Reference: 20250193
14 April 2025
Adam Irish
[FYI request #30386 email]
Dear Adam
Thank you for your Of icial Information Act request, received on 17 March 2025. You
requested the following:
Under the Official Information Act, I request information on the repayment
expectations for private equity contributions in transport projects.
Specifically, I'm interested in understanding how this approach is considered
value for money. The Crown can typically borrow at the government bond rate,
offering a lower risk return rate of 4.64% for 10-year bonds. In contrast, private
equity investment usually requires a return exceeding 8%. This suggests that if
the taxpayer funds a return higher than the government borrowing rate, and if the
budget isn't balanced, we're essentially borrowing more at 4.64% to pay higher
returns on the equity investment. Moreover, even if the taxpayer directly funds it,
the interest cost for the project would be significantly less than the required return
of the private equity investment.
It appears counterintuitive when the government could initially fund these projects
through debt, thereby owning the asset at the end of the period. The cost of
maintaining a fully owned asset is typically much lower than the lease costs
private investors require to generate a return on their capital. Furthermore,
leasing means the Crown foregoes any potential capital appreciation, which is
then factored into the market return that the private equity holder requires. How is
this approach consistent with achieving value for money?
Could you please provide any briefings and analyses from the Department of
Transport and/or Treasury on this matter
Please note that this response also addresses your requests for information on
education and infrastructure projects which were received by the Treasury on 19 March
and 25 March 2025 respectively.
1 The Terrace
PO Box 3724
Wellington 6140
New Zealand
tel. +64-4-472-2733
https://treasury.govt.nz
Information being released
Please find enclosed the following documents:
Item Date
Document Description
Decision
1. September 2015
Public Private Partnership
Released in full
Programme: The Public Sector
Comparator and Quantitative
Assessment – A Guide for Public
Sector Entities
2. September 2015
Public Private Partnership
Released in full
Programme: The New Zealand
PPP Model and Policy: Setting the
Scene – A Guide for Public Sector
Entities
Information publicly available
The following information is also covered by your request and is publicly available on
the Treasury website:
Item Date
Document Description
Website Address
3. November 2024
New Zealand PPP Framework
https://www.treasury.govt.nz/
– A Blueprint for Future
sites/default/files/2024-11/nz-
Transactions
ppp-framework-a-blueprint-
for-future-transactions.pdf
Accordingly, I have refused your request for the documents listed in the above table
under section 18(d) of the Official Information Act, that the information requested is or
wil soon be publicly available.
Information to be withheld
There is additional information in scope of your request. However, the documents
containing the information, and the document names/titles are being withheld in full
under the following sections of the Of icial Information Act:
•
section 9(2)(b)(ii) – to protect the commercial position of the person who supplied
the information, or who is the subject of the information,
•
section 9(2)(f)(iv) – to maintain the current constitutional conventions protecting
the confidentiality of advice tendered by Ministers and officials,
•
section 9(2)(h) - to maintain legal professional privilege, and
•
section 9(2)(j) - to enable the Crown to negotiate without disadvantage or
prejudice.
In making my decision, I have considered the public interest considerations in section
9(1) of the Official Information Act.
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Please note that this letter (with your personal details removed) and enclosed
documents may be published on the Treasury website.
This reply addresses the information you requested. You have the right to ask the
Ombudsman to investigate and review my decision.
Yours sincerely
Amanda Wilson
Acting Manager, National Infrastructure Unit
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