TORONTO, Nov. 30, 2022 (GLOBE NEWSWIRE) -- The Canadian Council for Public-Private Partnerships makes the following statement on the Ottawa Light Rail Transit Public Inquiry report released today:
“The Council thanks the Honourable Justice William Hourigan and the entire commission team for its work investigating the commercial and technical circumstances that led to Stage 1 challenges for the Ottawa Light Rail Transit system.
Transit projects are among the most complicated infrastructure projects, given the significant distances they cover and the known and unknown risks they encounter from geotechnical conditions, engineering challenges and responsibilities for relocating utilities along the route, in addition to the complexity of linking the project with existing transit lines, the consideration of future expansions and the procurement, commissioning, operation and maintenance of rolling stock. A singular transit project is never an island in and of itself.
The Council emphasizes that the third ‘p’ in P3s — partnerships — is arguably the most critical. We commend the inquiry for stressing how partnerships are key to successfully delivering, operating and maintaining infrastructure while also sustaining — and growing — public trust. A strong partnership between the public and private partners ensures challenges are met and resolved together, striking a balance that avoids a zero-sum game in order to fully achieve the long-term benefits of the agreement. Collaboration is a necessity.
Justice Hourigan noted the city saved more than $100 million after a sinkhole unexpectedly opened up on Rideau Street because of the P3 agreement’s transfer of geotechnical risk to RTG. As he wrote, ‘It is unfair to dismiss this cost saving as a lucky benefit of the model . . . the P3 model worked precisely as it should have by transferring that risk. The people of Ottawa were the beneficiaries of this good planning.’
The Council is a strong advocate of including private debt and equity capital in P3 projects as a key enabler of risk transfer. The role of private lenders in these projects is an important element in any successful Project Agreement. As noted in the inquiry report: ‘Third-party lenders provide a degree of independent oversight; they are a reality check for both the client and the project company, to ensure that both are acting in a reasonable way. Replacing the lenders removed this oversight.’
The Council entirely supports the inquiry’s recommendation for the Ontario government to find ways to develop skills and capabilities at the municipal level to lead complex infrastructure projects and have ongoing access to expert advice and guidance throughout the project, particularly with respect to managing the relationship with the private-sector partner.
We do, however, disagree with the inquiry on how it views the future of infrastructure procurement, particularly P3s. While it is true there are many options in the procurement ‘toolbox’ for governments to consider, public-private partnerships have a demonstrated track record where the model delivers value, innovation and sustainability for taxpayers.
For more than three decades, P3s have successfully been used by all levels of government across Canada to design, build, finance, operate and maintain publicly owned infrastructure, ranging from hospitals and other social infrastructure to highways, transit and water and wastewater systems. The model was adopted to combat the all too frequent delays and cost overruns experienced on traditionally procured projects – something upon which the model has time and again delivered.
Since then, close to 300 projects with an in-market value of more than $139 billion have used this ‘made in Canada’ procurement model, which continues to evolve and adapt to market conditions, while setting new benchmarks globally.
As part of our ongoing discussions on how best to refine the P3 model, our members – both government and private sector – will carefully examine the inquiry’s more than 100 recommendations over the coming weeks and months to reinforce the core belief that ‘government and private-sector entities must act in a manner that furthers the broader public interest’ and that ‘the public has the right to safe, reliable infrastructure.’”
-- Lisa Mitchell, President and CEO, The Canadian Council for Public-Private Partnerships (CCPPP)
About the Canadian Council for Public-Private Partnerships
Established in 1993, CCPPP is a national not-for-profit non-partisan, member-based organization with broad representation from across the public and private sectors. Our mission is to collaborate with all levels of government and Indigenous communities to enable smart, innovative approaches to infrastructure development and service delivery that achieve the best outcomes for Canadians. The Council is a proponent of evidence-based public policy in support of P3s, facilitates the adoption of international best practices, and educates stakeholders and the community on the economic and social benefits of public-private partnerships.
