December 10, 2014
News Release - Auditor General’s Report Paints Inaccurate Representation of the P3 Model
The Canadian Council for Public-Private Partnerships read with interest the report from the Ontario Auditor General on Alternative Financing and Procurement (also known as public-private partnerships or P3s) and is concerned that the report paints an inaccurate representation of the P3 model.
Moving past the headlines, the report confirmed many of the benefits of the model, including the savings as a result of avoided risk, the impeccable record of projects completed on-time and on-budget and where cost overruns have occurred, in the vast majority of cases the private sector was on the hook for the full amount. The Council agrees with the Auditor General’s observation that Infrastructure Ontario has a “strong record of delivering projects such as hospitals, courthouses, and detention centres on time and on budget.”
Today there are 220 P3/AFP projects in operation, under construction, or in procurement across Canada and across a variety of priority sectors of the economy. The value of those projects which have reached financial close exceeds $70 billion. Ontario is leading the way with over 100 AFP projects, the majority of which have been procured by the Government of Ontario.
The economic impact of these projects is clear and compelling. An independent study recently completed by InterVISTAS Consulting Inc. established the major impact of P3s on Canada’s economy, employment and competitiveness – not to mention quality of life, public facilities and services that matter to Canadians across the country. Cumulative economic impacts over the decade under review include:
- 517,430 total full-time equivalent (FTE) jobs, including 290,680 direct FTE jobs
- $32.2 billion in total income/wages and benefits, including $19 billion in direct income/wages and benefits
- $48.2 billion in total gross domestic product (GDP), including $25.1 billion in direct GDP
- $92.1 billion in total economic output, including $51.2 billion in direct economic output
- $7.5 billion in tax revenue to government
- $9.9 billion in cost savings for taxpayers over the traditional procurement method
“Infrastructure Ontario has gained an international reputation as a best-in-class procurement agency, overseeing award winning projects, and a stellar track record of ensuring projects are done on-time and on-budget, reducing risk to taxpayers, and delivering high quality infrastructure for Ontarians,” stated Mark Romoff, president and CEO for CCPPP.
“While some special interest groups will try to use aspects of this report for political gain, they are doing so void of facts. 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. The record speaks for itself. The transfer of risk to the private sector has real value and taxpayers are tired of projects costing far more than initially budgeted, deficient design and construction, and deferred maintenance, which is why governments have turned to P3s,” added Romoff.
In particular, the report makes assumptions about the cost of delivering infrastructure under the traditional model without having any empirical evidence. In fact, the Auditor General recommends that the government collect this data.
“The Canadian Council for Public-Private Partnerships agrees with this recommendation because traditional procurements should be held to the same standard of scrutiny as P3s. We are confident that with full information, the benefits of P3s will be clearly evident,” stated Romoff.
Canadians are also overwhelmingly supportive of P3s, with 62 per cent being open to their use and that number rises to over 70 per cent in communities where residents are aware of a particular project. In fact, without P3s, 70 per cent of residents do not think the project would have gone ahead.
Though public-private partnerships are not a panacea, when used appropriately, Ontario’s track record demonstrates that they are consistently more effective at delivering the infrastructure Ontarians need today on-time, on-budget, at less cost and at less risk than traditionally procured projects. This could not happen without strong provincial leadership and we commend the government for its commitment to the AFP model and its efforts to ensure it remains the gold standard.