A Comparison of Public Private Partnership Environment Between Australia and China

Abstract

Due to the central government’s effort in encouraging and supporting the participation of social capital investors in infrastructure development since late 2013, China is currently catching Public Private Partnership (PPP) fever. However, China is still considered to have immature regulatory and institutional PPP frameworks. By contrast, PPP projects have enjoyed significant success in Australia, which is one of the most mature PPP markets globally. Hence, this paper aims to review the environment for PPPs in Australia and China and consequently identify trends and potential innovations. It was found that although the overall environment is still evolving, China has a wealth of experience with PPPs. Given the tremendous economic growth and immense demand for infrastructure, China will continue to have a massive demand for future PPP projects. In Australia, the need for significant private investment in the nation’s infrastructure is expected to result in the emergence of a variety of innovative funding and financing models. However, notwithstanding the maturity of the Australian PPP market, very little has been done to confirm PPP performance during the operational phase. This paper makes an important contribution by comparing the two PPP markets and the findings will provide a better understanding of PPPs to industry practitioners in order to deliver cost-effective infrastructure. It could also offer a starting point for Australia to enter the Chinese PPP market based on its huge technical, financial and legal PPP expertise.