Penalties will apply for a failure to reach agreed targets in eight performance measures, including road surface quality, the response to defects and emergencies on the road, and even public communications. But the successful bidders will also be awarded the right to explore other unspecified commercial opportunities along the roads they manage, from which the state may also take “a share of net revenues”. Loading The deals also stand to ease the immediate financial pressure on the Andrews government as it juggles a huge $30 billion list of transport infrastructure projects. The public-private partnerships will enable the government to defer paying to fix key parts of an arterial network that Victoria’s auditor-general found last year was in such poor condition it was making roads less safe and more costly to use.

The case for repairing and expanding the outer suburban road network is urgent, new tender documents for the suburban roads packages state. Rapid population growth, entrenched car reliance and deteriorating roads are combining to threaten the economic wellbeing of Melbourne’s outer suburbs, which are forecast to absorb another 765,000 people in the next 15 years. “The combined effects of worsening congestion and deteriorating road assets increases the risk of outer suburban growth areas and employment centres not realising their potential and being unable to contribute to the sustainable development of Melbourne,” the document states. Craigieburn Road forms part of the northern roads upgrade package. Credit:Paul Jeffers The government this week moved to enter into two new public-private partnerships, issuing an invitation for expressions of interest for $2.2 billion of work for roads in Melbourne’s north and south-east.

Tender documents for the two road projects confirm that the government has made no commitment to pay any of the up-front costs of construction for improvements to 14 outer suburban arterial roads included in the $2.2 billion package. “Although the state has not committed to making a capital contribution to the projects at this point, it is willing to consider the use of state contributions in certain circumstances based on the proposed financing solution of each respondent,” the documents state. Instead, the successful bidders will receive quarterly availability payments for 20 years after construction work is complete. The two new partnerships follow the recent launch of a $1.8 billion roads package for the outer western suburbs, also a public-private partnership, for which construction began last month. The Andrews government’s use of a public-private partnership model for arterial roads is unprecedented in Australia, although the former Brumby government used it to construct the $759 million Peninsula Link freeway.

Southern Way, the consortium that built Peninsula Link, will continue to receive quarterly payments from the state until 2038. The successful bidders on the suburban roads packages are likely to strike agreements that would extend their repayment periods to at least 2040. Treasurer Tim Pallas described the public-private partnerships as “the biggest investment in Melbourne’s arterial roads since they were first constructed”. “We recognise that arterial roads are just as important as major freeway connections to efficiently move people and goods around our rapidly growing city,” Mr Pallas said in the expression of interest document. David Hensher, director of the Institute of Transport and Logistics Studies at the University of Sydney, said public-private partnerships had generally only been used in Australia to fund the construction of toll roads, with sometimes financially disastrous results.

But a commercial agreement that focused on construction and maintenance and ignored traffic volumes suggested the Andrews government had learned from past toll road failures, Professor Hensher said. “That is a model that is growing in popularity,” he said. “It has an advantage in that it gives government control, assuming they write the contract correctly.” Associate Professor Hussein Dia is deputy director of Swinburne University’s Smart Cities Research Initiative, and said the inclusion of scope for commercial opportunities for the successful bidder could lead to a number of outcomes. In the shorter term it could result in more roadside advertising but in future it could encourage novel strategies such as creating dedicated lanes for electric vehicles, he said.