members of the cabinet speak with one voice and support the commitments that the Minister of Finance has made to structural changes? Will the Minister himself be allowed to join the dots? If not, the risk is that negative perceptions will begin to undermine reform initiatives.</p>
<p>Reforms take time. The Minister warned that “the action we require involves collective action by many stakeholders”. Coordination of stakeholders can be time consuming and challenging. It will require buckets of political capital.</p>
<p>Strong and committed leadership in government and beyond will be critical to the ability of this budget to deliver the growth supporting reforms which have been promised.</p><img src="https://counter.theconversation.com/content/55395/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The Graduate School of Development Policy and Practice which Alan Hirsch directs receives funds from the National Treasury and other government departments. </span></em></p>There are many good things about the budget, including the promised cut to the payroll, but many of the key commitments relating to how policies will support growth are, at best, pointers.Alan Hirsch, Professor and Director of the Graduate School of Development Policy, University of Cape TownLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/544052016-02-16T23:02:23Z2016-02-16T23:02:23ZAn uneasy marriage: planners, public and the market struggle to work well together<p>Governments regularly extol the benefits of involving citizens and the private sector in planning land use and providing infrastructure.</p>
<p>Take, for instance, the newly minted Greater Sydney Commission. It will deliver land use plans for six Sydney districts (plans that can override local council plans). The commission, it is <a href="http://www.planning.nsw.gov.au/Plans-for-Your-Area/Sydney/A-Plan-for-Growing-Sydney/Greater-Sydney-Commission/">promised</a>, will “work closely with local councils and communities” to help them “get the most out of their neighbourhoods and suburbs”.</p>
<p>But what does this mean in practice? Tensions are mounting between the professional practices of government planners, the participatory frameworks of planning departments and the private sector’s increasing role in shaping Australian cities.</p>
<h2>An untenable planning governance system</h2>
<p>In our <a href="http://www.tandfonline.com/eprint/3EchHiMWWNDxDXGMaFbn/full">newly published research</a>, we found that, rather than fitting neatly together, there are fundamental difficulties in reconciling professional planning practices, participatory planning frameworks and market-led models of infrastructure provision. Unfortunately, little consideration has been given to the perhaps irreconcilable incongruities of these three processes.</p>
<p>Each dictates a different source of power to set planning agendas and make planning decisions. Each also locates this power with different people in different locations or institutional sites.</p>
<p>Importantly, enabling a suite of governance processes in one planning process can undermine important aspects of the others. For instance, governments might undermine the effectiveness of their planners if too much decision-making and agenda-setting power is devolved to “the market” or “local citizens”, or both.</p>
<h2>Professional planning</h2>
<p>In Australia, state-elected politicians hold the <a href="http://alga.asn.au/?ID=155">constitutional authority</a> to set the planning agenda and make planning decisions on behalf of citizens. Each state and territory devolves some of that power to local councils.</p>
<p>Within both state and local government, elected officials – operating within a system of “technocratic government” – defer some of their powers to planning professionals in their departments.</p>
<p>In planning, the line between state and local (and sometimes federal) authority is always shifting. Governments engage in intense intra-governmental politics about the scale at which to govern Australia’s cities. And this is expected to intensify.</p>
<p>The more pressing question is how direct community participation and the use of the private sector might fit within this politically charged planning system.</p>
<h2>Participatory planning</h2>
<p>In recent decades, a trend in urban planning has been to recommend a move away from “top-down” comprehensive planning towards strategic planning based on direct citizen participation.</p>
<p>Many government-led citizen participation events are characterised as an opportunity for citizens to play a more direct role in the planning decisions that affect them. We are led to believe that citizens in these more direct forms of democracy hold some agenda-setting and decision-making power. </p>
<p>But, in our technocratic system of government, is it possible to include local citizens in planning in the ways the government proposes? Are elected representatives and planning professionals actually handing over some of their technocratic planning power to citizens? </p>
<p>We are not arguing against the inclusion of citizens in local or state planning matters. What is missing from such policies is a process to incorporate community participation into the broader technocratic planning system. This is further complicated by market-led development.</p>
<h2>Market-led planning and development</h2>
<p>Under market-led planning and development regimes, elected politicians still hold the constitutional authority to set the urban planning agenda and make decisions.</p>
<p>However, market-led development requires that planning professionals defer some of their agenda-setting and decision-making power to market forces and private sector actors. They do so through various contractual arrangements, such as <a href="http://infrastructureaustralia.gov.au/policy-publications/public-private-partnerships/">public-private partnerships</a>. How does this work in practice?</p>
<p>The power to enable or restrain private sector power and to bring together market-led and professional planning processes remains with elected politicians. </p>
<p>When the government enters into a contract with a private sector actor, the responsibility to manage private sector insolvencies and other market failures largely falls to the government’s technocratic managers. This happens – possibly through bailouts – to ensure public infrastructure and services are still provided.</p>
<p>Professional planners are now required to apply <a href="http://www.tandfonline.com/doi/abs/10.1080/07293682.2015.1135816?tokenDomain=eprints&tokenAccess=3EchHiMWWNDxDXGMaFbn&forwardService=showFullText&doi=10.1080%2F07293682.2015.1135816&doi=10.1080%2F07293682.2015.1135816&journalCode=rapl20#.Vr1CdpN96Ho">financial criteria</a> to social and physical planning concerns. Economic performance has become a key decision-making mechanism. </p>
<p>The private sector now manages many large infrastructure projects that have significant public interest imperatives, which were once considered the remit of government.</p>
<p>The power of professional planners to set the planning agenda and make decisions is diluted by private sector contracts that lock in planning decisions and rule out transparency. This is the result of <a href="http://www.acag.org.au/ccpi.htm">commercial-in-confidence</a> legal arrangements and public-private partnerships.</p>
<p>In short, the enabling of market-led planning limits both the actions of professional government planners and the government’s participatory planning desires. In effect, even if the government desired to delegate power to local citizens, some of that power already belongs to the private sector.</p>
<h2>Finding a way forward</h2>
<p>Planning departments around Australia are in a governance dilemma. They are attempting to build a planning system from an incompatible suite of planning governance processes across different tiers of government.</p>
<p>What is needed is a <a href="http://www.tandfonline.com/doi/abs/10.1080/07293682.2015.1135816?tokenDomain=eprints&tokenAccess=3EchHiMWWNDxDXGMaFbn&forwardService=showFullText&doi=10.1080%2F07293682.2015.1135816&doi=10.1080%2F07293682.2015.1135816&journalCode=rapl20">critical reappraisal</a> of bringing participatory, technocratic and market-led planning together within Australia’s various planning systems. Such a reappraisal needs to acknowledge how each governance system might enable or mitigate the efficacy of the others.</p>
