What's in store for schools?
Peter Steele* Governments around the country continue to promote arguments about maintaining surpluses and reducing public debt. They are also, invariably, promoting the idea of public-private partnerships. Referred to in Australia as PPPs, the scheme involves private enterprises building, owning and operating physical infrastructure. For example: school buildings, hospitals, courts, correctional facilities, film and television studios, roads (Citylink), fibre optics, wastewater treatment plants and reclaimed water projects. In Victoria, PPPs are organised through Partnerships Victoria, a Victorian Government policy that facilitates business interaction between parties seeking consortium partners [helps private businesses get together to provide facilities] and businesses otherwise interested in participating in Partnerships Victoria projects [single businesses wishing to deal directly with the Government]. (Government of Infrastructure website.) The Spencer Street Station development site in central Melbourne is a good example of a public-private partnership being operated under the Bracks Government. According to newspaper reports the Government will make payments towards this project of $310 million. As the official website states, "The station and its precinct will be redeveloped over three years in a $700 million public/private partnership between the Victorian Government and the Civic Nexus consortium, comprising ABN Amro, Leighton Contractors, Daryl Jackson Architecture, Nicholas Grimshaw and Partners, Honeywell Limited and Delaware North Australia. The project ... includes a retail plaza, and three office and apartment towers as part of a massive commercial redevelopment of the precinct ..." In most cases, including schools, governments enter into arrangements where they lease the building/infrastructure from a private enterprise, in order to reduce infrastructure costs. This situation supposedly reduces overall public debt and frees up funding for important social service provision. The problem for Victoria's Bracks Government is that the evidence from the overseas experience — namely the United Kingdom — reveals that the outcome of these schemes has the opposite effect. In a paper about private financing of public infrastructure John Quiggin, from the Australian National University (ANU) says, "In retrospect many of these projects have been shown to have reduced the net worth of the public sector, and to have incurred higher financing costs than would have arisen with traditional methods based on the use of bonds to finance publicly owned assets." Hypothecation is the putting up of securities as collateral, for example, pledging buildings/land as security without the delivery of titles or possession. This is the basis of the public-private partnership. Ironically, Treasury is traditionally opposed to hypothecation — which commits government funds to specific and finite projects for years. Budget tied up Fifteen per cent of the UK budget is tied up in these deals. By entering into such long-term agreements now, governments tie large amounts of expenditure and reduce their ability to continue funding important social services into the future. Expenditure is therefore constrained, not released, by PPPs and hypothecation. How is it that the Bracks Government, which says it has to reduce debt, wants to enter into schemes which commit Treasury funds for years ahead? Is this not just another form of debt? The answer according to three speakers at a seminar on July 16 on PPPs: Are They Worth the Trouble? is that Labor governments seem to have to please the big end of town. To do this, such governments are now advancing the notion that pubic- private partnerships will reduce public debt, along with other spurious arguments about debt reduction. Clearly such notions are a potential issue for government schools (see "Partnership Victoria: Riding the Rocky Road to Privatisation?" ("AEU News" 14/03/02). Another form of privatisation There is growing concern that PPPs are simply another form of privatisation where the private sector takes the profits, while the public sector carries the risks. To this end, the AEU has made a submission to the public accounts and estimates committee inquiry into private sector investment in public infrastructure. The Australian Education Union is totally opposed to any form of private operation of public schools. The provision of public education is a state responsibility and, rather than being weakened by private partnership, this responsibility needs to be strengthened through greater government commitment to adequate resources. The ALP Victorian Branch May Conference is reported to have made a decision to prohibit private ownership of "human services" infrastructure. If articles by Kenneth Davidson in "The A did not lead me to have doubts about the Government's intent in pursuing PPPs, then a young man asking questions at a recent seminar did. The seminar, titled "Private/Public Partnerships: are They Worth the Trouble", looked at what has happened in the UK regarding PPPs and compared that experience to what is occurring in Australia. After the seminar finished a young man stood up and questioned the three speakers, concerned that they appeared to be opposed to PPPs and that there had been no debate on the issue which could have put the points in favour of PPPs. The young man was none other than Premier Steve Bracks' senior economics adviser! I'll leave you to draw your own conclusions about the direction of the Government's policies.
* * ** Vice President Primary, Victorian Branch of Australian Education Union. Acknowledgement to The AEU News August 8, 2002. The original article and back issues can be found at: http://www.aeuvic.asn.au