Government Operations Committee on Oct. 4th, 2012

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

You talked about how the value-for-money analysis is required, but who's in charge of determining those costs?

[John McBride]

Again, just to be clear, we have two lines of business. We work with provinces and municipalities, and our fund is only for provinces and municipalities. In those circumstances, the first obligation is on the procuring jurisdiction to produce a value-for-money analysis, but we will subject that to our own due diligence and whether or not we agree or disagree with it.

When it comes to federal projects, at the end of the day the Treasury Board would review proposals from departments to go forward with capital projects. That value-for-money analysis would be part of their decision-making process. We are producing guidance and guidelines, and we're working with other people around what a federal value-for-money methodology should look like, drawing in best practice from other jurisdictions.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Fabulous. Thank you very much.

We have Sir John A. Macdonald, a great Canadian; Sir John McCallum; and now John McBride—three Johnnys, great Canadians.

[The Chair, NDP, Pat Martin]

It's just that kind of day—all great Canadians. We can agree on that.

Just before we let you go—and that does conclude our second round—there's one question I have of a general nature.

In answering questions, you said that in the $1.25 billion that went out there, there's an average 8% saving, $125 million. When you're putting that together, do you calculate the fact that by the time the infrastructure project is handed back to the public sector, it's probably at the time when it needs the most maintenance? For instance, after the 25-year mark—when that bridge comes back into the taxpayers' obligation and responsibility again—that's when it's probably needing a big overhaul.

Does that mitigate the 8% savings?

[John McBride]

Yes, it's factored in.

Actually, in P3 arrangements the hand-back provisions—if you went through one of those contractual documents—are quite specific. Therefore, when it's handed back, it has to be at a high level of maintenance. They're not handing back assets that are ready to tumble into the ground. That's part of the contractual provisions in the hand-back clauses.

[The Chair, NDP, Pat Martin]

It's like leasing a car. In that period of time that you lease the car—nothing goes wrong with a car in the first 100,000 kilometres. But after four years and one day when you hand it back to them, that's why the car is not worth very much anymore.

[John McBride]

You can sort of debate that. It's not brand new, but there are absolute hand-back provisions.

[The Chair, NDP, Pat Martin]

You answered my question. I was wondering if hand-back provisions were factored into your overall savings. Your argument that even with the hand-back provisions—

[John McBride]

I would argue that governments are getting back better assets at 25 years, at the end of their terms, than they are normally if you take a look at government assets after 25 years. In fact, I think it's a net benefit.

[The Chair, NDP, Pat Martin]

It's been a very helpful overview, Mr. McBride.

Thank you for helping us get off to a good start with our study on public-private partnerships.

[John McBride]

If there's anything our organization can do to help you through your study, please feel free to call on us.

[The Chair, NDP, Pat Martin]

We may in fact invite you or someone from PPP Canada back as we proceed.

Thank you very much.

I believe the meeting is adjourned.