Earlier this week, the Grattan Institute released a report, entitled “Megabang for megabucks: driving a harder bargain on megaprojects”, which roasted the Victorian Government’s infrastructure waste:
A market-led proposal involves private-sector proponents developing a project proposal and then lobbying government to invest in it. When a government accepts a market-led proposal, it usually bypasses the tender process, and instead negotiates directly with the firm that submitted the proposal.
It’s an extreme case of bypassing competition; the government engages with a monopoly provider during as well as after the contract negotiation. About $11 billion of transport infrastructure over the past fifteen years has been commissioned through market-led proposals. They are particularly prominent in Victoria, where a sixth of the value of megaproject contracts has been awarded through market-led proposals…
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Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
