INVESTING IN TOMORROW’S PROSPERITY: HOW PUBLIC-PRIVATE PARTNERSHIPS CAN HELP BUILD ONTARIO UP
It’s July 1, 2041. Ontario’s population is almost 17.8 million with well over half of the province’s residents living in the Greater Toronto Area (GTA). Our big cities are dynamic and bustling. Twenty-six years into Ontario’s future, we are a thriving economic engine for the country, and a highly desirable place to live, visit and invest. Our urban centres, in particular, have modern, reliable public infrastructure and services that meet the transportation and transit needs of our busy cities and the health care needs of our aging population. How did we get here when the Federation of Canadian Municipalities pegged t he national municipal infrastructure deficit at more than $123 billion in 2007 and PricewaterhouseCoopers assessed the total infrastructure debt in Canada at $350-$400 billion ($30,000 for every household in Canada)? The annual cost of traffic congestion to commuters in the Greater Toronto and Hamilton Area alone was pegged at $3.3 billion in a 2008 Metrolinx study, and this cost was projected to balloon to $7.8 billion by 2031, if Ontario did not take action.
FACING THE INFRASTRUCTURE GAP
Since 2003, the Government of Ontario has invested nearly $100 billion in public infrastructure, supporting an average of 100,000 jobs each year in construction and related industries. The 2015 Provincial Budget committed to a record investment of more than $130 billion in public infrastructure over 10 years, a spending plan that is expected to create 110,000 jobs. By making the unprecedented investments often in partnership with other levels of government and leveraging the strengths of the private sector, the province has heavily invested in critical projects like roads, bridges and public transit and in social infrastructure like water, schools and hospitals, to build our cities of tomorrow. Given the Province’s sizeable deficit and net debt, much of these investments would not have been possible without finding innovative ways to finance and procure large, complex, world-class public infrastructure projects ontime and on-budget. Public-private partnerships, or Alternative Financing and Procurement (AFP) as they are known in Ontario, have played a major role in closing the infrastructure gap in the province.
PUBLIC-PRIVATE PARTNERSHIPS FOR A PROSPEROUS ONTARIO
Today, roughly half of Canada’s P3s are located in Ontario. P3s are attractive because the economic and employment benefits are undeniable. There are currently 238 P3 projects across Canada, with those that are already in operation or under construction valued at more than $81 billion. Over a 10-year period, P3s created more than 290,000 direct full-time equivalent jobs, contributed $25.1 billion to direct GDP, and generated $9.9 billion in cost savings and $7.5 billion in tax revenue contributions to federal and provincial governments. According to the Conference Board of Canada, studies comparing P3s and conventional projects show that Canadian P3s deliver an average of 13 percent in savings.
TRANSPORTATION AND TRANSIT P3s IN ONTARIO
P3s are increasingly trusted for the delivery of first-rate infrastructure and services in the transportation sector. Two major P3 projects in Toronto, for example, will help provide commuters with faster, convenient and more reliable connections to the city’s airports. The Billy Bishop Toronto City Airport Pedestrian Tunnel, an 850-foot underground and underwater path that runs from the mainland to the Toronto Island airport terminal, is an excellent example of private investment and innovation in infrastructure procurement. Unveiled to the public on July 30, the new route – a 6-minute walk – dramatically improves passenger traffic to and from the airport with convenient and reliable access. The $82.5 million tunnel was financed entirely by the private sector and the existing $20 Airport Improvement Fee – no taxpayer dollars were used. And because three of the tunnel drifts were built to include new City Of Toronto sanitary and water mains to and from the Toronto Islands, the project has helped save Toronto taxpayers more than $10 million in duplicated construction efforts. Another important P3 transportation project was recently completed in Toronto. The $456 million Union Pearson Express (UPX) rail line linking Toronto’s Pearson International Airport and downtown opened on June 6, 2015 on time (in time for the Pan AmGames) and on budget. The UPExpress offers commuters a comfortable, affordable and convenient trip in just 25 minutes. Billions of dollars are being invested by the public sector in Light Rail Transit projects across Ontario. Toronto’s Eglinton Crosstown LRT, currently under construction, is the largest transit expansion in Toronto’s history and will be one of the largest P3 projects in the country by the time it is completed in 2021. Once operational, the Crosstown will accommodate more than ten times as many passengers and move up to 60 percent faster than existing bus services. The $2.1 billion Ottawa Light Rail Transit Project (known as the Confederation Line), the capital’s first light rail public transit system, will accommodate population growth that is expected to increase by 30 percent by 2031. It is tracking on time and on budget and scheduled to open in 2018. The Confederation Line is expected to produce operational savings of $16 million a year by 2021.
OTHER P3s IN ONTARIO
Health is another leading sector for P3s in Canada. There are currently 88 P3 hospitals and health-care facilities across Canada, with 59 located in Ontario. In a few days, the doors will open to the public at the Humber River Hospital, one of Canada’s largest regional acute care hospitals and North America’s first fully integrated and inter-operable digital hospital. The hospital is LEED Silver Certified – on track for LEED Gold – and designed and constructed to minimize environmental impact with 100 percent fresh air throughout, 20,000 equivalent savings in tons of CO2 due to green initiatives, and 95 percent of construction waste diverted from landfill. The project came in at a savings of $469 million. P3s have also punched above their weight in Ontario’s justice sector. The Durham Consolidated Courthouse improves access to justice services by bringing together various services that had been previously delivered in eight different locations into an environmentally friendly single facility in downtown Oshawa. The first Design-BuildFinance-Maintain (DBFM) project under Infrastructure Ontario’s AFP (P3) program saved taxpayers $49 million. The evidence is clear that P3 projects can be a major part of the solution to our infrastructure challenges and successes. It is, therefore, not surprising that, nationally, 62 percent of Canadians are open to P3s to build infrastructure and deliver public services. A majority of Canadians support the use of P3s across sectors of the economy, notably transit systems, roads, social housing, and hospitals. We want
– our governments to find ways to make sure our water is
p safe, our roads and transit systems are reliable and our hospitals are modern and well equipped. And wherever public funding is at stake, as taxpayers, we want to know that our hard-earned dollars are being spent wisely. Mark your calendars for 2041, because the critical investments and innovative partnerships that the public and private sectors are making today mean the best P3s are yet to come.