<p>Until that takes place, government promises to directly include citizens in decisions about the future of their cities are likely to remain, at best, hollow and, at worst, misleading.</p><img src="https://counter.theconversation.com/content/54405/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dallas Rogers receives funding from the Henry Halloran Trust.</span></em></p><p class="fine-print"><em><span>Laura Schatz receives funding from the Henry Halloran Trust. </span></em></p>Tensions are mounting between the professional practices of government planners, processes of public participation and the private sector’s increasing role in shaping Australian cities.Dallas Rogers, Lecturer in Urban Studies, Western Sydney UniversityLaura Schatz, Lecturer in Geography and Urban Studies, Western Sydney UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/522042015-12-11T04:14:19Z2015-12-11T04:14:19ZWant to build better cities? Get the private sector involved in rail projects<figure><img src="https://images.theconversation.com/files/105361/original/image-20151211-31729-qkc3ud.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Rail needs to go where it will do the most to reinvigorate cities.</span> <span class="attribution"><span class="source">Tooykrub / Shutterstock.com</span></span></figcaption></figure><p>Our cities are slowing down. Traffic speeds have slowed in the world’s cities for 30 years and <a href="http://theconversation.com/malcolm-turnbull-wants-to-embrace-disruptive-technology-he-can-start-with-solar-power-storage-47567">rail transit</a> is now faster than road speeds in most cities.</p>
<p>Rail is needed in all of the world’s cities as it can enable travel time savings and space efficiencies <a href="http://islandpress.org/book/the-end-of-automobile-dependence">no longer achievable by car and bus</a>. Rail can carry 20 times as many people compared to a single lane of freeway and five to 10 times that of a bus way.</p>
<p>The problem for getting more rail is obviously funding. Prime Minister Malcolm Turnbull <a href="http://www.afr.com/news/policy/budget/turnbull-seeks-ways-of-tapping-into-landvalue-gains-from-new-rail-projects-20151011-gk68ct">has stated</a> that he wants to see a greater involvement of private sector funds in urban rail.</p>
<p>How can this be done?</p>
<h2>The link between rail and development</h2>
<p>Financing of rail in the 19th and early-20th century was undertaken through land development partnerships opening up new suburbs. It was profitable for the companies and created the tram and train suburbs we now love.</p>
<p>By the 1950s rail had lost its advantage as cars and buses offered up better time savings. These flexible modes could also open up land between the rail corridors and further beyond them. That era is over in most cities as easy land has been developed and traffic has stifled the time advantages. </p>
<p>We therefore need a different way of funding and financing rail projects that can bypass traffic and at the same time create opportunities to redevelop our cities. </p>
<p>The rail projects from 150 to 50 years ago were based on how much land could be developed to finance their projects. I have proposed a new entrepreneur-led rail approach based on how much land can be developed – or redeveloped – for financing the rail construction and operations.</p>
<p>This new approach turns traditional transport planning on its head.</p>
<h2>A finance model for entrepreneurs</h2>
<p>Instead of predicting numbers of people who could use a railway line based on present land use, this model starts by predicting how much land can be developed as the fundamental source of the funding. </p>
<p>After we plan the land development as the basis of financing we can estimate the potential number of people using the railway. The government, in partnership with private proponents, can assess different levels of passengers based on different levels of land development. </p>
<p>This is therefore an entrepreneur’s approach to rail. It cannot be done simply by government planners as land development is mostly a private enterprise activity.</p>
<p>The process is therefore reversing the traditional transit planning approach, as you can see below. On the other hand the entrepreneur’s approach starts with land use, develops financing (and funding) from this and then can estimate transit numbers as the basis for detailed infrastructure planning. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/105353/original/image-20151211-8291-1yfkuai.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/105353/original/image-20151211-8291-1yfkuai.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/105353/original/image-20151211-8291-1yfkuai.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=360&fit=crop&dpr=1 600w, https://images.theconversation.com/files/105353/original/image-20151211-8291-1yfkuai.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=360&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/105353/original/image-20151211-8291-1yfkuai.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=360&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/105353/original/image-20151211-8291-1yfkuai.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=453&fit=crop&dpr=1 754w, https://images.theconversation.com/files/105353/original/image-20151211-8291-1yfkuai.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=453&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/105353/original/image-20151211-8291-1yfkuai.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=453&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Reversing the traditional transit planning approach (above) with the entrepreneur approach (below).</span>
<span class="attribution"><span class="source">Peter Newman</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>It’s possible in the future a <a href="https://en.wikipedia.org/wiki/Bus_rapid_transit">bus rapid transit system</a> could be financed using a similar model, however this would require the widespread adoption of electric busses. </p>
<h2>The role of government</h2>
<p>The idea of the model is to put the onus on financing rail on the private sector. The private sector would build, own, operate and finance rail development. It would necessarily require a Public Private Partnership to ensure public goals are met.</p>
<p>These include linking into the rest of the public transport system, the fares, the frequencies, and, most importantly, how to enable redevelopment goals to be met around stations. An <a href="http://www.dtf.vic.gov.au/Infrastructure-Delivery/Alliance-and-traditional-contracting">alliancing approach</a> may be the best way to enable such a partnership. </p>
<p>Government may chip in, but government funding should be more than matched by land development-based financing from the private sector. There are a <a href="http://www.tandfonline.com/doi/abs/10.1080/08111146.2014.968246">range of methods</a> for estimating how much money can be made from investing in the land around stations, and how much money goes into government coffers from the increased land value.</p>
<p>This model would not only enable federal, state and local money to go much further but it may even need very little government capital, just support for the process of land development as the driving base. </p>
<p>The alternative will be to continue seeing rail projects as welfare rather than the market-oriented opportunity they have now become in congested cities. In the present government-funded system investors come in and take windfall profits from the land around stations, thereby capturing much of the economic value created. This approach finds a way of recycling such value into the building of rail lines as well as the dense station precincts. </p>
<p>These rail projects would provide much needed transport infrastructure, but also provide the basis for reinvigorating our cities over the next 30 years.</p><img src="https://counter.theconversation.com/content/52204/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Newman does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Building more rail shouldn’t be reliant on the public purse.Peter Newman, Professor of Sustainability, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/412402015-05-06T05:05:59Z2015-05-06T05:05:59ZNon-resources states Vic and NSW now in best budget position<p>Victorian Treasurer, Tim Pallas, delivered the Andrews’ Labor government’s first budget yesterday, and promptly received a warm ovation. His budget was aimed squarely at Labor’s heartland, shifting spending from privately constructed roads to publicly delivered services in health, education and community services, while simultaneously keeping net debt low, and the operating account firmly in the black. </p>
<p>In so doing, Pallas drew attention to a marked shift that has occurred in the Australian federation, which has seen a two speed economy transform into a two budget one instead. Whereas the former was based on the resources boom, the budget divide is based on something different, with the two non-resource driven economies of Victoria and NSW emerging with the strongest budgets in the land. </p>
<p>Both are now running substantial budget operating surpluses, both have managed to crank up infrastructure spending to record levels, and both have managed to keep service delivery growing, albeit under what might end up being quite different models.</p>
<p>NSW has opted to continue its privatisation push, preferring Public Private Partnerships, long-term leases and outsourcing of community services over traditional procurement and public sector delivery, irrespective of the cost.
