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63-623: The 28.7 km (17.8 mi) section between Shiraoi and Numanohata is the longest straight railway section in Japan. On 19 November 2016, JR Hokkaido's president announced plans to rationalise the network by up to 1,237 km, or ~50% of the current network, including the proposed conversion to Third Sector operation of the Tomakomai–Iwamizawa section of the Muroran Main Line. However, if local governments do not come up with an agreement,

126-407: A rent-seeking behavior, which leads to spiraling costs for users and/or taxpayers in the operation phase of the project. Some public–private partnerships, when the development of new technologies is involved, include profit-sharing agreements. This generally involves splitting revenues between the inventor and the public once a technology is commercialized. Profit-sharing agreements may stand over

189-467: A building contractor, a maintenance company, and one or more equity investors. The two former are typically equity holders in the project, who make decisions but are only repaid when the debts are paid, while the latter is the project's creditor (debt holder). It is the SPV that signs the contract with the government and with subcontractors to build the facility and then maintain it. A typical PPP example would be

252-399: A definition, the term has been defined by major entities. For example, The OECD formally defines public–private partnerships as "long term contractual arrangements between the government and a private partner whereby the latter delivers and funds public services using a capital asset, sharing the associated risks". According to David L. Weimer and Aidan R. Vining, "A P3 typically involves

315-475: A fixed period of time or in perpetuity. Using PPPs have been justified in various ways over time. Advocates generally argue that PPPs enable the public sector to harness the expertise and efficiencies that the private sector can bring to the delivery of certain facilities and services traditionally procured and delivered by the public sector. On the other hand, critics suggest that PPPs are part of an ideological program that seeks to privatize public services for

378-450: A hospital building financed and constructed by a private developer and then leased to the hospital authority. The private developer then acts as landlord, providing housekeeping and other non-medical services, while the hospital itself provides medical services. The SPV links the firms responsible of the building phase and the operating phase together. Hence there is a strong incentives in the building stage to make investments with regard to

441-552: A private entity financing, constructing, or managing a project in return for a promised stream of payments directly from government or indirectly from users over the projected life of the project or some other specified period of time". A 2013 study published in State and Local Government Review found that definitions of public-private partnerships vary widely between municipalities: "Many public and private officials tout public–private partnerships for any number of activities, when in truth

504-486: A project cheaper for taxpayers. This can be done by cutting corners, designing the project so as to be more profitable in the operational phase, charging user fees, and/or monetizing aspects of the projects not covered by the contract. For P3 schools in Nova Scotia , this latter aspect has included restricting the use of schools' fields and interior walls, and charging after-hours facility access to community groups at 10 times

567-452: A radical reform of government service provision. In 1997, the new British government of Tony Blair 's Labour Party expanded the PFI but sought to shift the emphasis to the achievement of "value for money", mainly through an appropriate allocation of risk. Blair created Partnerships UK (PUK), a new semi-independent organization to replace the previous pro-PPP government institutions. Its mandate

630-602: A range of costs, the exact nature of which has changed over time and varies by jurisdiction. One thing that does remain consistent, however, is the favoring of "risk transfer" to the private partner, to the detriment of the public sector comparator. Value for money assessment procedures were incorporated into the PFI and its Australian and Canadian counterparts beginning in the late 1990s and early 2000s. A 2012 study showed that value-for-money frameworks were still inadequate as an effective method of evaluating PPP proposals. The problem

693-458: A transfer of risk, but when things go wrong the risk stays with the public sector and, at the end of the day, the public because the companies expect to get paid. The health board should now be seeking an exit from this failed arrangement with Consort and at the very least be looking to bring facilities management back in-house. Furthermore, assessments ignore the practices of risk transfers to contractors under traditional procurement methods. As for

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756-451: A vested interest in recommending the PPP option over the traditional public procurement method. The lack of transparency surrounding individual PPP projects makes it difficult to draft independent value-for-money assessments. A number of Australian studies of early initiatives to promote private investment in infrastructure concluded that in most cases, the schemes being proposed were inferior to

819-681: Is a long-term arrangement between a government and private sector institutions. Typically, it involves private capital financing government projects and services up-front, and then drawing revenues from taxpayers and/or users for profit over the course of the PPP contract. Public–private partnerships have been implemented in multiple countries and are primarily used for infrastructure projects. Although they are not compulsory, PPPs have been employed for building, equipping, operating and maintaining schools, hospitals, transport systems, and water and sewerage systems. Cooperation between private actors, corporations and governments has existed since

