Research reveals benefits of social infrastructure

AUSTRALIA AND NEW ZEALAND – A first-of-its-kind report has highlighted the benefits of social infrastructure public-private partnerships.

Infrastructure Partnerships Australia teamed with University of Melbourne and Drum Advisory for the research, examining the operating performance of social infrastructure PPPs in Australia and New Zealand over the past 25 years.

Supported by the governments of Victoria, New South Wales, Queensland and New Zealand, the research, Measuring the value and service outcomes of social infrastructure PPPs in Australia and New Zealand, studied the firsthand experiences of service providers and users of social infrastructure PPPs such as hospitals, schools, justice facilities and convention centres.

Notably, an overwhelming 95 per cent of service providers said their PPP project delivered what was promised at the time of project announcement, and there was a strong preference for working in a PPP over a traditionally-procured government facility.

It also found satisfaction levels remained extremely high over many years and that the quality of the service delivered was better than a government-run facility.

Infrastructure Partnerships Australia CEO Adrian Dwyer said the findings paint an overwhelmingly positive story about the success of social infrastructure PPPs.

“This success has been built on the foresight, hard work and commitment of infrastructure leaders across the public and private sectors who have developed and delivered these assets and services,” Mr Dwyer said.

“Through PPPs in the social infrastructure sector Australians have gained access to innovative and effective infrastructure services.

“Twenty five years of PPPs represented an opportune moment to reflect on the performance of this approach to delivering social infrastructure.

“While many within the infrastructure sector recognise the benefits these PPPs have brought, many in the broader community may not see or understand the differences from regular service delivery.

“The sector should be rightly proud of this track record.”

Lead researcher, University of Melbourne Professor Colin Duffield, said the candidness of the participants was helpful in gaining meaningful insights.

“It was refreshing during the conduct of the research to see the high level of openness and frankness brought out in discussions,” Professor Duffield said.

“The overwhelming support for PPP arranged social infrastructure projects was somewhat surprising as some workshop participants shared stories of difficult discussions they had had or witnessed between government representatives and those representing the PPP operator.

“Regardless of these robust discussions, the service providers interviewed, in all but two instances, preferred working in PPP run and managed facilities.

“This was a very strong endorsement of the PPP arrangements.”

The research found hospital PPPs, for example, have delivered above their capacity requirements, have improved operating efficiencies, and achieve value for money over the life of the PPP.

In addition, all service providers interviewed agreed the PPP model provides similar flexibility provisions to traditional procurement models.

An example of that flexibility is through the ability to expand existing facilities.

Earlier this year Plenary completed the $135 million expansion of Casey Hospital (pictured) in southeast Melbourne, providing additional healthcare capacity as the Victorian Government responded to the COVID-19 pandemic.

The 13,000-square-metre expansion – one of the first expansions of an operating hospital PPP in Australia – delivered 152 new beds and allows operator Monash Health to treat more than 25,800 extra patients, perform an extra 8,000 procedures and support an extra 1,300 births each year.

Plenary was contracted to design, build, finance and maintain the expanded facility for 10 years, aligning with the remainder of the original 25-year PPP contract.

Plenary Head of Corporate Affairs Kelvyn Lavelle commended Infrastructure Partnerships Australia and University of Melbourne for what is the first in-depth looks at the service delivery outcomes being achieved by social infrastructure PPPs.

“This research not only gives us an understanding of how PPPs are performing but it is also a great step towards giving users and operators a voice in telling the story of their comparative experiences,” Mr Lavelle said.

“While you rarely hear from them, the operators and users of social infrastructure clearly appreciate and experience firsthand the benefits of social infrastructure PPPs.

“We commend the Victorian, New South Wales, Queensland and New Zealand governments for supporting this important work,” Mr Lavelle said.

Plenary manages three major hospital PPPs in Australia, including Casey Hospital and the Victorian Comprehensive Cancer Centre.

“It is through this lens we see PPP hospitals improving patient outcomes, as well as setting new benchmarks in all aspects of research, education, treatment and care,” Mr Lavelle said.

“As this research recommends, governments should continue to consider and use the PPP model for social infrastructure service delivery as a way of bringing greater benefits to service providers and users, and better value for taxpayers.”

Plenary is founding member of Infrastructure Partnerships Australia and is a supporter of its independent research work in partnership with governments.

This latest research follows the landmark 2007 research by Infrastructure Partnerships Australia, University of Melbourne and Allen Consulting, Performance of PPPs and traditional procurement in Australia (PDF), showing the delivery of PPPs achieve a cost efficiency of between 11-30 per cent compared to traditional procurement methods.