In fact, NSW premier Mike Baird reacted poorly during the recent NSW election to <a href="https://theconversation.com/power-privatisation-is-bad-for-the-nsw-budget-bottom-line-38659">suggestions</a> that the privatisation model might be good for a lot of reasons, but the budget bottom line was not amongst them.</p>
<p>Victoria has chosen a different path. Pallas’ budget has placed service delivery over infrastructure as a priority, and has budgeted for a whopping 7.1% increase in spending on public service wages and salaries. Some of this will fund pay rises, but the bulk will end up in new staffing, following years of austerity under the Coalition. </p>
<p>Both states have managed to put in place budgets that are strong enough to withstand the funding cuts coming out of Joe Hockey’s disastrous first budget, which managed to cost shift a lot of the federal austerity measures to the states by way of cuts to specific purpose grants for health, community services and education. </p>
<p>In contrast stand the other states whose budgets remain stretched, but also under varying conditions of repair. South Australia long ago abandoned its commitment to a AAA budget, and has pragmatically accepted running small operating deficits in the interests of the overall health of the economy. In 2015/16 the operating accounts are set to return to surplus. </p>
<p>Remarkably, despite these apparently unfashionable settings, the Jay Weatherill-led Labor government was returned last year, albeit with a two party vote that fell short of anything like a majority. Weatherill has turned the Federal cuts to his political advantage, pointing successfully to Joe Hockey as a reason why budget consolidation in his state is proving so hard.</p>
<p>Tasmania is also doing it tough, and its newly elected Liberal government has found that turning operating deficits into surpluses is a mighty hard equation, particularly with an economy that’s struggling to grow in real per capita terms. It would be best to continue to use the budget to try to balance the economy, rather than force a budget correction that could trigger a costly recession. </p>
<p>The resource states of Queensland and Western Australia are also struggling, with the latter facing a perfect storm when not so long ago it was facing a perfect summer. Queensland’s financial woes are largely one of self-perception, reflecting budget settings far harsher than other jurisdictions and a strange determination by the now-ousted Campbell Newman government to talk down its public finances. </p>
<p>Whereas all the other states measure their financial bottom lines by pointing to their operating balance and net indebtedness, Queensland has opted for the unnecessarily tougher goal of keeping the budget in the black and reducing gross liabilities. </p>
<p>And in contrast to the other States prepared to use both tax increases and spending cuts to adjust their bottom lines, Queensland has focused instead on the latter while boasting that they have the lowest taxes in the nation. When stripped of all the talk of gloom and doom, Queensland’s public accounts are really not that bad.</p>
<p>It is Western Australia that stands out as the state that is in arguably the most financial trouble. Despite a booming economy, it has overseen a massive lift in recurrent and capital spending, and a shift from operating surplus to deficit, with net debt rising fast. </p>
<p>It allowed the budget to become dependent on iron ore royalties without diversifying the economy, so when the iron ore price inevitably tumbled it blew a cool $1 billion throwing the operating budget unexpectedly into the red. GST payments from the Commonwealth fell dramatically during the boom and are now starting to flood back, but not quickly enough to make up for the collapse in royalties. Strangely, the WA Government has said little about Hockey’s budget cuts, preferring instead to focus its energies on trying to get more from the GST pool, which can only come at the expense of the people in the rest of the nation.</p>
<p>The Victorian budget has muddied the waters of what seemed to be a pretty clear pattern, putting lie to the claim that a resources boom is necessary for a strong budget position.It shows that it is possible to restore public services at the expense of privatised roads and still get a positive public reception.</p><img src="https://counter.theconversation.com/content/41240/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Hayward does research work for trade unions, public sector entities and has advised without payment the Victorian Treasurer, Tim Pallas, while he was in opposition. </span></em></p>Victoria’s Labor government has eschewed an austerity approach in its first budget, in contrast to some of its state counterparts.David Hayward, Dean, School of Global, Urban and Social Studies, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/402322015-04-16T20:25:29Z2015-04-16T20:25:29ZEast-West Link shows miserable failure of planning process<p>Two cheers for resolving the East-West toll road project mess. The agreement reached by the Andrews Government in Victoria to pay the consortium $339 million for its bid costs and early work is unprecedented, but also honourable and transparent. It was always going to involve considerable pain on all sides, because it was created by Labor, by the Coalition and by the consortium in the first place. But what a tangled government-business ‘partnership’! </p>
<p>Signed contract deals, a <a href="http://www.abc.net.au/news/2015-02-05/east-west-link-victorian-opposition-releases-secret-side-letter/6072904">hurried side letter</a>, four court challenges and an election fought and won over whether the five kilometre East-West toll road was good for Victorians or not… The signed business contract said “yes”, the democratic verdict was “no!” All the hallmarks of a comedy show on television. But it was our reality; $339 million down the drain. Opportunistic behaviour on all sides fanned along by a bunch of voracious bankers and eager businesses counting their future revenues.</p>
<h2>Payout is lesser of two evils</h2>
<p>Perhaps this agreement is the lesser of two evils, though. After all, with a benefit cost ratio for the project of just 0.45, after spending $10 billion we would also be losing around $5.5 billion straight down the drain. No-one in their right mind would “invest” in such a massive waste. In this respect, the price tag of only a few hundred million dollars to stop this financial catastrophe may be cheap.</p>
<p>But let’s talk about the bigger picture here. The past two Victorian elections have resulted in huge Public-Private Partnership controversies - firstly over a $5 billion desalination plant (which the conservatives apparently tried to renegotiate) and the second over the East-West toll road (which Labor, smelling the blood of infrastructure politics, did renegotiate.) </p>
<p>Both episodes have put into doubt the State’s professional planning capacity and resulted in arguably illegitimate project proposals being implemented through long-term privately funded infrastructure contracts. </p>
<h2>Stop burning money</h2>
<p>A new approach is needed so that we can make better infrastructure decisions. It is only by doing this that we will avoid burning so much of our money on stupid “Taj Mahals”. Business Councils can also play a role here by stopping their self-serving calls for new projects to replace the current failed ones. Perhaps they could devote their energy to ensure current businesses pay their tax bills here instead of sheltering in faraway tax havens? </p>
<p>Contract renegotiations of this size are extraordinary. And they are also tough because of our dual expectations. On the one hand, we expect government to maintain commercial legitimacy, drive a hard deal in our name, and behave in legally responsible ways. And as part of this we assume that governments believe in the sanctity of commercial contracts. After all, private contracts are the building block of the economy. </p>
<p>But on the other hand, we equally expect governments to take their democratic mandate and carry out policies taken into an election. In big projects such as the Desal plant and the East-West toll road, there is a clash of expectations. We want government to be both commercially sensible on our behalf, and democratically responsible on our behalf.</p>
<h2>Legitimate projects, not ministerial favourites</h2>
<p>Of course governments have always been able to sign us up to long-term projects and long-term debts - whether aluminium plants, hospitals or dams. And we will never take all the politics out of public infrastructure projects - this would be naive. </p>
<p>We do though need governments to put infrastructure priorities into a bipartisan process in which legitimate projects gravitate towards the top (instead of just the Minister’s personal favourites), undertake competent economic assessments (instead of back-of-the-envelope trumped-up business cases worth less than the napkin on which they were developed) and seriously consider whether dozens of smaller expenditures are likely to be better than the “Taj Mahal” mentality that government egos still seem to thrust on Victorian citizens. </p>
<p>It would also be better if governments could leave aside their <a href="http://www.theage.com.au/victoria/911b-melbourne-metro-swanston-street-project-to-go-ahead-daniel-andrews-20150416-1mm3wh.html">love of long-term infrastructure contracts</a>, private finance and commercial secrets and level with us. We are not mugs. Citizens expect to know what governments are doing in their name, how they are behaving with the power they temporarily hold and how the relationship they have with businesses is being employed. </p>
<h2>Big secrets?</h2>
<p>Can this be solved through legislation stopping governments from signing contracts before elections? I doubt it. Business and politics are both incredibly innovative in getting around new rules. But let’s try anyway. Big infrastructure projects imply big decisions, with big risks. Public risks. </p>
