Guest post by Mark Romoff, President and CEO, The Canadian Council for Public-Private Partnerships
On December 9, 2014, Ontario’s Auditor General released her 2014 Annual Report, sharply criticizing Ontario’s Alternative Financing and Procurement (AFP or P3) program and suggesting a return to using the traditional method of delivering public infrastructure to achieve savings in taxpayer money. The report expresses skepticism about the cost-saving benefits of the P3 delivery model, directly contradicting what is widely viewed by P3 players and the Canadian public generally as a powerful tool for delivering much needed public infrastructure in a cost-effective and timely manner.
In particular, the Auditor General’s report paints an inaccurate representation of the P3 model and makes assumptions about the cost of traditional project delivery methods that are not backed by any empirical evidence.
Canada’s track record on P3s has demonstrated that the transfer of risks to the private sector under the P3 model has real value. Ontario has over 100 AFP projects in procurement or implementation phases, and a total of 220 P3/AFP projects have been brought to market across Canada. Managed by Infrastructure Ontario, Ontario’s AFP program is internationally renowned as the “gold standard” for P3 programs. An independent study recently completed by InterVISTAS Consulting Inc. confirmed the impressive economic impact that P3s have had on the Canadian economy over the past decade, including $9.9 billion in cost savings for tax payers over the traditional procurement method, $7.5 billion in tax revenue to government, and 517,430 total full-time equivalent jobs.
On the other hand, to believe that the public sector can deliver every project on-time and on-budget or even has the capacity to manage multiple, complex projects at the same time, is simply unrealistic. Taxpayers are tired of projects costing far more than initially budgeted, deficient in design and construction, and depreciation from deferred maintenance, which is why governments have turned to P3s.
However, I do whole-heartedly agree with one recommendation in particular made by the Auditor General, which calls on the government to begin collecting data on the cost of delivering infrastructure under the traditional model. Traditional procurements should be held to the same high standard of scrutiny as P3s. I am confident that with full information, the benefits of P3s will be clearly evident.