882-498: Is borne exclusively by the users of the service, for example, by toll road users such as in the case of Toronto 's Yonge Street at the dawn of the 19th century, and the more recent Highway 407 in Ontario . In other types (notably the PFI), capital investment is made by the private sector on the basis of a contract with the government to provide agreed-on services, and the cost of providing

945-477: Is established or renewed, the financing is, from the public sector's perspective, "on-balance sheet". According to PPP advocates, the public sector will regularly benefit from significantly deferred cash flows. This viewpoint has been contested through research that shows that a majority of PPP projects ultimately cost significantly more than traditional public ones. In the European Union, the fact that PPP debt

1008-518: Is lower than returns for the private funder. PPPs are closely related to concepts such as privatization and the contracting out of government services. The secrecy surrounding their financial details complexifies the process of evaluating whether PPPs have been successful. PPP advocates highlight the sharing of risk and the development of innovation , while critics decry their higher costs and issues of accountability . Evidence of PPP performance in terms of value for money and efficiency, for example,

1071-479: Is mixed and often unavailable. There is no consensus about how to define a PPP. The term can cover hundreds of different types of long-term contracts with a wide range of risk allocations, funding arrangements, and transparency requirements. The advancement of PPPs, as a concept and a practice, is a product of the new public management of the late 20th century, the rise of neoliberalism, and globalization pressures. Despite there being no formal consensus regarding

1134-468: Is not recorded as debt and remains largely "off-balance-sheet" has become a major concern. Indeed, keeping the PPP project and its contingent liabilities "off balance sheet" means that the true cost of the project is hidden. According to the International Monetary Fund , economic ownership of the asset should determine whether to record PPP-related assets and liabilities in the government's or

1197-457: Is responsible, and the Private sector assumes that risk at a cost for the taxpayer. If the value of the risk transfer is appraised too high, then the government is overpaying for P3 projects. Incidentally, a 2018 UK Parliament report underlines that some private investors have made large returns from PPP deals, suggesting that departments are overpaying for transferring the risks of projects to

1260-475: Is that it is unclear what the catchy term "value-for-money" means in the technical details relating to their practical implementation. A Scottish auditor once qualified this use of the term as "technocratic mumbo-jumbo". Project promoters often contract a PPP unit or one of the Big Four accounting firms to conduct the value for money assessments. Because these firms also offer PPP consultancy services, they have

1323-451: Is that most of the up-front financing is made through the private sector. The way this financing is done differs significantly by country. For P3s in the UK, bonds are used rather than bank loans . In Canada, P3 projects usually use loans that must be repaid within five years, and the projects are refinanced at a later date. In some types of public–private partnership, the cost of using the service

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1386-583: The Conservative government of John Major in the United Kingdom introduced the Private finance initiative (PFI), the first systematic program aimed at encouraging public–private partnerships. The 1992 program focused on reducing the public-sector borrowing requirement , although, as already noted, the effect on public accounts was largely illusory. Initially, the private sector was unenthusiastic about PFI, and

1449-563: The Higashi-Muroran–Muroran section becoming known as the branchline. In 1935, a rail motor service was established on the branchline. Initially, the line mainly functioned as a freight line. However, with the reduction in coal being mined, from the 1960s the line's main traffic shifted to passengers. At present, all the intercity express trains between Sapporo and Hakodate operate over the Chitose and Muroran lines to Oshamambe, bypassing

1512-453: The assessment of PPPs which focused heavily on value for money . Heather Whiteside defines P3 "Value for money" as: Not to be confused with lower overall project costs, value for money is a concept used to evaluate P3 private-partner bids against a hypothetical public sector comparator designed to approximate the costs of a fully public option (in terms of design, construction, financing, and operations). P3 value for money calculations consider

1575-496: The contractor. One of the main criticisms of public–private partnerships is the lack of accountability and transparency associated with these projects. Part of the reason why evidence of PPP performance is often unavailable is that most financial details of P3s are under the veil of commercial confidentiality provisions, and unavailable to researchers and the public. Around the world, opponents of P3s have launched judicial procedures to access greater P3 project documentation than

1638-711: The contractual complexities and rigidities they entail". In the United Kingdom, many private finance initiative programs ran dramatically over budget and have not provided value for money for the taxpayer, with some projects costing more to cancel than to complete. An in-depth study conducted by the National Audit Office of the United Kingdom concluded that the private finance initiative model had proved to be more expensive and less efficient in supporting hospitals, schools, and other public infrastructure than public financing. A treasury select committee stated that 'PFI

