Yes. Thank you very much, Mr. Chairman.
I'm just going to briefly introduce myself and our organization so you can get some perspective on where we fit into the PPP sector.
We're a private money manager. We manage money on behalf of Canadian pension plans. Our clients include several universities; these are the pension funds of the universities. This also includes corporate pension funds, Canadian corporate pension funds. A significant client base is also that of construction unions; trade union funds such as the Labourers' Pension Fund or the Operating Engineers' Pension Plan. These are the individuals who actually work on these projects as construction workers.
I've been in the sector for approximately 15 years. I've seen the sector grow in Canada, specifically at the provincial level, from the first transactions that were done in Ontario and British Columbia. We are concessionaires, in that we invest pension plan money in the form of equity capital in these projects on the strength of the concession agreements executed with municipal, provincial, and federal governments.
I personally am a practitioner as a transaction professional, meaning that I get involved when government is procuring the project. When they've decided to go ahead with a P3 and they at that point put out a request for qualification and a request for proposal, I'm involved in organizing consortiums to bid on the projects, put in a proposal, and then ultimately, if we are successful, execute on that proposal, develop the infrastructure, and operate the infrastructure over the concession term.
That is my perspective. I'm not really involved in consulting with government as to whether to do a P3 or not to do a P3. I get involved once government has decided to go down that path.
I can give you my views on P3s and why I think they're beneficial. Obviously, I'm a supporter of the sector. I make my living from P3s, but also, as a stakeholder in Canada, etc., I actually do believe in the value of P3s.
I think I'm going to echo some of Ms. Mullen's comments. Basically, this is a philosophy of procuring complicated.... By the way, for P3 around the world, whether it's with governments such as those of the U.K. or the EU, less than 10% of the actual infrastructure spend of government is done via P3s, okay? It's a tool that's used in very discrete circumstances, and primarily in respect of new infrastructure—complicated, large infrastructure. It can be used for roads, hospitals, prisons, courthouses, or an information technology project.
By the way, we have 14 investments in Canada in all of those sectors. We have a prison investment, a road investment, a courthouse investment, and several hospital investments, primarily with provincial governments. These are our clients, ultimately—the provincial governments.
There are several reasons to do a P3. One is that government describes the service that it requires, effectively,as opposed to describing the exact specifications of the infrastructure. Government describes the output. That allows for a tremendous amount of design innovation from the private sector, meaning how best to design the piece of infrastructure to provide that specified service, as opposed to having a very descriptive approach to the specific infrastructure.
Again, that allows for design innovation. As you design the asset, you are designing it with the maintenance of the asset in mind over the long term, because P3 integrates design, construction, and maintenance under one service. So whoever is designing and building the asset has the operator beside him, describing how he is building it and how he is designing it, because that operator—this is the private sector operator—has to take on asset on after construction and live with it for 30 years. That's another important aspect of P3 that's beneficial.
The other part of P3 is that there's cost certainty over 30 years for government, meaning that government is buying a 30-year service, as opposed to, “Thank you for the design and construction,” and then having government take on the asset. It's really helpful in a four-year election cycle. We always talk about the challenges of government in long-term strategic planning. When the election cycle is only four years, it really takes away.... It really allows for government to set certain pieces of infrastructure down the path for a 30-year period. This is where—Ms. Mullen talked about it—government receives the asset back in a high-quality condition at the end of 30 years.
Now, there's a price for that, and there's a cost for that. What the actual cost does is remove some flexibility from government in costing—really, in reducing costs—because they've basically entered into a 30-year commitment. These are the trade-offs. You enter into a 30-year commitment. You have cost certainty that the asset is going to behave and it's going to come back to government in a certain condition, but at the same time, you've ventured into a contract for 30 years, with little flexibility as to whether you want to pull back capital or money from that contract. You have an obligation to pay for that asset over 30 years. Those are the benefits, and I've described some of the costs.
Ultimately, it's a philosophy of procurement on certain projects where the government wants to be a builder and operator of assets as opposed to a manager of contracts and assets. Governments struggle with these issues day in and day out.
By the way, never, ever, take the argument that it's a form of privatization; it's never a form of privatization. We operate and own.... No, I shouldn't say that we “own”; we operate a number of prisons, hospitals, and courthouses across Canada. We don't own those assets. Those assets are owned by government. We have the privilege, under a license agreement, to step in, build, and operate those assets on behalf of government. Government can decide to terminate us at any time and take the asset back.
Those are my initial comments.