There are three components to every project from the private sector. First, there is the construction component: the builder produces a price to build the asset and he prices for risk. That risk price would be there even if it weren't a PPP. If the government hired a builder, the builder would price for risk. Second, there is a maintenance contract for 30 years. That's a fixed-price maintenance contract and the maintenance company will price for risk. Third, there is the capital, the cost of capital. This is what gives rise to most of the debate.
Our cost of capital—the concessionaire's cost—for a typical PPP in Canada is about 6%. However, the cost of capital for government is far lower than 6%. I'm talking about 6% over 30 years—30-year capital. The cost of capital for government is less than 6%. It's probably closer to 4%, so there is a 2% premium in the cost of capital.
The question is, what is government receiving for that 2% premium? Are they getting value for money? This is the subjectivity of the debate, and it is subjective—it's a tough question. We can sit there and do all this analysis and risk-adjusted projections, but at the end of the day, there is a lot of subjectivity and it's a difficult question. This is what government grapples with: is it value for money for that 2%?