1701-413: The cost of the complex scientific laboratory, which was ultimately built, was very much larger than estimated. On the other hand, Allyson Pollock argues that in many PFI projects risks are not in fact transferred to the private sector and, based on the research findings of Pollock and others, George Monbiot argues that the calculation of risk in PFI projects is highly subjective, and is skewed to favor

1764-461: The costs to be larger than what was projected. Another risk within this area is with change of governance from differing political representatives could lead to projects being diminished or reduction of the allocated budget. This is common within PPPs as different political actors are likely to scrutinise their opponents based on their ideological positions. Private monopolies created by PPPs can generate

1827-410: The government of the day appear more fiscally responsible , while offloading the costs of their projects to service users or future governments. In Canada, many auditors general have condemned this practice, and forced governments to include PPP projects "on-balance sheet". On PPP projects where the public sector intends to compensate the private sector through availability payments once the facility

1890-427: The government retains ownership of the facility and/or remains responsible for public service delivery. Others argue that they exist on a continuum of privatization, P3s being a more limited form of privatization than the outright sale of public assets, but more extensive than simply contracting out government services. Because "privatization" has a negative connotation in some circles, supporters of P3s generally take

1953-502: The idea that the private sector is inherently better at managing risk, there has been no comprehensive study comparing risk management by the public sector and by P3s. Auditor Generals of Quebec , Ontario and New Brunswick have publicly questioned P3 rationales based on a transfer of risk, the latter stating he was "unable to develop any substantive evidence supporting risk transfer decisions". Furthermore, many PPP concessions proved to be unstable and required to be renegotiated to favor

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2016-464: The inception of sovereign states , notably for the purpose of tax collection and colonization . Contemporary "public–private partnerships" came into being around the end of the 20th century. They were aimed at increasing the private sector's involvement in public administration . They were seen by governments around the world as a method of financing new or refurbished public sector assets outside their balance sheet . While PPP financing comes from

2079-473: The lack of investor rights guarantees, commercial confidentiality laws, and dedicated state spending on public infrastructure in these countries made the implementation of public–private partnership in transition economies difficult. PPPs in the countries usually can't rely on stable revenues from user fees either. The World Bank 's Public-Private Infrastructure Advisory Forum attempts to mitigate these challenges. A defining aspect of many infrastructure P3s

2142-419: The limited "bottom line" sheets available on the project's websites. When they are successful, the documents they receive are often heavily redacted. A 2007 survey of U.S. city managers revealed that communities often fail to sufficiently monitor PPPs: "For instance, in 2002, only 47.3% of managers involved with private firms as delivery partners reported that they evaluate that service delivery. By 2007, that

2205-529: The line from Muroran (now Higashi-Muroran) to Iwamizawa. The line was built to link coal mines in the Iwamizawa-Asahikawa region and Muroran Port. The line was extended to the current Muroran in 1897. The Japanese Government nationalised the Hokkaido Colliery Railway in 1906, and the Higashi-Muroran–Muroran section was double-tracked in 1910. The section between Oshamambe and Higashi-Muroran

2268-475: The majority of P3 projects in Australia. Wall Street firms have increased their interest in PPP since the 2008 financial crisis. Government sometimes make in kind contributions to a PPP, notably with the transfer of existing assets. In projects that are aimed at creating public goods , like in the infrastructure sector, the government may provide a capital subsidy in the form of a one-time grant so as to make

2331-404: The modern electric grid . In Newfoundland, Robert Gillespie Reid contracted to operate the railways for fifty years from 1898, though originally they were to become his property at the end of the period. The late 20th and early 21st century saw a clear trend toward governments across the globe making greater use of various PPP arrangements. Pressure to change the model of public procurement

2394-577: The north section of the Hakodate Main Line route. The last steam locomotive hauled regular service ran between Iwamizawa and Muroran in 1975. Growing coal traffic on the Iwamizawa–Muroran section resulted in the double-tracking of the 101 km Higashi-Muroran–Mikawa section in stages between 1920 and 1958. The 7 km Iwamizawa–Shibun section was double-tracked in 1961, but returned to single track in 1994. The 9 km Yuni–Kurioka section

2457-733: The operating stage. These investments can be desirable but may also be undesirable (e.g., when the investments not only reduce operating costs but also reduce service quality). Public infrastructure is a relatively low-risk, high-reward investment, and combining it with complex arrangements and contracts that guarantee and secure the cash flows make PPP projects prime candidates for project financing . The equity investors in SPVs are usually institutional investors such as pension funds, life insurance companies, sovereign wealth and superannuation funds, and banks. Major P3 investors include AustralianSuper , OMERS and Dutch state-owned bank ABN AMRO , which funded

