Canada’s World-Class Approach To Public-Private Partnerships
Insight President and CEO of The Canadian Council for Public-Private Partnerships, Mark Romoff, reflects on the successes of 2013 and looks forward to years of growth, innovation, and excellence ahead.
Canada has one of the most active public-private partnership (P3) markets in the world and the record shows that our approach is achieving success across the country. As Canadian governments face significant pressure to reduce deficits as well as invest in new public infrastructure, P3s are being viewed as a viable alternative to the traditional design-build procurement method.
These partnerships are achieving significant results for governments, taxpayers, and for Canada’s diverse infrastructure industry. A report undertaken by an independent consulting firm for The Canadian Council for Public-Private Partnerships (CCPPP) in March 2014 showed that P3s play a major role in boosting Canada’s economy.
Between 2003 and 2012, the following direct economic impacts were achieved: more than 290,000 full-time equivalent jobs, $25.1 billion in GDP, $9.9 billion in cost savings, and $7.5 billion in tax revenue to government. According to recent reports by both the Conference Board of Canada and The Fraser Institute, Canada has a strong track record of on-time, on-budget delivery and P3 projects are providing value for money to taxpayers. In Ontario, a 2013 study showed 29 of 30 projects were on budget and 28 of 30 were delivered on time or within three months of the scheduled completion date.
Canadians are recognizing this track record of success, with 62 percent of respondents in a CCPPP national poll indicating that they are open to public-private partnerships. Support levels in communities with P3 projects in operation were even higher.
There are currently 214 P3 projects across Canada, with those under construction or in operation worth more than $67 billion. From hospitals to roads, and from water treatment plants to social housing, P3s are being used in a wide variety of sectors.
One particularly active sector is public transit. With traffic congestion and urban growth necessitating new mass transit capacity, innovative financing and project development will be critical. LRT projects are underway in Vancouver, Edmonton, Waterloo, Toronto, and Ottawa. These large complex projects are well suited to the P3 approach because they bring together designers, builders, financiers and sometimes operators under a single consortium focused on results. And it’s important to note that P3s are not privatization. Governments retain ownership of the assest and exercise control over performance through penalties and hold-backs if the private partner does not meet its obligations under the agreement.
Pan Am Games
“In Ontario, several projects under construction for the 2015 Pan Am/Parapan Am Games are using the P3 model, with the private sector partners taking on the risk for delays and cost overruns.”
In Ontario, several projects under construction for the 2015 Pan Am and Parapan American Games are using the P3 model, with the private sector partners taking on the risk for delays or cost overruns. These iconic projects, such as the UP Express link between Union Station and the airport, the Athletes Village, and the Aquatics Centre will provide lasting community legacies and world-class venues for residents to enjoy.
Part of Canada’s early P3 success came through learning from the United Kingdom’s and Australia’s experience. These countries began developing projects in the 1990s. Today our model is viewed as world -class and emulated by other countries looking to introduce this approach. We have found the right balance between value for money and risk transfer, and have professional expertise on both the public and private side of the partnership, ensuring projects deliver the intended results.
There is healthy competition from domestic and international infrastructure companies that ensure that innovation and pricing are optimized. Continuous improvement is a hallmark as well. Jurisdictions around the country regularly consult with industry to refine their procurement processes to remain at the cutting-edge and to achieve the best results for Canadians.
Governments at the federal, provincial/territorial, and municipal level all recognize the importance of infrastructure investments to Canada’s economic prosperity and the quality of life of residents. We have a proven made-in-Canada approach that plays an important role in leveraging those infrastructure dollars.