Finance Minister Bill English is looking to Australia for ideas on how private sector involvement in financing and operating New Zealand's infrastructure might work.
The Government's basic position was clear, he told the New Zealand Council for Infrastructure Development yesterday.
"We want to maximise economic efficiency, help the economy grow faster and get better value for money for taxpayers. In that sense, New Zealand is open to good, innovative ideas from business.
"From overseas experience, it's apparent that, with some projects, private sector innovation can provide a better asset for a cheaper whole of life cost."
Since 2000, about 50 major private, public partnerships (PPPs) worth around $30 billion had been completed in Australia, he said.
They ranged from the traditional road, rail, water and energy through to areas such as defence facilities, hospitals, schools, prisons and radio networks.
Total Australian infrastructure spending was running at about $A50 billion a year, or nearly 5% of gross domestic product.
But less than 20% of total Australian spending was financed privately.
Most infrastructure remained traditionally funded.
"I'm sure this will also be the case in New Zealand. I have been impressed by the level of interest from the market in working with the Government.
"But let me be clear - this is not about ideology: Private sector involvement will happen only where it makes sense, period."
In New Zealand. the Corrections Department was investigating building more prisons in response to prison population forecasts, Mr English said.
There was a range of opportunities for more private sector participation in the process from the current approach, where private sector input was limited, through to designing, financing, building and operating and maintaining prison facilities.
The Government had asked Corrections to look at alternatives to conventional procurement for delivering extra capacity - including a new prison, he said.
"We're happy to proceed with that if the case stacks up. We expect to be in a position to make decisions about that early next year.
"We want to see options genuinely considered and appraised - not simply ruled out on the basis of some ideological knee-jerk response or for political expediency."
No one approach should be presumed to be more efficient than another, Mr English said.
The key was determining which form of delivery provided the best value for money in meeting Government and public objectives.
Green Party co-leader Russel Norman said the Australian experience of PPPs was why New Zealand should steer well clear.
Private companies involved in PPPs in Australia had, on numerous occasions, underbid, overpromised and under-delivered.
Those private firms in Australia had aimed to minimise their financial risks - at the public's expense.
"Many times when project budgets have been miscalculated, the Aussie taxpayer has come to the rescue.
But when a windfall profit has been made, the private company has unsurprisingly not distributed any largesse to the Australian taxpayer," he said.