2520-430: The position that P3s do not constitute privatization, while P3 opponents argue that they do. The Canadian Union of Public Employees describes P3s as "privatization by stealth". Governments have used such a mix of public and private endeavors throughout history. Muhammad Ali of Egypt utilized " concessions " in the early 1800s to obtain public works for minimal cost while the concessionaires' companies made most of

2583-418: The private corporation's balance sheet is not straightforward. The effectiveness of PPPs as cost-saving venture has been refuted by numerous studies. Research has showed that on average, governments pay more for PPPs projects than for traditional publicly financed projects. The higher cost of P3s is attributed to these systemic factors: Sometimes, private partners manage to overcome these costs and provide

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2646-593: The private sector, one of the Treasury's stated benefits of PPP. Supporters of P3s claim that risk is successfully transferred from public to private sectors as a result of P3, and that the private sector is better at risk management . As an example of successful risk transfer, they cite the case of the National Physical Laboratory . This deal ultimately caused the collapse of the building contractor Laser (a joint venture between Serco and John Laing ) when

2709-484: The private sector, these projects are always paid for either through taxes or by users of the service, or a mix of both. PPPs are structurally more expensive than publicly financed projects because of the private sector's higher cost of borrowing, resulting in users or taxpayers footing the bill for disproportionately high interest costs. PPPs also have high transaction costs . PPPs are controversial as funding tools, largely over concerns that public return on investment

2772-471: The private sector: When private companies take on a PFI project, they are deemed to acquire risks the state would otherwise have carried. These risks carry a price, which proves to be remarkably responsive to the outcome you want. A paper in the British Medical Journal shows that before risk was costed, the hospital schemes it studied would have been built much more cheaply with public funds. After

2835-674: The profits from projects such as railroads and dams. Much of the early infrastructure of the United States was built by what can be considered public–private partnerships. This includes the Philadelphia and Lancaster Turnpike road in Pennsylvania, which was initiated in 1792, an early steamboat line between New York and New Jersey in 1808; many of the railroads, including the nation's first railroad , chartered in New Jersey in 1815; and most of

2898-403: The profits of private entities. PPPs are often structured so that borrowing for the project does not appear on the balance sheet of the public-sector body seeking to make a capital investment. Rather, the borrowing is incurred by the private-sector vehicle implementing the project, with or without an explicit backup guarantee of the loan by the public body. On PPP projects where the cost of using

2961-473: The project economically viable. In other cases, the government may support the project by providing revenue subsidies, including tax breaks or by guaranteed annual revenues for a fixed period. Within public-private partnerships (PPPs), there are various risks associated. One risk common within PPPs is the lack of proper or accurate cost evaluation. Oftentimes the estimated costs of a project will not properly account for delays or unexpected events, leading to

3024-1021: The public sector was opposed to its implementation. In 1993, the Chancellor of the Exchequer described its progress as "disappointingly slow". To help promote and implement the policy, Major created institutions staffed with people linked with the City of London , accountancy and consultancy firms who had a vested interest in the success of PFI. Around the same time, PPPs were being initiated haphazardly in various OECD countries. The first governments to implement them were ideologically neoliberal and short on revenues : they were thus politically and fiscally inclined to try out alternative forms of public procurement. These early PPP projects were usually pitched by wealthy and politically connected business magnates . This explains why each countries experimenting with PPPs started in different sectors . At that time, PPPs were seen as

3087-476: The rate of non-P3 schools. In Ontario, a 2012 review of 28 projects showed that the costs were on average 16% lower for traditional publicly procured projects than for PPPs. A 2014 report by the Auditor General of Ontario said that the province overpaid by $ 8 billion through PPPs. In response to these negative findings about the costs and quality of P3 projects, proponents developed formal procedures for

3150-489: The relationship is contractual, a franchise, or the load shedding of some previously public service to a private or nonprofit entity." A more general term for such agreements is "shared service delivery", in which public-sector entities join with private firms or non-profit organizations to provide services to citizens. There is a semantic debate pertaining to whether public–private partnerships constitute privatization or not. Some argue that it isn't "privatization" because

3213-487: The risk was costed, they all tipped the other way; in several cases by less than 0.1%. Following an incident in the Royal Infirmary of Edinburgh where surgeons were forced to continue a heart operation in the dark following a power cut caused by PFI operating company Consort, Dave Watson from Unison criticized the way the PFI contract operates: It's a costly and inefficient way of delivering services. It's meant to mean

