Motion sickness

In the story of the tortoise and the hare, it’s the over-confidence of the hare (and his love of forty-winks) that lets him down.

New Zealand’s government may only be at the early stages of its first PPPs – the Wiri prison and the Hobsonville school scheme – but its "slow and steady wins the race" rhetoric provides a sobering contrast to the big thinking and bravado of a number of other governments around the world.

While the Philippines struggles to keep its pipeline in check and Turkey’s government tries to jump from €250m hospitals to €5bn toll roads in a matter of months, New Zealand has instead decided upon the rather novel idea of creating a sound benchmark for all its future PPPs.

"We need to get good at the smaller projects first," said Infrastructure Minister Bill English over the summer.

All the players involved down under recognise climbing onto the PPP bandwagon is a slow process and their market has unique characteristics making it different to the UK or Australia.

Western Australia’s first water PPP reached financial close last month, whereas New Zealand’s government – in its recent National Infrastructure Plan – has clearly highlighted the poor performance of its water sector.

An economy heavily reliant on the primary sector and a relatively small population spread over vast stretches of land also make road or rail schemes more complex than in other developed countries.

But as PPP markets go it has many pluses.

Firstly, Asian investors have expressed a desire to get involved. Although New Zealand’s capital markets are in good shape, investors in China and Japan have access to large pools of capital, are close to the country and have a solid understanding of its infrastructure needs.

Added to this, New Zealand’s government has clearly recognised investment in infrastructure as key to economic growth and has outlined plans to invest $7.6bn in social assets over the next four years.

So is there room for PPP here?

It might be slow coming to fruition, but hospitals and social housing seem likely contenders to be next in line after prisons. It will be interesting to see who else is waiting at the finish when they get there.