July 10, 2016

Don't shelve success, minister: A history of successful public-private partnerships in Canada

Paige MacPhersonAlberta CTF Director
 

(This op-ed by Paige MacPherson, Alberta Director of the Canadian Taxpayers Federation, was originally published in the June issue of "Business in Calgary" magazine.)

It’s not entirely clear why Alberta Infrastructure Minister Brian Mason is shelving all public-private partnerships in favour of “traditional methods of funding” for the next five years of the government’s capital plan.

What should be clear, however, is that in any policy area, refusing to at least take a look at all available options just doesn’t make sense. Ignoring potential political motivations (cough, cough: giving more taxpayer-funded work to government unions) and thinking only of building quality infrastructure at the best price, it’s hard to understand why the government would universally reject a model that’s enjoyed so much success.

Public-private partnerships – better known as P3s – involve engaging the efficiency, experience and expertise of the private sector on public infrastructure projects. In many cases, P3s allow businesses to not only design and build infrastructure, but also to help finance, maintain and operate it. Often, governments pay for projects once they’re completed, and cost overruns are avoided and ideally, contractually forbidden – unlike in ‘traditional’ government projects.

Let’s be clear: not all P3s are a good deal for taxpayers. Like any financing model, they make sense in some cases and not others. But the P3 financing model has worked well for many Canadian infrastructure projects.

In 2013, Regina put out a competitive tender for a P3 wastewater facility. The Canadian Union of Public Employees argued against the model, and opponents gathered enough signatures on a petition to force a vote on the matter. The P3 project passed with 57 per cent. Ultimately, a report by Deloitte estimated that the project ended up saving a total of $138 million, or 29 per cent less than what it would have cost had it been traditionally procured and financed. That’s almost double what the city thought it would save.

In British Columbia, the P3 model has been used often – and in particular has helped three major health care projects come to fruition on time and on budget. The Abbotsford Regional Hospital and Cancer Centre was built in 2008, followed by an outpatient and surgery centre in 2011 and a critical care centre in 2014.

Here in Alberta, the government used a P3 model to design, build, finance and operate the Northwest, Northeast and Southeast legs of Anthony Henday Drive in Edmonton, saving taxpayers a cumulative $614 million over the course of the three projects.

P3s have worked outside of Canada as well. In 2000, a group called Environment Probe drew attention to a P3 success story out of Indianapolis.

In 1994, Indianapolis privatized the operations and maintenance of two of its wastewater treatment plants, saving $72.8 million U.S. over the first five years of the contract. Environment Probe said the P3 model resulted in improved environmental results and strengthened relations with staff at the plants.

As should be the case with any project, P3 contract agreements must be entered into with healthy skepticism. The government must act diligently on behalf of the taxpayer, ensuring all bases are covered and accountability mechanisms are in place.

The province has committed $39.1 billion to infrastructure over the next five years, with a chunk of that cash coming to Calgary. There is no reason to automatically reject a funding model that has in the past delivered important infrastructure projects on time, on budget and often saving taxpayers money.

Comments
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commented 2016-07-11 17:07:31 -0400
I agree Bill. It just asks for corruption. Nothing wrong of course for government to contract out. Have private companies build roads, move our mail, ect. So yes, government doing work meant for the private industry needs to back out and return to private hands. But partnerships cause confusion of who is accountable (which I think is the point). Think of Solyndra and the billions lost to the US government.
commented 2016-07-10 18:26:35 -0400
“Public-Private Partnership: Another Phrase for Fascism -
”https://www.mises.ca/public-private-partnerships-another-phrase-for-fascism/">https://www.mises.ca/public-private-partnerships-another-phrase-for-fascism/

Traditionally, the ancient Roman term “Fascism” has referred to a specific economic theory and form of government, rather than to a racist ideology. This form of Collectivism is called “THE THIRD WAY” because it is neither laissez faire capitalism nor communism.

Economics of Fascism

• Government/corporate partnerships- public/private
• Public works projects to achieve full-employment
• Private sector bail-outs of banks/corporations
• Government funding of militarization of federal domestic law enforcement
• State/school cooperation to satisfy workforce needs and ideological goals
• Government take-over of investments/retirements
• Sweeping, government-imposed energy policy
• Government subsidies of key industries (green tech)
• Government/central bank control of boom/bust markets with credit-expansion (money-printing)
• People forced to buy government bonds to fund debt
commented 2016-07-10 18:14:03 -0400
In a free market demand economics society there should be no such thing as public-private aliances; that is the core of fascist economics and communist crony corporatism.
commented 2016-07-10 15:03:37 -0400
Alberta walking backwards continues.

So think before you vote next time Alberta – having Notley, the insignifi-cunt, can’t be good for the blood pressure.

Enjoy the beating Alberta – you deserve it. You choose Hitler with tits and you get Hitler with tits.
commented 2016-07-10 13:45:44 -0400
The Left’s Great Enemy is Capitalism. For a socialist government to co-operate with the private sector is like asking Satan to go to church, at least for the clique of socialists that hang out on the left of the socialist spectrum. Certainly, Notley and her comrades appear to be in that category so no one should be very surprised at this development. By the same token, no one should expect them to relent unless perhaps dragged kicking and screaming toward the right by a public backlash.
commented 2016-07-10 12:37:28 -0400
The Non-Democratic Party knows it cannot pursue the P3 model. First, because it is beholden to the public service union bosses. Second and more important, they have driven private contractors and private sector investment out of the province, so there is no private sector to partner with.
commented 2016-07-10 12:34:15 -0400
Any government involvement in work which can be done by the private sector is a mistake.
commented 2016-07-10 11:41:23 -0400
You assume saving money and having on time, on budget projects are a priority for the Alberta NDP. The bigger the spill, the more there is to slosh around to all their friends.
commented 2016-07-10 09:47:12 -0400
P3 model was used in Nova Scotia in 1998 to build nearly 40 schools. Because of poor contract wording, the P3 consortia ripped off the government for millions of dollars. While P3 can be cheaper and better for the taxpayer, contracts have to be TIGHT.