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3276-576: The section may face closure. The section between Oshamambe and Numanohata is the part of the main link route between Sapporo and Hakodate . As such, the limited express trains Super Hokuto and Hokuto run between two cities once per 1 to 2 hours, as well as Suzuran between Sapporo and Muroran . As for the local service, the line is roughly divided into four sections, namely the section between Oshamambe and Higashi-Muroran, between Higashi-Muroran and Muroran, between Higashi-Muroran and Tomakomai, and between Tomakomai and Iwamizawa. The last section

3339-441: The service is intended to be borne exclusively by the end-user, or through a lease billed to the government every year during the operation phase of the project, the PPP is, from the public sector's perspective, an " off-balance sheet " method of financing the delivery of new or refurbished public-sector assets. This justification was particularly important during the 1990s, but has been exposed as an accounting trick designed to make

3402-414: The services is borne wholly or in part by the government. Typically, a private-sector consortium forms a special company called a special-purpose vehicle (SPV) to develop, build, maintain, and operate the asset for the contracted period. In cases where the government has invested in the project, it is typically (but not always) allotted an equity share in the SPV. The consortium is usually made up of

3465-547: The standard model of public procurement based on competitively tendered construction of publicly owned assets. In 2009, the New Zealand Treasury , in response to inquiries by the new National Party government, released a report on PPP schemes that concluded that "there is little reliable empirical evidence about the costs and benefits of PPPs" and that there "are other ways of obtaining private sector finance", as well as that "the advantages of PPPs must be weighed against

3528-427: Was associated with the neoliberal turn. Instigators of the policy portrayed PPPs as a solution to concerns about the growing level of public debt during the 1970s and 1980s. They sought to encourage private investment in infrastructure , initially on the basis of ideology and accounting fallacies arising from the fact that public accounts did not distinguish between recurrent and capital expenditures. In 1992,

3591-539: Was double-tracked in 1968, and the Mareppu–Higashi-Muroran section was doubled in stages between 1968 and 1978, with five new tunnels and realignments shortening the route by 0.8 km. The Numanohata–Muroran section was electrified in 1980 in conjunction with the electrification of the Chitose Line to Sapporo. Public-private partnership#Japan A public–private partnership ( PPP , 3P , or P3 )

3654-437: Was doubled between 1968 and 1969, but the 4 km Kuriyama–Kurioka section became single track in 1990 as a result of the collapse of a tunnel. The 42 km Oshamambe–Toya section was double-tracked between 1964 and 1975, involving the construction of ten new tunnels and realignments that reduced the route length by 1.7 km. Several of the abandoned single-track tunnels can be seen in this section. The Usu–Nagawa section

3717-439: Was down to 45.4%. Performance monitoring is a general concern from these surveys and in the scholarly criticisms of these arrangements." After a wave of privatization of many water services in the 1990s, mostly in developing countries, experiences show that global water corporations have not brought the promised improvements in public water utilities. Instead of lower prices, large volumes of investment, and improvements in

3780-454: Was no more efficient than other forms of borrowing and it was "illusory" that it shielded the taxpayer from risk'. One of the main rationales for P3s is that they provide for a transfer of risk : the Private partner assumes the risks in case of cost overruns or project failures. Methods for assessing value-for-money rely heavily on risk transfers to show the superiority of P3s. However, P3s do not inherently reduce risk, they simply reassign who

3843-580: Was once an important freight route, but became a quiet local line after coal mines closed. Prior to the opening of the Hokkaido Shinkansen , there were also sleeping car trains between Honshu and Hokkaido , such as the Hokutosei , Cassiopeia , Twilight Express , and Hamanasu . Some local trains may skip Koboro (marked "◌"). In 1892, the Hokkaido Colliery and Railway Company opened

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3906-661: Was opened between 1923 and 1928 as the Osawa Line ( 長輪線 , Osawa-sen ) by the Imperial Japanese Government Railways , which later became the Japanese National Railways (JNR). The line was built to bypass the mountainous section of the Hakodate Main Line , as well as to link the inland Iburi to the Muroran Port. The two lines were merged into one in 1931, and renamed the Muroran Main Line, with

3969-531: Was to promote and implement PFI. PUK was central in making PPPs the "new normal" for public infrastructure procurements in the country. Multiple countries subsequently created similar PPP units based on PUK's model. While initiated in first world countries , PPPs immediately received significant attention in developing countries . This is because the PPP model promised to bring new sources of funding for infrastructure projects in transition economies , which could translate into jobs and economic growth . However,

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