<p>Our current Victorian PPP habit, though seems to imply big secrets, and big “success” fees, even for failed public projects! These are particularly galling. But together, these form a cocktail of complex ongoing deals that could cripple the state if we keep going like this. If we can’t improve our infrastructure priority planning, our assessments, our transparency and bipartisan discourse we will repeat the recent history many times over in coming decades. So the real task here is to take another road. </p>
<p>Independent institutionalised professional planning needs to be reintroduced into the picture, not sidelined. Consultation needs to be undertaken. And priorities need to be re-established so that debates around medium and long-term project options, alternatives and relative timing can occur. Not just the immediate personal choices of ministers as if they were purchasing something in a retail shop. </p>
<p>We need to get on and re-professionalise for a more democratic approach to medium and long-term infrastructure success. And quickly.</p><img src="https://counter.theconversation.com/content/40232/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Graeme Hodge receives funding from the Australian and New Zealand School of Government for research into the long term governance of public-private partnerships. He is affiliated with the Accountability Roundtable.</span></em></p>How many times do taxpayers have to go down the same road before governments seriously assess how expensive infrastructure decisions are made?Graeme Hodge, Professor, Monash Centre for Commercial Law and Regulatory Studies, Faculty of Law, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/346002015-01-27T22:41:41Z2015-01-27T22:41:41ZWhy Sydney’s global infrastructure hub should be wary of PPPs<figure><img src="https://images.theconversation.com/files/69725/original/image-20150122-27551-1cpuodb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A global infrastructure shortfall looms - but governments need to carefully assess the merits of private capital.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/stuckincustoms/408701960/in/photolist-C7GRw-rvLMe-8uGDam-gJvfd-8K11NN-5z5xgm-auSdAB-4pH9g8-d3mrrb-iVFkdw-aD5nGM-6ecu1y-pFjDvH-QYUcU-2eLLb-6FSVnk-6Bh5W8-5GCNYJ-9DSRqU-n244Nf-69dsV6-ELS9m-eqySu3-kMtWpt-7VV98t-X94Td-hkQAiA-dYueGw-9kSBvS-3XUjTe-nLktuk-bTh172-3Cw1cR-oZh7ga-yKr5j-nyd7g-dttojn-6S7VKd-grf1U2-pe2cpX-pTLkkP-nWEt78-atyG93-aNwgL6-4d5LCZ-gWAdmf-9cdh3R-9i6b5b-65BmYQ-9gFcfu">Flickr/Trey Ratcliff</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>While in Davos representing Australia at the World Economic Forum, Assistant Treasurer Josh Frydenberg has <a href="http://mpegmedia.abc.net.au/rn/podcast/2015/01/bst_20150122_0808.mp3">enthusiastically extolled the virtues</a> of the <a href="https://theconversation.com/building-big-does-australia-need-a-global-infrastructure-hub-32026">Global Infrastructure Hub</a> as a way of funding an infrastructure shortfall, particularly in developed nations.</p>
<p>Frydenberg told the ABC:</p>
<blockquote>
<p>“There is a great deal of interest here at Davos in what Australia is doing because essentially this infrastructure hub is a knowledge sharing platform. It is about sharing best practice across the funding of infrastructure, the construction of infrastructure and the prioritising of infrastructure. It is estimated there is a $50 trillion deficit in infrastructure over the next decade and Australia had a real strength in this area.</p>
</blockquote>
<p>In <a href="https://theconversation.com/au/topics/g20-brisbane">Brisbane last November, G20 countries</a> endorsed the idea of the establishing the hub and agreed to establish it in Sydney to harness perceived Australian expertise, especially in Public Private Partnerships (PPPs). </p>
<p>I am not ideologically for or against PPPs and can see the case for them every time I visit a developing country to give governance advice and walk through a brand new terminal that cannot be the most important priority for limited government capital in poor cash-strapped states. But I am arithmetically opposed to PPPs which do not add up, cautious about self-interested spruiking, almost as leary of private monopolies as Adam Smith and concerned about the governance issues associated with PPPs. </p>
<h2>Australia’s experience</h2>
<p>Australia does have experience of PPPs from which the world can and should learn. But we may offer as many lessons in what not to do as what should be done. Brisbane is the city of bankrupt PPP tunnels and Sydney is the place where huge fees were generated even in projects that spectacularly failed or succeeded by extracting monopoly rents from privatised monopolies. </p>
<p>Melbourne’s Citylink innovated by including agreements to restrict competing routes (for instance, reducing the lanes on busy arterial Toorak Road and banning a Tullamarine rail-link) - measures that profit the contractor but limit the increase in total capacity by less than the capacity of the new road. When similar lane closing measures were included in Sydney’s cross city tunnel, the public outcry led to the cancellation of those measures. Sydney’s bankrupt Cross-City and Lane Cove tunnels were joined by two in Brisbane where "optimistic” traffic flow projections also led to bankruptcy (of the tunnel companies, not the scheme promoters). </p>
<p>For supporters of PPPs, this just showed that governments should take some of the core risks so that investors could enjoy more secure returns (suggested by experts at the B20 to be 7% real return). Accordingly, the new model has the government providing some of the funding and paying “availability fees” to the contractor. </p>
<p>An equally good example of value for money conundrum was the now-dumped East-West link in Melbourne. This involved government providing the bulk of the funding (A$4 billion), with the contractor providing A$2 billion, construction management and ongoing maintenance worth less than A$5 million per annum (based on a much larger <a href="http://www.leightoncontractors.com.au/projects/gateway-motorway">contract</a> for maintaining two bridges and 20km of motorway in Brisbane for 14.5 years cost $80 million). </p>
<p>At the end of the 25 years, the tunnel would have reverted to the government. This was, in essence, a very expensive hire purchase agreement. If the money had been borrowed at the Commonwealth’s 15 year bond rate Victoria could have paid for the maintenance and applied the rest of the A$340 million to paying off the loan in 13 years rather than 25 (leading to the state being better off by more than $4 billion).</p>
<p>To the extent that the undisclosed escalation clause increases the A$340 million, the disparities merely increase. The difference between the two represents the higher costs of borrowing by the contractor, the profit and the fees. Ironically, one of the problems with the East Link project was that it was hard to see value for money (VFM). If the government had chosen a less expensive means of funding, it might have come much closer to VFM standards. </p>
<h2>Economics of PPPs</h2>
<p>This raises a more general question about the economics of PPPs. Economist Nick Gruen <a href="http://www.crikey.com.au/2010/11/25/gruen-paying-for-australia%E2%80%99s-infrastructure-deficit">demonstrated</a> that “hard” infrastructure projects, such as roads and water projects are inherently more expensive as a result of higher interest rates, transaction costs and the need to make a profit. He estimated that, even after adjusting for risk, NSW is A$4.6 billion worse off for having chosen PPPs for some of its motorways.</p>
<p>Why should governments choose more expensive infrastructure? Expensive infrastructure is a problem for growth, not a solution. It raises the costs of other businesses and also raises the cost of capital for exporting and import competing businesses by providing such good returns on less risky investments. Business should be careful not to promote the interests of some businesses that would make money out of more expensive infrastructure for business in general.</p>
<p>The irony of arguments from the banking and finance sector that infrastructure should be funded from more expensive sources is that much of the extra expense is generated by the profits they demand and the fees they extract. Where a government ends up paying A$340 million per annum in “availability payments” instead of A$65 million in interest and maintenance - preventing the state paying down an extra A$4 billion debt - the argument is intellectually bankrupt.</p>
<h2>Governance issues</h2>
<p>The <a href="http://integrity20.org/">Global Integrity summit</a> considered infrastructure governance issues in some detail. Here’s the World Bank’s Vice President in charge of integrity, Leonard McCarthy: </p>
<blockquote>
<p>“At their best, PPPs can provide rapid injections of cash from private financiers, delivery of quality services, and overall cost-effectiveness the public sector can’t achieve on its own. But at their worst, PPPs can also drive up costs, under-deliver services, harm the public interest, and introduce new opportunities for fraud, collusion, and corruption.</p>
</blockquote><img src="https://counter.theconversation.com/content/34600/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Charles Sampford receives funding from the ARC, DFAT and Griffith University. I would materially benefit from the building of the East West link</span></em></p>While in Davos representing Australia at the World Economic Forum, Assistant Treasurer Josh Frydenberg has enthusiastically extolled the virtues of the Global Infrastructure Hub as a way of funding an…Charles Sampford, Director, Institute for Ethics, Governance and Law, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/346692014-11-26T01:21:12Z2014-11-26T01:21:12ZThe road ahead: why infrastructure should not be used for political point scoring<figure><img src="https://images.theconversation.com/files/65455/original/image-20141125-2393-gb2kak.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Protesters rally against Victoria's East-West Link project</span> <span class="attribution"><span class="source">Courtney Biggs/AAP</span></span></figcaption></figure><p>Infrastructure projects are ripe for political point scoring. None more so than Private Public Partnerships (PPPs), which allow private companies to profit from key infrastructure. Yet political debate, especially during an election, overlooks why key projects actually need PPPs.</p>
