How to fund a better public transport system in Melbourne

How to fund a better public transport system in Melbourne

The biggest puzzle in Victorian politics is why both major parties are enthusiastic for the public-private partnership method of financing public infrastructure, even though the costs are at least twice those of financing through public borrowings.

The effective interest expense on public-private partnership deals done for roads, hospitals, schools, jails and police stations is higher than for the deals by credit-worthy individuals to get a mortgage or a loan for a car. The yield on Victorian 10-year debt is just under 4 per cent. The effective cost of funds for the Royal Children’s Hospital and the desalination plant is in excess of 11 per cent.

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