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Public Private Partnerships. Is PPP a good idea?. Our Video. How it works. P3s are a long-term performance-based approach for procuring public infrastructure.
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Public Private Partnerships Is PPP a good idea?
How it works • P3s are a long-term performance-based approach for procuring public infrastructure. • The private sector assumes a major share of the responsibility in term of risk and financing for the delivery and the performance of the infrastructure, from design structural planning to long term maintenance.
Pros • Gives a wider range of ideas when working together • Infrastructure is usually built faster with less delays • Allows government money to now go to more important areas (ex social welfare programs) • High quality and efficiency is obtained
Cons • There will be opposing needs, such as profit over people or vice versa • Does not guarantee profit and thus could hurt the private company badly • The private company has a stricter code, has harsher consequences • The government and company must have the high trust in order to succeed.
Public Interest • Definition: Public interest is a common concern among citizens in the management and affairs of local, state, and national government • Good or Bad for PPP: Public is very good for PPP to consumers especially as it keeps the private company focused on the public as well as profit, maintaining human rights.
Self Interest • Definition: Selfish or excessive regard for one's personal advantage or interest. • Good or Bad: The self interest is brought mostly from the private part as the company strives for profit. This profit pushes for efficiency and thus the overall product and process of the partnership creates a strive for the perfect blend of efficiency and public interest.
Taxation • Definition: the act or principle of levying taxes or the condition of being taxed • Good or Bad: For private companies, the overall taxation is less and therefore, the overall cost of the process is cheaper than going alone. However, the product made from this partnership usually has a higher tax, making it less compelling to consumers
Government Spending • Definition: Government spending (or government expenditure) includes all government consumption and investment but excludes transfer payments. • Good or Bad: The government does not have to spend their money alone on the process and thus the money can go to more important areas, such as welfare or education.
Supply and Demand • Definition: In microeconomics, supply and demand is an economic model of price determination in a market. • Good or Bad: Having a better look on the supply and demand trends in Canada is beneficial for the private company as the government would have a more indebt knowledge of these trends. However, the government would not be as concerned for this.
Aggregate Demand and Supply • Definition: The total supply of goods and services produced within an economy at a given overall price level in a given time period. The total amount of goods and services demanded in the economy at a given overall price level and in a given time period • Good or Bad: The government would be more concerned about this supply and demand as it affects the entire Canadian economy while the private partner would only focus on its own supply and demand.
Class Questions • Should PPP’s be more apparent in Canadian society? • Why would private companies not be interested in PPP’s? • Are PPP’s better for the consumer or worse? • If you owned an infrastructure business and the Canadian government came to you asking to be in a PPP, how would you respond? Why?