<p>As governments face shrinking revenues and increasing infrastructure needs, PPPs can be used to harness private sector finance and increase the total spending on projects.</p>
<p>These structures enable governments to provide key infrastructure such as roads, schools and hospitals that might otherwise be unaffordable, or provided over a substantially longer time frame if traditional public debt financing was used.</p>
<p>The primary argument for PPPs is they provide a better value-for-money proposition. Privately financed projects, incentivised by the “profit motive”, are better able to bring projects to completion on time and on budget. <a href="http://www.infrastructureaustralia.gov.au/publications/files/National_PPP_Forum_Benchmarking_Study_Ph2_dec08.pdf">Studies within Australia</a> show PPPs experience lower cost over-runs (4.3% compared to 18%) and less construction delay (1.4% compared to 25.9%) than traditionally procured infrastructure.</p>
<p>PPPs also need to source their revenue, and recoup their costs, from customers who are willing to pay for the use of the infrastructure. This need to attract users helps ensure consumers are given a greater value proposition with respect to service and quality.</p>
<p>For the private sector, PPPs offer a potential conceded revenue stream. However, in order to capture this “reward”, the private sector bears a number of risks. These include completion, maintenance and demand risk. Only if the asset performs to its contractual specifications is the private sector able to realise the investment.</p>
<p>In order to complete due diligence, debt financiers spend a lot of time and money on understanding and pricing risk. Other costs are incurred in the planning and design phase of tendering for projects such as geotechnical work, engineering design and market analysis. Altogether they represent a significant investment by the private sector, often in the vicinity of A$15 to $25 million. </p>
<p>Once a bid is awarded, the winner often is tied to the outcome of that single project. The majority of bidders do not have the ability to diversify over multiple activities; they invest their resources in a small number of projects or even a single PPP.</p>
<p>Consequently, once a PPP is determined as being the best tool to finance a desired piece of infrastructure, it is important that the playing field over which the risks and responsibilities will be assigned is stable. Any changes to the rules of the game can leave the private tenderer out of pocket and highly exposed to further losses. For this reason, the private sector negotiates compensation clauses should the government position change. </p>
<h2>The East-West link fallout</h2>
<p>The announcement in Victoria that, if elected, a Labor government will scrap the East-West link is an example of why such clauses are included. It is also an example of what can happen if infrastructure decisions are made for the wrong reasons. </p>
<p>Should the East-West link be abandoned, Victorian taxpayers stand to lose in excess of A$1 billion in compensation payments to the private entities involved in the winning tender. This compensation significantly erodes the benefits of a PPP’s structure, such as the ability to free up public capital to spend on other government services and to avoid levying higher taxes to finance infrastructure investments. </p>
<p>These losses are not confined to the current project. Realised political risks will have a cascading effect across the portfolio of infrastructure requirements. </p>
<p>When done properly, PPPs create an efficient and productive working partnership between the public and private sector. The erosion of good faith in PPP negotiations will have a detrimental impact on subsequent private sector investment.</p>
<p>The private sector already views infrastructure as a risky prospect without the government fickleness. A government backtrack on the project will have a negative impact on any hope of increasing private sector engagement in the space, including harnessing superannuation funds.</p>
<p>Reneging on signed agreements will also send a signal to the market that Victoria is a risky place to do business. It will make it difficult to attract PPP tenders without significant price increases to compensate for the increased risk.</p>
<p>The scenario highlights why infrastructure decisions should not be used as a political football. </p>
<p>Good infrastructure is important for economic growth, job creation and living standards. Victoria would be wise to adopt a more systematic approach to prioritising and selecting good infrastructure projects.</p>
<p>A considered approach to infrastructure decision making will provide better certainty for both the market and the community, enabling future decisions to be made with more confidence.</p><img src="https://counter.theconversation.com/content/34669/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Matthew Beck does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Infrastructure projects are ripe for political point scoring. None more so than Private Public Partnerships (PPPs), which allow private companies to profit from key infrastructure. Yet political debate…Matthew Beck, Senior Lecturer in Infrastructure Management, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/337812014-11-19T09:22:59Z2014-11-19T09:22:59ZHere’s how to fix America’s crumbling bridges<figure><img src="https://images.theconversation.com/files/64738/original/svqm3pg4-1416243871.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Some US bridges are currently living out their twilight years.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/bobjagendorf/8103534059/in/photolist-dm5Jmt-o4cUUd-pjF1JG-9UpzSf-aNcXHz-6pkec2-a1ehEi-eJyQr3-nsbJMP-6kW3ho-bQ5xzn-dR3Jfu-9ScLCL-et7WET-o3XC1W-bmz1Dj-6V9M8Q-nmzz7-nnSNuj-81nDmt-tdMzn-5SSFxZ-e8rEqd-cPmqu-btnRhp-cNbAab-aPRmZ4-jBSfsP-aPJUzM-nkFTRJ-xNDP8-pkd2rR-8uq59A-aQGSqr-9CyJ65-fDvhKW-nTsUmV-oVV2fb-9WZh7R-oAEhBe-5xiAHW-4x1Tjk-65fmUY-nEMdC4-8gfpgC-oZat1U-ixXhkr-ev4wna-4tL3qC-6HMzvL">Bob Jagendorf</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>There are about 600,000 bridges in the United States, and about one in four is <a href="http://www.fhwa.dot.gov/bridge/deficient.cfm">classified</a> as functionally obsolete or structurally deficient. This doesn’t mean they’re in danger of imminent collapse; they may be simply too narrow or built for lighter traffic than today’s standards. Bridges that can’t support heavy trucks have weight restrictions posted.</p>
<p>There are plenty of repairs that need to be done. But drivers groan when individual bridges are finally slated for reconstruction since these repair projects – along with accompanying traffic snarls – can seem interminable. </p>
<h2>Who writes the checks?</h2>
<p>The federal government pays much of the costs to repair and replace highway bridges, but it is up to the individual states to prioritize the work. Under current practice, the federal money comes principally from <a href="http://www.fhwa.dot.gov/infrastructure/gastax.cfm">taxes on fuel</a> – 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel. The revenue goes into the <a href="http://www.fhwa.dot.gov/reports/fifahiwy/fifahi05.htm">Highway Trust Fund</a>. However, because motor vehicles have become more fuel efficient and people tend to be driving less, the trust fund has been woefully underfunded in recent years. Last summer, Congress passed a stopgap measure to supplement the trust fund <a href="http://www.cbsnews.com/news/congress-passes-bill-to-prevent-cut-in-highway-funding/">through May 2015</a>. In the upcoming Congress, there’s likely to be considerable discussion about a more permanent fix.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/64623/original/r4qwkz94-1415999005.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/64623/original/r4qwkz94-1415999005.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/64623/original/r4qwkz94-1415999005.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/64623/original/r4qwkz94-1415999005.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/64623/original/r4qwkz94-1415999005.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/64623/original/r4qwkz94-1415999005.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/64623/original/r4qwkz94-1415999005.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/64623/original/r4qwkz94-1415999005.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Hopefully not a bridge to nowhere.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic.mhtml?id=37230340&src=lb-29877982">Construction image via www.shutterstock.com.</a></span>
</figcaption>
</figure>
<h2>The slow process of building a bridge</h2>
<p>The traditional way a bridge has been built in America is for a state department of transportation to design the structure — either totally in-house or with the help of a consulting firm — and then issue a request for proposals from qualified construction companies. If not required to accept the lowest bid, the state may take into account such non-fiscal factors as past performance of the bidder, time to completion of the project and aesthetics. Only after a contract has been signed can construction begin.</p>
<p>This serial process takes time and delays can occur for a variety of reasons. Complications or contradictions in the design may arise, which can halt construction and require a return to the drawing board. When changes are necessary, disagreements can arise over who – the state or the contractor — should be held financially responsible. This can lead to legal challenges. Sometimes a contractor goes bankrupt in the middle of a job. Even when there are no technical or fiscal complications, environmentalists and other interest groups may call for a halt to work, which can also lead to further delays. Then there is the weather, which can cause delays in a construction project not otherwise challenged.</p>
