Minister of Finance Jim Flaherty on infrastructure funding
The Honourable Jim Flaherty, Minister of Finance and advocate on the P3 model shares his insight and expertise.
How can P3s deliver benefits to government, industry, and end users?
Public-private partnerships improve the delivery of public infrastructure for Canadians and provide better value for taxpayers. Under P3 arrangements, governments continue to own the infrastructure assets while the private sector plays a larger role in their design, construction, operation and maintenance. In doing so, the private sector assumes a greater share of project risks. The risk transfer gives incentives to the private sector partner to deliver projects on time and on budget and lower costs over the full life cycle of assets. P3s mean that Canadians benefit from quality, high-performing infrastructure.The private sector also takes on a role in financing the project. By having private financing at risk, it incentivizes the private sector to finish the project on time and on budget and lowers costs over the life cycle of the asset.
Why are P3s the most suitable method to update Canada’s infrastructure?
At a time when all levels of government are focused on both infra- structure renewal and getting the most out of government spending, P3s represent an innovative way to stretch every taxpayer dollar spent further when compared to traditional government infrastructure spending. This is mainly achieved by transferring risks to the private sector,such as design, financing, construction, operating and maintenance risks.
How has Canada managed to secure their position as a global leader in the P3 model?
Canada is recognized as a global leader in P3s. Canadian governments have done that by following a number of best practices, such as establishing dedicated P3 units at the provincial level to concentrate knowledge and expertise on P3s. At the federal level, we established PPP Canada in 2008 to advance federal efforts to develop the Canadian P3 market. Canada also has a diverse and consistent slate of public infrastructure projects that has helped attract more competition among domestic and international players, generating lower costs and greater value for taxpayers. PPP Canada itself has committed over $770 million in federal contributions towards 16 projects across Canada,with more than $3 billion in capital costs.
We recognize that some projects are better suited for a P3, and that is why we emphasize in-depth ‘Value for Money’ analysis to determine if a P3 is the best viable procurement option for a given project, ensuring greatest value for taxpayers dollars.
What areas of Canada’s infrastructure are most suitable for P3 projects?
P3s can deliver value for money for a range of projects — from bridges, hospitals, schools, airports, wastewater plants and more, where private sector innovation can be harnessed to its fullest extent. Experience to date in Canada has shown that P3s typically achieve the greatest value for money when projects are large, complex, and where the value of the risk transferred is higher than the incremental financing costs
Will the need for Public-private partnerships increase, or will we see fewer of them as the economy improves and governments become less revenue-strapped?
We owe it to taxpayers to always consider innovative options when looking at infrastructure projects. P3s must be part of that mix, ensuring that government infrastructure spending is done in the most costeffective manner possible. The benefits that P3s provide to taxpayers and governments go well beyond financial considerations though, as they leverage private sector expertise to deliver infrastructure projects on time and on budget, meeting high performance and maintenance standards over the long-term. That is why, our Government has made P3s a key part of our long-term plan to improve Canada’s infrastructure.