Most Ontario voters see business, not the public, as the biggest beneficiary when the government turns to the private sector to handle infrastructure projects, a new poll suggests.
The Forum Research Inc. survey, conducted on Monday and provided exclusively to QP Briefing, found just 10 per cent of people answered that the public sector benefits most from public-private partnerships, or P3s. Another 46 per cent said it was the private sector enjoying the lion’s share of the profits, 21 per cent said both sides split the benefits equally, and 23 per cent said they just don’t know.
As defined by Ontario’s auditor general, a P3 is an agreement wherein “private-sector businesses deliver large infrastructure projects and provide other services, and the various partners share the responsibilities and business risks.” One example is Toronto's 19-kilometre Eglinton Crosstown light-rail transit line, the $9.1-billion design, construction, financing and maintenance of which has been contracted out to a private-sector group.
In general, Forum found 39 per cent of those surveyed approved of P3s as a way of building public works projects, 24 per cent disapproved and 37 per cent didn’t know how they felt about it.
“The lure of P3s is seductive, and more voters approve of them than disapprove, but the awareness that the public sector very rarely profits from them is widespread,” said Forum Research President Dr. Lorne Bozinoff in a release sent out Thursday.
The Forum poll found Conservative voters were the most open to P3s, with 46 per cent supportive of that type of project. Liberals were 44 per cent in favour, while only 34 per cent of New Democrats were fans. The survey reached 1,184 random Ontarians and is considered accurate within three percentage points, 19 times out of 20.
The polling numbers come ahead of a follow-up report, to be released November 30, by Ontario’s auditor general on the province's “Alternative Financing and Procurement” – which is government-speak for P3s. The initial audit found 74 infrastructure projects that had been AFP’d by Infrastructure Ontario, a crown agency, were estimated to cost nearly $8 billion more than if the public sector just did them.
But the auditor general’s view of P3s wasn’t unanimously acclaimed. Paul Boothe, a professor at Western University's Ivey Business School, wrote in Maclean’s in January 2015, that “private sector firms that specialize in construction may be able to manage the risks at a lower cost because of their expertise.”
Another example of a public-private partnership is the $13-billion refurbishment of six reactors at the Bruce Power plant, the world’s largest operating nuclear generating station, which is slated to begin in earnest in 2020. The Ontario government and Bruce Power – a private-sector consortium made up of TransCanada Corp., the OMERS pension plan, and two unions – struck a deal last December to renew their contract, which pays the company more for the electricity it produces in order to cover the cost of the rebuild. Bruce Power leases the nuclear reactors from provincially owned Ontario Power Generation.
The Bruce P3 was mentioned by Ontario Infrastructure Minister Bob Chiarelli Wednesday in a speech to the Canadian Club of Toronto. As the history of the province's nuclear projects is a very expensive and delayed one, Chiarelli called the Bruce deal “one of Ontario’s most significant successful and largest public-private partnerships,” which he actually oversaw as energy minister, prior to this June’s cabinet shuffle.
Chiarelli went to bat for Ontario's AFP process and P3s in general, saying governments worldwide were grappling with the costs of building infrastructure.
“Over the last several decades many jurisdictions around the world have recognized that there is not enough revenue available in government to meet their infrastructure deficits and growth needs,” Chiarelli said.
The infrastructure minister said the $180 billion in infrastructure money from the federal government and $160 billion promised by the province is “not enough because the challenge is so great.”
Chiarelli said Ontario is now delivering more than 90 AFP projects valued at $43 billion in capital costs. The first 45 projects were almost all completed on budget, he noted.
“But as Ontario grows, infrastructure planning and implementation create new imperatives for innovation and this includes a broader toolbox of public-private partnerships,” he added. “There's a consensus forming in Ontario in Canada, that many other jurisdictions around the world have already reached, and that is the realization that governments do not now have, nor will they have in the foreseeable future the revenue sources to meet our infrastructure deficits and growth requirements.”
Therefore, Chiarelli continued, “this means embracing a wider range” of P3s to secure “equity investments” from the private sector and “pools” of money from pension funds.
Chiarelli also said a full list of new P3 projects from Infrastructure Ontario had been placed on the audience member's seats, consisting of 30 major developments with a capital cost of about $11.8 billion, including light-rail, highway and health-care projects.
“The reality is many governments hesitate to engage much-needed revenue tools and/or create P3s for fear of public backlash," said Chiarelli. "Which interprets revenue tools as taxation rather than a user pay system that constitutes an investment in infrastructure and quality of life."