<p>A well-crafted construction project will include monetary penalties on the contractor for not meeting deadlines. These can amount to tens of thousands of dollars for every day that the new bridge is not opened to traffic. On the other hand, if the bridge is finished ahead of schedule, the contractor will typically receive a bonus. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/64746/original/4qj9h8rb-1416247138.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/64746/original/4qj9h8rb-1416247138.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/64746/original/4qj9h8rb-1416247138.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/64746/original/4qj9h8rb-1416247138.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/64746/original/4qj9h8rb-1416247138.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/64746/original/4qj9h8rb-1416247138.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=565&fit=crop&dpr=1 754w, https://images.theconversation.com/files/64746/original/4qj9h8rb-1416247138.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=565&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/64746/original/4qj9h8rb-1416247138.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=565&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Getting a bridge project completed can be like walking a tightrope.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic.mhtml?id=500742&src=lb-29877982">Bridge image via www.shutterstock.com.</a></span>
</figcaption>
</figure>
<h2>Newer ways to get bridges built</h2>
<p>Increasingly in recent years, especially where large construction projects are involved, state departments of transportation have preferred to enter into so-called design-build contracts. In this case, a single company is engaged to do the design and carry out the construction of a bridge. This arrangement involves design and construction teams working together from the start. Any complications and contradictions are likely to be resolved internally and quickly so that the project can proceed with minimum delay. New York’s nearly US$4 billion <a href="http://www.newnybridge.com/about/index.html">Tappan Zee Bridge</a> replacement project, currently the largest bridge project underway in the US, is a design-build project.</p>
<p>With government funding for infrastructure projects being so tight, an alternative has arisen in what are called <a href="http://www.investopedia.com/terms/p/public-private-partnerships.asp">public-private partnerships</a>, often abbreviated PPP or P3. In this arrangement, private investors assume the responsibility for financing and building a bridge or highway, and the investors are granted the right to collect tolls for what may be decades. The investors naturally believe they will realize a good return on their investment, even after they pay the public partner a sizable sum upfront for the concession. This upfront payment can be in the billions of dollars, which can be very tempting for a state or municipality struggling to balance its budget.</p>
<p><a href="http://www.post-gazette.com/news/transportation/2014/10/24/Pennsylvania-Department-of-Transportation-selects-partnership-to-replace-558-bridges/stories/201410240190">Pennsylvania recently entered</a> into a public-private partnership to finance, design, build and maintain over the course of 25 years 558 of the state’s bridges in need of repair or replacement. Although the state could do this kind of work itself, it would be limited in how much money it could spend annually. The private consortium will produce generic designs and order common structural components in quantity, something the state could not do within its annual budget. What would have taken the Pennsylvania department of transportation eight to 12 years to do under its normal procedures will be accomplished in just three. </p>
<p>Pennsylvania’s bridge replacement program was modeled after a <a href="http://www.modot.gov/safeandsound/index.htm">Missouri initiative</a> that repaired or replaced over 800 bridges in just three-and-a-half years, at a cost of $685 million. One of the features that made the project succeed was allowing the contractor to close a road and detour traffic rather than realign it where work was being done on a bridge. This not only saved the contractor the time and money it takes to divert traffic lanes but also provided a better environment for the construction workers, who could do their job more safely and quickly. Had the state transportation department been doing the work, voter and other political pressures would likely have argued against closing a road to work on a bridge. </p>
<p>Creative financing and contract arrangements like these are being implemented to repair and replace aging bridges more economically, quickly, and safely. We can expect to see more such sensible infrastructure work in the future.</p><img src="https://counter.theconversation.com/content/33781/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Henry Petroski does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>There are about 600,000 bridges in the United States, and about one in four is classified as functionally obsolete or structurally deficient. This doesn’t mean they’re in danger of imminent collapse; they…Henry Petroski, Professor of Civil Engineering and History, Duke UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/324572014-10-07T05:57:08Z2014-10-07T05:57:08ZThe pitfalls of the G20 infrastructure agenda<figure><img src="https://images.theconversation.com/files/60840/original/f74cq5cy-1412559197.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Global infrastructure agendas must not marginalise developing countries </span> <span class="attribution"><span class="source">www.shutterstock.com</span></span></figcaption></figure><p>Australia’s G20 infrastructure agenda aims to increase quality investment into global projects. The agenda advocates using the private sector to develop infrastructure in order to boost global growth and job creation. However, these initiatives need to ensure developing countries are not left marginalised.</p>
<p><a href="http://forumblog.org/2014/10/imf-public-infrastructure-return-investment/">Research</a> by the World Economic Forum argues that “increased public infrastructure investment can have positive effects on the macro-economy”. This is through raising output in the short term by boosting demand. The net long term effect, as the researchers argue, is to increase the economy’s productive capacity. </p>
<p>However, for many developing countries meaningful benefits from infrastructure investment hinge on the existence of sound legal frameworks and credible policy tools – something that remains woefully lacking in many parts of the African continent.</p>
<p>There are few developing countries endowed with development finance institutions holding healthy balance sheets. These countries also don’t possess sufficient fiscal weight to undertake massive public investment in infrastructure projects across energy, transport and water. </p>
<p>It is precisely for this reason that instruments such as public private partnerships (PPPs) are increasingly seen as silver bullets for building infrastructure in the developing world. They can attract equity and debt finance as well as the technical competencies required for implementing complex large scale projects. </p>
<p>When the G20 finance ministers and central bank governors met in Cairns this September, Australia championed the establishment of a knowledge sharing platform on infrastructure. This would presumably assist on how to structure PPPs and also address information gaps regarding available opportunities and investors.</p>
<p>However, the global infrastructure compact is yet to be formally endorsed at the G20 Brisbane Summit in November this year. It is also noteworthy that the first time infrastructure development emerged as a G20 focus area was during the Seoul Summit in 2010. Yet up until now the area has not gained much traction, beyond rhetoric, as a serious and actionable development theme.</p>
<h2>The Australian agenda</h2>
<p>To inform the G20 framework, the Australian government is drawing on its own Infrastructure Australia initiative. Established under the Labor prime minister Kevin Rudd in 2008, Infrastructure Australia is a central body responsible for planning and coordinating infrastructure across the country. While its main feature is the PPPs mechanism, Infrastructure Australia has various dimensions including an infrastructure priority list and tax incentives aimed at wooing the private sector. Prime Minister Tony Abbott is so committed to this agenda that he has even dubbed himself the “Infrastructure Prime Minister”. </p>
<p>Abbott’s goal is to internationalise the concept of Infrastructure Australia as part of his G20 legacy. This is despite criticism that PPPs tend to socialise private sector risk and lack developmental sensitivity. They can also be narrowly focused on value for money objectives above measures related to sustainability, environmental safeguards and inclusive development. True to its conservative ideological predisposition, Australia’s G20 presidency places primacy on private sector led growth as opposed to government directed efforts. </p>
<h2>Challenges to a successful G20 outcome</h2>
<p>There are three major challenges to the G20’s grand ambitions. The first is the G20 is institutionally weak with limited legitimacy. It lacks any teeth to enforce commitments. </p>
<p>If there is any embodiment of what <a href="http://www.newstatesman.com/politics/politics/2013/06/g8-g20-g-zero-why-no-one-wants-take-charge-new-global-order">Ian Bremmer</a> refers to as the G-Zero world in the domain of global economic governance, the G20 is the prototype. It has no leadership anchorage and its agenda shifts every year when the presidency changes hands from one country to another. Turkey may choose to have its own pet projects as the centrepiece of its G20 presidency in 2015. </p>
<h2>Underrepresentation of developing nations</h2>
