The legislative branch of government, that is, the elected, law-making parliament or assembly may control the PPP process in several ways.
- Defining the PPP legal framework and policy: The PPP framework is often established in specific PPP legislation. As described earlier in this chapter, one rationale for introducing a PPP law is to enable the legislative branch of government to set rules for how PPPs will be developed and implemented, against which those responsible can be held accountable;
- Defining limits on PPP commitments: The legislature may limit total PPP fiscal commitments (as highlighted in section 4.7.6), the amount taken on in a year, or otherwise govern the risk and inter-generational equity issues that PPPs can create;
- Approving PPP projects: PPP projects may require parliamentary approval, as described in section 4.6.5. This requirement can be limited to PPP projects above a certain size. For example, the Hungarian PPP Act (1992) states that the government must seek Parliament’s approval before signing a contract creating multi-year payment obligations with a present value of more than $230 million.[156] In Guatemala, all PPP contracts require approval from Congress[157]. Requirements for parliamentary approval create a risk that a tender process will be conducted and a preferred bidder will be selected, but parliament will not give the necessary approval for the government to enter into the contract. This risk may decrease investor appetite to bid for PPPs in the country; and
- Program oversight: Many governments include information on the PPP program in budget documents and other financial reports. Some Australian states table project or contract summaries in parliament within a specified time after financial close. This gives parliament the opportunity to scrutinize the government’s commitments to PPPs and hold the decision-makers responsible after the event. Parliament may also commission and receive auditors’ reports on the PPP program. Examples of legislative oversight are provided in box 2.24.
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BOX 2.24: Legislative Oversight of PPP Programs · In 2005, the Parliament (House of Commons) of the UK published a performance audit of the 30 year PPP for the London Underground Urban Mass Transit System. The report assessed the government’s justification for the maintenance and upgrade contract with the private sector, the Value for Money analysis, and overall structure of the PPP. The report provided conclusions and offered recommendations for future changes, which the UK Treasury then addressed to Parliament.[158] · The Public Accounts and Estimate Committee in the Parliament of Victoria, Australia reviewed Partnerships Victoria, the PPP program, in the context of governance, risk allocation, accountability, protecting the public interest, economic benefits and Value for Money, and international accounting standards for PPPs. Recommendations were then made to improve PPP policies and strengthen governance of the projects.[159] |
[156] Irwin (2007) Government Guarantees: Allocating and Valuing Risk in Privately Financed Infrastructure Projects. World Bank.
[157] Congress of the Republic of Guatemala (2010) Ley de Alianzas para el Desarollo de Infraestructura Económica (Law of Partnerships for the Management of Economic Infrastructure).
[158] Committee of Public Accounts (2005) London Underground Public Private Partnerships: 17th Report of Session 2004-2005.
[159] Public Accounts and Estimates Committee, Parliament of Victoria (2006) Report on Private Investment in Public Infrastructure, Seventy First Report to the Parliament.
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