P3 model unduly criticized
In response to Dave Randell’s letter to the editor entitled “Don’t be too easily sold on P3s” published on Oct. 12, the St. John’s Board of Trade would like to address the criticism of public-private partnerships. We support thoughtful, evidence-based criticism and critical thinking. Constructive criticism has helped to improve the Canadian P3 model.
Private and public-sector members of the Canadian Council for Public-private Partnerships (CCPPP), the P3 industry and the St. John’s Board of Trade have listened and learned from this constructive criticism. The Canadian model is now internationally regarded as an efficient, predictable, transparent, and above all, a competitive procurement process. While thoughtful criticism has led to an improved model, there has been criticism promoting a misunderstanding of the P3 model. Let there be no mistake, in Canada, P3s are not privatization; the assets are publicly owned and controlled. The model has evolved over the past 25 years to make the best use of public resources and to ensure a high standard of asset management.
P3s are designed to provide real value for taxpayers’ dollars.
P3s are designed to provide real value for taxpayers’ dollars. The project must demonstrate value for money and attract at least three competitive bids to go ahead as a P3. The value for money report does a comparative analysis between the P3 approach and the traditional design, bid build approach. Once the process begins, the procurement agencies make documentation and value for money reports available to the public through their own web portals and CCPPP database.
The Canadian P3 procurement process consistently outperforms alternative approaches when it comes to delivering infrastructure on time and on budget. The infrastructure delivered is publicly owned and controlled. The focus on minimizing costs of infrastructure delivery across the lifecycle of the assets will lower the longterm costs of the facilities. The Canadian Centre for Economic Analysis has independently estimated that P3s have saved Canadians as much as $27 billion over the last 25 years. These projects are being built 13 per cent faster, which has added an additional $11 billion in value to the Canadian economy. Most importantly, P3s are creating 115,000 jobs and generating $5 billion of additional wages every year on average.
There is a robust infrastructure and P3 pipeline across Canada. The majority of the 266 P3 projects in the CCPPP database were delivered over the past 15 years, primarily because our federal and provincial governments have recognized the need to address our infrastructure deficit, which is estimated to be as much as $1 trillion in Canada. One of the reasons the Canadian P3 model is successful and the market is attractive to investors is because of the stability in the public infrastructure market.
In Canada, the overarching element in the P3 model is its innovative approach. Whether it’s the financing, the technology or the products developed to maintain these assets, innovation is at the heart of the model. It is important to be aware that models vary from country to country. P3s are not a one-size-fits-all solution to infrastructure needs and are not a panacea. Successful P3s are done for the right reasons and on the right project.
Partnerships take time and must be complemented with the ability to execute and manage properly. We encourage our government, as they move through the stages of our first P3 project, to work with agencies, such as the CCPPP, and continue to grow their capacity to manage projects into the future.
Through our education we have learned that private sector companies and unions can co-exist using a P3 model, it is not a P3 issue. Expectations must be met up front and managed throughout the contract. We will continue to encourage dialogue on P3s.
Newfoundland and Labrador is the last province in the country to embrace P3s and take advantage of their innovation, efficiency and value. Taxpayers should demand no less.