<p>Second, a large number of countries affected by infrastructure constraints, especially in Africa, are underrepresented in the G20. They have no voice in the deliberations that could possibly affect them. Some of these countries, such as Nigeria and Kenya, are among the fastest growing economies in the world. They are also restructuring their state utilities and their infrastructure projects are magnets for both institutional investors and private equity funds. Without such key players, the G20 may miss out on important input on how to promote an economic recovery in the developing world.</p>
<h2>Too many competing initiatives</h2>
<p>Finally, there are too many competing infrastructure initiatives that are being simultaneously touted at a regional and global level.</p>
<p>They include China’s proposed Asia Infrastructure Fund, with a seed capital of US$100 billion, and the Asian Development Bank. India has also been pushing for a<a href="http://www.thehindubusinessline.com/industry-and-economy/banking/india-to-propose-setting-up-of-south-asian-development-bank/article6238562.ece"> SAARC Development Bank</a> of South Asian nations.</p>
<p>The African Development Bank’s <a href="http://www.cnbcafrica.com/news/special-report/2014/05/01/african-development-bank-to-launch-$3bn-infrastructure-fund/#">Africa50 Infrastructure Fund</a> is to be initially capitalised with US$3 billion. While the <a href="http://brics6.itamaraty.gov.br/media2/press-releases/219-agreement-on-the-new-development-bank-fortaleza-july-15">BRICS New Development Bank</a> was launched in Fortaleza, Brazil early this year. </p>
<p>In addition, the World Bank will also be soon launching its <a href="http://online.wsj.com/news/articles/SB10001424127887324577304579058660663794356">Global Infrastructure Facility</a>. This facility seeks to attract private sector participation in infrastructure supply as well as lessening the risk of such projects. This is precisely the same thing that Australia claims it wants to do. </p>
<p>It is open secret that China’s push for an Asia Infrastructure Fund is born out of dissatisfaction that the Asian Development Bank is dominated by Japan. Similarly, the BRICS New Development Bank and the supplementary currency reserve arrangements are viewed as a rival to the Western-dominated World Bank and International Monetary Fund. </p>
<p>If not managed well, these initiatives may just achieve the opposite of global cooperation. At worst, they could lead to misallocation of resources towards efforts that do not generate significant economic value for the regions of the world that need infrastructure investment the most.</p><img src="https://counter.theconversation.com/content/32457/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mzukisi Qobo does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia’s G20 infrastructure agenda aims to increase quality investment into global projects. The agenda advocates using the private sector to develop infrastructure in order to boost global growth and…Mzukisi Qobo, Senior Lecturer, International Political Economy, University of PretoriaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/317992014-09-18T05:26:13Z2014-09-18T05:26:13ZPFI contracts to build waste incinerators burned more money than rubbish<p>More than £200m has been spent on failed waste management projects, according to a scathing <a href="http://www.publications.parliament.uk/pa/cm201415/cmselect/cmpubacc/106/106.pdf">report</a> by a cross-party group of MPs. The Public Accounts Committee <a href="http://www.bbc.co.uk/news/uk-politics-29226234">blamed</a> “lax” and “poorly drafted” public-private funding arrangements.</p>
<p>But though MPs are right to criticise these contracts, they fail to oppose the obsession with private finance itself. We shouldn’t be afraid to say it: waste management is simply cheaper and more effective in public hands.</p>
<p>The problems date back to Private Finance Initiative (PFI) contracts signed in the late 90s. Under PFI, private businesses stump up the money to build new infrastructure and the public sector pays them back over time.</p>
<p>Such schemes have proven controversial and MPs have in the past <a href="http://www.publications.parliament.uk/pa/cm201012/cmselect/cmpubacc/1201/120102.htmFor">criticised PFI</a> in roads, hospitals, schools and the London underground, as well as waste management. </p>
<p>In this case, some projects have simply not been finished. For instance the UK government has paid Surrey County Council £124m since 1999, tied to the council’s deal with a contractor to build two waste-to-energy plants. Fifteen years on, these plants have still not been built. And the money? If only waste could be incinerated this easily.</p>
<h2>Predictable problems</h2>
<p>The latest report shows how the commercial interest in profitable incinerators can distort policies for dealing with waste, at the expense of recycling and re-use.</p>
<p>Waste disposal is rapidly developing and MPs are right to highlight how inflexible these contracts are in the face of such change. Fixed 25-30 year contracts are standard in PFI deals, but they struggle to factor in new technologies and uncertain forecasts of the amount of rubbish produced and the extent of recycling. </p>
<p>But these problems were predictable – and clearly identified by critics of privately financed incinerators. Friends of the Earth <a href="http://www.foe.co.uk/sites/default/files/downloads/waste_pfi.pdf">warned in 2008</a> that PFI waste operators were pressing councils to commit to high and growing future waste levels, despite evidence of a levelling-out and even decline. The problems with a proposed PFI waste incinerator in Norfolk, highlighted in the committee report, were very clearly set out <a href="http://www.farmerscampaign.org/pages/pfi.html">several years ago</a> by Chris Edwards of the University of East Anglia. Even waste management firms themselves <a href="http://www.iswa.org/uploads/tx_iswaknowledgebase/Berthoud.pdf">sometimes admit</a> there is excess incineration capacity across Europe. </p>
<p>The deals nevertheless went ahead, driven by the well-known problem of exaggerated demand forecasts in all kinds of public-private partnerships. Just as road and rail schemes come with excessive traffic forecasts, and new stadiums or sporting events exaggerate their <a href="https://theconversation.com/olympic-style-mega-events-reach-new-frontiers-at-a-cost-22446">supposed “economic impact”</a>, so proposals for waste treatment plants come with unrealistic consumption projections. Such claims – usually made by consultants with a vested interest – make the projects more likely to be approved. </p>
<p>Exaggeration also raises the level of business guaranteed under PFI contracts – a further incentive. According to a <a href="http://flyvbjerg.plan.aau.dk/JAPAASPUBLISHED.pdf">survey by Danish academics</a>, the distortion of forecasts is so consistent and widespread it was only explicable as:</p>
<blockquote>
<p>systematic misrepresentation, that is, lying … The problem of misinformation is an issue of power and profit and must be dealt with as such, using the mechanisms of transparency and accountability.</p>
</blockquote>
<p>The UK government was responding to the problems after they emerged, not challenging the projections or the investigating alternative possibilities beforehand. Even the EU, despite its own enthusiasm for uniting the public and private sectors, has proved capable of saying no. Earlier this year, for instance, it <a href="http://bankwatch.org/news-media/blog/cold-shower-czech-incinerator-plans-no-eu-funding-says-european-commission">refused to subsidise</a> a number of incinerators in the Czech republic where demand couldn’t justify the costs.</p>
<h2>Taking it in-house</h2>
<p>One obvious solution to the whole financing mess would be for local councils to simply build, own and operate incinerators themselves. However, government credits are only available for PFI schemes, and the committee report is also silent about the option of direct public financing.</p>
<p>Local authorities are effectively locked in to public-private deals for waste management if they want to get the benefit of government “PFI credits”. As the MPs report puts it, this “incentivises the use of PFI to construct waste management assets over other options for reducing the amount of waste sent to landfill”.</p>
<p>In Sweden, Germany and Denmark, groups of municipalities have <a href="http://www.recobaltic21.net/downloads/Public/Project%20results/wmreview_swe_ge_de_fin.pdf">built and run incinerators themselves</a>. Some local authorities in the US own their own incinerators too, including at least two in <a href="http://www.dec.ny.gov/docs/materials_minerals_pdf/wtelist.pdf">New York state</a>.</p>
<p>This reduces and shares risks, but it also erodes potential profits from the market and the dominance of the private companies. No surprises then that the waste-to-energy companies aren’t too pleased – but <a href="http://curia.europa.eu/juris/liste.jsf?language=en&num=C-480/06">the European Court of Justice rejected a legal challenge</a> against an inter-municipal incinerator set up by a group of local authorities around Hamburg. </p>
<h2>Going public</h2>
<p>The core reason to build new infrastructure with public funds is financial. It is intrinsically less expensive than PFI or other public-private partnerships and avoids the risk of expensive and inflexible long-term commitments.</p>
<p>Even the Republican governor of Alaska – successor to Sarah Palin – has recently scrapped a public-private plan for a bridge in favour of <a href="https://www.alaskadispatch.com/article/20131218/parnell-wants-abandon-public-private-partnership-let-state-build-knik-arm-crossing">direct government provision</a>, because: “Having the state, rather than a private developer, fund the project could save hundreds of millions of dollars.”</p>
<p>The UK, however, remains frozen in its commitment to private operators, in waste and elsewhere – as far as government support is concerned, there really is <a href="http://books.google.co.uk/books/about/Capitalist_Realism.html?id=ibN3fGpW1DIC">no alternative</a>.</p>
