Off the Books: Extracts from ‘Game of Mates’

OK, we're off the books now. I always thought when looking at budget breakdowns that there seems to be a lot missing.

So...transport and infrastructure. This also hints as to why there are so many strange infrastructure projects out there that seem to make little sense.
There are these agreements between government and private companies called public private partnerships (PPPs). It goes like this...
"Private companies would appear to put their own money at risk to build a piece of infrastructure...but governments would in fact guarantee a high return" if the public fails to use the infrastructure enough to meet the guaranteed return, the government fronts the rest using tax dollars.
"The guaranteed return is a future 'liability' of the public but, crucially, it is NOT COUNTED AS PUBLIC DEBT in official statistics.
With this guarantee at hand, the private company is able to borrow from banks abroad. The debt is made, "and was guaranteed to be paid off by the government, but it is not on the books as public debt. To all intents and purposes, the infrastructure was still financed by the government and the public, but now at inflated prices and with a guarantee of a large profit [to the private enterprise]"
"Private companies would often not actually put up much private money, but would borrow money from the government itself at low interest rates which they would have to pay back if they exceeded a certain return later...The crucial element that made this trick work politically is that a public loan to a private company can be counted as a financial asset on the governments books, netting out any extra debt taken on before being consolidated and reported, even if it is unlikely that it will get paid back and earns absurdly low interest rates...[this is] something that should be seen as a straightforward gift of publicly funded infrastructure...Unsurprisingly, these arrangements were kept rather quite at the time they were made.
As one researcher puts it...
"PPPs originated as an accounting trick, a way round the governments own constraints on public borrowing....Just as companies like Enron had tried to conceal their true liabilities by moving them 'off balance sheet', so governments started using PPPs as "tricks...whereby public accounts imitate the creative accounting of some companies in the past." (Hall 2014)
As far as why this results in strange infrastructure projects with dubious benefits for the public...
Private institutions that do this have "...no reason to be truthful about the social benefit of the infrastructure" and have "...every incentive to deceive" and claim that it will be to the public benefit.
These projects are proposed "...without any government agency identifying a need for it". Where they were once called "unsolicited proposals", in a "brilliant piece of marketing, that unattractive label has recently been rebadged as 'market-led proposals'.
"...and naturally, there are revolving doors involved" between private industry and government.