April 18, 2018

It’s a Plan for the Past: Analyzing the NDP Platform

The Canadian Council for Public-Private Partnerships (CCPPP) applauds the Ontario NDP for its election platform commitment to invest $180 billion in infrastructure over the next decade. Unfortunately, the party’s vision for the future returns Ontario to an era of no accountability, higher costs, time delays, and zero innovation. The platform chooses to ignore global best practices and a Canadian industry that is recognized as the best in class.

To simply and offhandedly dismiss public-private partnerships (P3s) as “wasteful” is not only factually incorrect, but it falls into the trap of appeasing a chorus of complainers who are more concerned with their membership numbers rather than their memberships’ needs.  It caters to the OPSEU leadership rather than supporting workers across Ontario who benefit from the jobs and wages generated by P3s.

Abandoning the P3 approach ignores the overwhelming evidence that demonstrates P3s lead to significant cost savings, faster build times, more innovation, and better lifecycle maintenance when they’re applied for the right reasons and on the right project. Arbitrarily ruling out the use of P3s rules out evidence based decision making and shows no interest in ensuring we get the greatest value out of Ontario’s infrastructure.

This province has been the leading P3 champion in Canada, where our unique P3 model has evolved into an international standard of excellence. Infrastructure Ontario has consistently been rated as a top procurement agency in the world!

Ontario is home to over 160 private sector companies representing billions of dollars of investment in P3 projects. Some of the province’s largest private sector unions are heavily active in P3s and are providing the necessary expertise from a labour perspective to ensure Ontarians enjoy the safest infrastructure possible. Public sector union pension plans often invest in these projects, ensuring long term benefits for their members.

THESE ARE THE FACTS:

The P3 model has been used to procure 276 publicly owned and controlled complex infrastructure projects across Canada with those projects already in operation or under construction valued at more than $125 billion. They include some of the most advanced and innovative hospitals, transit lines, and water treatment facilities in the country.

VALUE FOR MONEY

P3 projects DO NOT proceed unless they demonstrate Value for Money. This pre-groundbreaking scrutiny ensures the best use of public resources and a higher standard of asset management.

ECONOMIC IMPACT

  • The Canadian Centre for Economic Analysis (CANCEA) has independently estimated that P3s have saved Canadians as much as $27 billion over the last 25 years.
  • P3s are built 13% faster than traditionally procured projects (adding $11 billion in value to the Canadian economy.)
  • Canadian P3s create 115,000 jobs and generate $5 billion of additional wages on average every year.

BENEFITS FOR PUBLIC SECTOR

The P3 model considers an asset’s whole life, which can affect many decisions on the project and lead to better value in design, construction, maintenance and operation.

British Columbia’s Auditor General, Jim Doyle, noted in his 2012 Report that P3 consortia will use premium quality products in order to ensure overall, long term savings.

“Under a P3 contract, a contractor can choose to spend more on construction, knowing the benefits will likely be lower maintenance and rehabilitation costs later in the contract period.”

Including life-cycle costs in advance ensures the private sector sets aside money for maintenance and guarantees a higher standard of asset management. The private sector is better and more experienced at managing construction and operational risks which result in savings to taxpayers.

Risk transfer to the private sector is the backbone of the P3 model. Because appropriate risks are transferred to the private sector, cost and time overruns are paid for by the private sector – NOT taxpayers.

  • Contractors are penalized if they go over budget, take longer than expected, or underperform.
  • Delivering projects on time provides quicker access to health care and public services.
  • Operations and maintenance payments are locked in for the long-term and are not subject to the whim of politically driven budget cuts.

TRADITIONAL vs. P3s

The 2015 AG Report in Ontario noted that there are no metrics designed to monitor how well traditionally procured projects are managed. Ontario’s P3 model, on the other hand, requires regular reviews – ensuring payments are made based on performance of the private sector partners and the availability of the asset. P3s are highly scrutinized and monitored in progress – unlike traditionally procured projects.

Ontario’s P3s have a documented track record of success.  Turner and Townsend conducted an independent review of 51 P3 projects that had reached substantial completion by 2016. It indicates that 96% of the projects were completed on-budget; 73% were completed on-time and 20% were delivered early.

The same cannot be said for a litany of traditionally procured projects that have gone billions of dollars over budget and delays were measured in years. They would include the Toronto-York-Spadina-Subway-Extension,(+$400m), the Union Station revitalization, (+$183.5m), the Toronto Nathan Phillips Square redevelopment, (+$20.4m), the Sudbury Regional Hospital, (+$231m) and the Niagara Tunnel Project,  (+$615m).

SUMMARY

The Ontario NDP’s dismissal of P3s threatens a Canadian sector that is the envy of the world; it threatens to force high-skilled and high-paid jobs to other global financial centres such as New York, London, Sydney, Tokyo, and Shanghai; it will burden Ontarians with cost overruns and time delays, which means fewer projects, lower productivity, and more congestion and wait times.

CCPPP regularly conducts public opinion research that consistently shows Ontarians overwhelmingly support P3s. They understand that neither government nor the private sector has all of the solutions when it comes to infrastructure. The NDP infrastructure platform is a plan for the past at a time when Ontarians need a plan for the future.

The facts and the research make it clear; the NDP’s outright ban on P3s in Ontario will bring us back to the past where cost overruns and time delays were the norm at a time when we need to harness the best expertise from BOTH the private and public sector. Our hope is that the NDP will take the time to educate itself on these issues as there are too many jobs at stake and too much infrastructure to get built for misguided policy to derail.

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. Its mission is to promote smart, innovative and modern approaches to infrastructure development and service delivery with all levels of government.

For media enquiries contact: Steven Hobbs, Director, Strategic Planning & Partnerships, shobbs@pppcouncil.ca , 416-861-0605 ext. 204