P3s: Ensuring Municipalities Receive The Best Value Possible
Insight Canada's success in implementing public-private partnership projects results from the combination of a number of elements that together have fostered a strong and stable P3 transaction environment.
As such, infrastructure spending represents a significant portion of overall government expenditures, and as public officials it is our responsibility to ensure taxpayers receive the best value possible.
Over the past decade we have begun to think differently about infrastructure, by considering an asset’s entire lifespan rather than just the construction period. P3s engage the private sector for a longer period of time — typically twenty to thirty years — by integrating into a single contract the design, construction, and operations and maintenance phases. When done properly, this motivates the construction of government-owned assets that last and are properly maintained.
P3s transfer risk from taxpayers to the private sector — the risk of cost overruns, time delays, and quality product. To ensure this risk is truly transferred, the public sector pays only on performance over the life of the infrastructure. This requires the private sector to raise and invest significant amounts of capital. Having ‘skin in the game’ creates strong incentives for good performance and adds the discipline of the oversight of lenders.
The Canadian approach to P3s has made Canada a global leader with a strong market that is attractive to investors. This has been in part to the pioneering approach of provinces like Alberta, British Columbia, New Brunswick, and Ontario.
And now, as the market evolves and grows, there is greater interest and participation from Canadian municipalities. As the Government of Canada’s centre of expertise, PPP Canada has provided expert advice and support to help Canadian municipalities to build capacity and to develop and bring their P3 projects to market.
“The Canadian approach to P3s has made Canada a global leader with a strong market that is attractive to investors.”
The years 2013–2014 marked the fifth-year of the P3 Canada Fund. Over that time, PPP Canada fully committed the $1.2 billion Fund to more than 20 projects across the country leveraging more than $6 billion in public infrastructure projects. Of these projects, 16 are at the municipal level including water/wastewater facilities, transit and maintenance facilities, roads, and solid waste facilities.
In June, 2014, Round Six, the first round of the renewed P3 Canada Fund saw almost 75 percent of the applications from Canadian municipalities.
A plan for tomorrow
Already we have seen cities like Barrie, Calgary, and Saskatoon adopt the P3 model for their new transit facilities that will provide enhanced operation and maintenance services to sustain the current bus fleets while improving operational efficiency, quality of services.
In Greater Victoria and Sudbury we are seeing the P3 model being used to construct new biosolids facilities to modernize their approach to their wastewater management.
Saint John plans to construct a new 100 million litre per day drinking water treatment plant, to provide residents with cleaner, safer water and allow the city to minimize maintenance costs.
And in Edmonton, the city council is moving forward with their new Light Rail Transit project using the P3 model.
When done right, P3s have proven themselves a successful tool in the toolbox for governments across Canada, something Canadians can appreciate when they use and enjoy well-built, cost-effective infrastructure.