<p>The committee’s report does nothing to change this. It calls for the government to help “improve local authorities’ contracting capability”, but not to develop the capacity to run their own systems. It concludes that 25-30 year PFI contracts are too inflexible, but without acknowledging that the private sector will not build and operate incineration plants without such contracts. </p>
<p>While the report provides further evidence of the need for a break from the political orthodoxy of the past 25 years in order to recreate a mainstream option of direct municipal operations, the PAC itself does not make that break.</p><img src="https://counter.theconversation.com/content/31799/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Hall has received funding for research from the European Commission FP5 and FP6 programmes, European Commission DG Devco, Rockefeller Brothers Foundation, University of Greenwich, Public Services International, European Public Services Union, Oxfam, World Development Movement, and others.</span></em></p>More than £200m has been spent on failed waste management projects, according to a scathing report by a cross-party group of MPs. The Public Accounts Committee blamed “lax” and “poorly drafted” public-private…David Hall, Visiting professor of Public Services International Research Unit, University of GreenwichLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/236552014-06-29T21:26:04Z2014-06-29T21:26:04ZHow private funding influences GM research<figure><img src="https://images.theconversation.com/files/51275/original/j8t87xp3-1402972220.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The private sector has driven GM research – but in whose interests?</span> <span class="attribution"><a class="source" href="http://www.flickr.com/photos/cimmyt/4616167679">International Maize and Wheat Improvement Center/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span></figcaption></figure><p><em>In this fifth instalment of <a href="https://theconversation.com/topics/gm-in-australia">GM in Australia</a> – a series looking at the facts, ethics, regulations and research into genetically modified crops – Sky Croeser outlines how most GM research is profit-driven.</em></p>
<hr>
<p>Most of the debate around genetically modified (GM) foods has focused on health and nutrition, or the potential impact on the Australian agricultural industry. There has been less attention to the role of private, profit-driven investment in shaping GM and biotechnology.</p>
<p>Research into GM crops has always been largely driven by the private sector, even though a <a href="http://www.cbd.int/doc/measures/abs/msr-abs-au4-en.pdf">2000 report</a> from the Commonwealth Biotechnology Ministerial Council emphasised the need for government support for an emerging, and potentially lucrative, industry. </p>
<p>The report noted high levels of private investment in biotechnology in North America, Canada and Japan, and calls for government support to help Australia compete. According to the authors this should include intellectual property protection, and work to “build community confidence in biotechnology” as well as increase funding. </p>
<p>Subsequent governments have largely followed these recommendations. In 2009, in the wake of the global financial crisis, the Labor government spent <a href="http://lifescientist.com.au/content/lab-technology/news/what-the-government-is-doing-for-biotech-656089387">A$390 million</a> on research and industrial support, noting the importance of the industry to Australia’s economy.</p>
<h2>Teaming up</h2>
<p>Much of the research into biotechnology carried out by academics, public research institutions and even non-profit organisations is shaped by the push towards “public-private partnerships”. </p>
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<a href="https://images.theconversation.com/files/51267/original/jffyq7jf-1402971029.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/51267/original/jffyq7jf-1402971029.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/51267/original/jffyq7jf-1402971029.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=803&fit=crop&dpr=1 600w, https://images.theconversation.com/files/51267/original/jffyq7jf-1402971029.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=803&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/51267/original/jffyq7jf-1402971029.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=803&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/51267/original/jffyq7jf-1402971029.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1010&fit=crop&dpr=1 754w, https://images.theconversation.com/files/51267/original/jffyq7jf-1402971029.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1010&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/51267/original/jffyq7jf-1402971029.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1010&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><a class="source" href="http://www.flickr.com/photos/jmwoolfe/6905940160">Jamie Woolfe/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span>
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<p>The CSIRO, for example, is required to raise a significant proportion of its own funding from royalties, “sales of goods and services”, and private partnerships (as outlined in the <a href="http://www.industry.gov.au/AboutUs/Budget/Pages/PBS-2014-15.aspx">latest budget statements</a>), and has been working closely with biotechnology companies including <a href="http://www.csiro.au/Outcomes/Food-and-Agriculture/Sustainable-Cotton-Industry.aspx">Monsanto</a>.</p>
<p>Defenders of GM crops position critics as irrational and anti-science, implying that they either don’t understand the technology or are driven by shadowy motives. But if a <a href="https://theconversation.com/was-canola-case-shows-gm-crops-are-still-being-demonised-23123">proponent</a> of GM crops can question the motives of activists because they receive funding, it is reasonable to ask similar questions about how private funding affects biotechnology research as well.</p>
<p>This is particularly the case given the effort going into public relations around GM crops in Australia and <a href="http://mcs.sagepub.com/content/24/3/325.short">overseas</a>. CSIRO even briefly and <a href="http://www.australasianscience.com.au/article/issue-may-2013/how-tobacco-lobbyist-won-over-csiro.html">controversially</a> hired a former tobacco industry lobbyist as Director of Communications.</p>
<h2>How green was the Green Revolution?</h2>
<p>In order to more fully understand the importance of seeing biotechnology primarily as an industry, it’s useful to look at alternative models of agricultural research. The “<a href="http://www.agbioworld.org/biotech-info/topics/borlaug/borlaug-green.html">Green Revolution</a>” is the most obvious example. </p>
<p>The Green Revolution took place after World War II, and was driven in large part by the hope that increased food security would stop the spread of communism. Public funding and national security considerations played a key role in shaping the technology.</p>
<p>There are important criticisms of Green Revolution agriculture, including its impacts on the water table, soil fertility and social inequality, but it does demonstrate that different political contexts lead to different outcomes. The focus during the Green Revolution was on increasing yields for cereal crops, such as wheat and rice.</p>
<p>In contrast, the priority for current biotechnology research – particularly into GM – is generating profits. </p>
<p>Even <a href="https://theconversation.com/was-canola-case-shows-gm-crops-are-still-being-demonised-23123">Golden Rice</a>, which is usually held up as the poster-child for benevolent GM research for the public good, will be sold commercially through <a href="http://goldenrice.org/Content1-Who/who4_IP.php">public-private partnerships</a>.</p>
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<h2>Profits and public interest</h2>
<p>Private investment does not guarantee poor outcomes, but we should also be sceptical of claims that it has no effect on technological development. The drive for profits encourages:</p>
<ul>
<li>a reliance on monocultures</li>
<li>a focus on cash crops rather than food crops</li>
<li>legislation against comprehensive food labelling</li>
<li>restrictive intellectual property regimes.</li>
</ul>
<p>This is happening at a time when the world needs resilient, sustainable food systems that preserve crop biodiversity, responsive democratic legislation and a massive overhaul of restrictive national and international intellectual property law. </p>
<p>We can’t simply accept at face value claims that private interests will align neatly with public needs.</p>
<p>Any realistic and rational evaluation of technologies must take into account the political and economic context from which they emerged. Technologies exist as part of systems, and their impacts often have unintended consequences which we can only begin to understand once we move beyond a narrow view of science as somehow existing outside of society. </p>
<hr>
<p><strong><em>Further reading:<br>
<a href="https://theconversation.com/gm-techniques-from-the-field-to-the-laboratory-and-back-again-25753">GM techniques: from the field to the laboratory (and back again)</a><br>
<a href="https://theconversation.com/setting-the-standards-who-regulates-australian-gm-food-25533">Setting the standards: who regulates Australian GM food?</a><br>
<a href="https://theconversation.com/safety-first-assessing-the-health-risks-of-gm-foods-26099">Safety first – assessing the health risks of GM foods</a><br>
<a href="https://theconversation.com/because-we-can-does-it-mean-we-should-the-ethics-of-gm-foods-28141">Because we can, does it mean we should? The ethics of GM foods</a></em></strong></p><img src="https://counter.theconversation.com/content/23655/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sky Croeser does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In this fifth instalment of GM in Australia – a series looking at the facts, ethics, regulations and research into genetically modified crops – Sky Croeser outlines how most GM research is profit-driven…Sky Croeser, Researcher and teacher, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.