Tuesday, 19 June 2012

Old Schoolyard

And a bit more thought provoking today was question eight, about the cost of the first PPP school, in Hobsonville.

It appears that the cost of delivering the school via a PPP is about $2million less, out of a budget of over $110million, than if it were delivered using traditional procurement.  Under 2% is not a huge amount, and it excludes $4million, or thereabouts, on deciding to go for a PPP approach.

If the National Party are so convinced of their ideology, why did they need to commit $4million of taxpayers' money to having some consultants endorse it?  The "National won the election and have the mandate" argument, as applied vociferously to asset sales, seems to work just as well for PPPs, so why is the $4million needed again?

Most new schools are built very much by the private sector, who undertake the design and construction, and there are plenty of questions to ask about whether private sector involvement is always the most cost effective option, but in the absence of alternative procurement models e will not know.  Also, I expect Labour are not ready to ask such questions, lest they expose their mutated roots.

The Minister should be acknowledging that the private side of the PPP is expecting to make a profit, in fact without business cases that show they will, they could not have proceeded to put a tender forward.  That profit is part of the $110million, let's say it's a little under 10%, i.e. it will cost $100million, the remaining $10million is the profit.  Surely the Minister should be asking why the goverment can not build the school, sans profit, for the same $100 million.

Cat Stevens - Izitso, 1977

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