Partnering Up To Address Canada’s Infrastructure Deficits
Insight P3's are collaborative projects set to make daily life easier for us all.
The Toronto skyline sits at eye level, framed perfectly in the floor-to-ceiling pane glass windows of Bert Clark’s office – president and CEO of Infrastructure Ontario.
It’s fitting, given the city below is dotted with examples of the organization’s achievements – there’s Bridgepoint Health Centre, the Toronto South Detention Centre and the Centre for Addiction and Mental Health. These are testaments to the success of IO’s approach to public-private partnerships (P3) known in the province as Alternative Financing and Procurement projects.
“We’ve completed over 30 projects, 29 at the contracted cost or less,” says Clark. “Twenty-two were on schedule or earlier, and only two were more than six months late.”
A strong P3 model
Initially set up in 2005 to tackle the province’s capital deficit, Ontario’s P3 model AFP has tackled some the most ambitious assets in health, transportation, and justice.
The model fosters partnerships between the public sector and private sector consortiums – comprised of designers, construction companies and life cycle management – for developing public assets.
Essentially, the private sector takes the risks associated with design, construction, and ongoing maintenance of the building or highway, while the government manages the political risk and initial funds.
“The approach we’re taking is very pragmatic,” says Clark. “The objective isn’t to introduce private capital, the objective is for the public sector to have cost certainty and asset quality certainty – you can’t have that if all your money is at risk.”
“That’s a massive amount of work already underway and we’re talking about more.”
For example, if IO’s contract with the private sector consortium is for $100 million and goes over by $5 million, the consortium has to absorb that cost.
“Oh, and we’re not paying a dollar until it's done and when we do, we’ll pay you monthly for 30 years and only if we got exactly what we wanted,” says Clark.
The approach pushes the private sector to design and build an asset that will last.
Easy access for us all
As he speaks, tunnel-boring machines are elbowing their way beneath Eglinton and the link between Pearson Airport and Union station is well on its way to completion in time for the 2015 Pan Am games in Toronto, which IO is also heavily involved in developing athletic facilities for.
“Four years from now, we’ll have a Union-Pearson connection, Eglinton well advanced, a Light Rail Transit in Ottawa almost done, rapid transit in Waterloo advanced and Highway 407 extending almost all the way out to Peterborough,” he says. “That’s a massive amount of work already underway and we’re talking about more.”
Although an overwhelming portion of P3 projects are in Ontario, the model has been employed countrywide.
“Canada has been using this approach to infrastructure for 20-plus years and one of the earliest projects was Confederation Bridge which links PEI and New Brunswick,” says Mark Romoff, President and CEO of The Canadian Council for Public-Private Partnerships (CCPPP) – a council established in 1993 to help promote the model. “It’s got quite a long history.”
Growing our P3 reputation while growing jobs
At the moment there are 205 P3 projects around the country across a myriad of sectors, mainly in road and transit construction. The CCPPP estimates that P3 projects have created 290,000 direct jobs over the past decade and contributed $48 billion to Canada’s GDP.
“Canada is recognized internationally as best in class when it comes to its approach to P3,” says Romoff.
But the model isn’t without its critics.
“There’s this thinking out there that these partnerships mean privatization, that the government is selling the assets and this is never the case; if there's privatization, then we don’t consider it a P3 project,” says Romoff. “Besides, I can’t think of a project that hasn’t been built by the private sector, governments don’t construct things they turn to the private sector – the real question is which approach do you want to use.”