Thank you for the invitation to join this important discussion.
Using the Canada Infrastructure Bank to advance infrastructure privatization and public-private partnerships is deeply misguided and dangerous, and here's why. The CIB's current structure promotes a flawed financing model of public-private partnerships, inviting and subsidizing private interests to take control of critical infrastructure and services that should be kept in public hands. P3s are a tool that poorly invests public funds to further corporate interests while failing to support communities. The CIB could play a critical role in supporting a just recovery from the pandemic and support the transition to a low-carbon economy, but not if it remains fixated on privatization and P3s.
For infrastructure to truly be in the public interest, it must be publicly owned and operated. P3s eliminate jobs, lack transparency and exclude municipalities from the decision-making process. Given the failings of P3s, we should not be surprised that at least one CIB project was already cancelled before it even began. Last summer the Township of Mapleton called off its plans to privatize its water infrastructure with the CIB, because the privatization would have been too risky for the township.
P3s cost more. Canadians could benefit from the CIB if it were returned to its original mandate. A federal provider of low-cost public financing for infrastructure projects would help municipalities from coast to coast to coast. The current CIB model, however, which relies on private financing, often provides municipalities with loans with two to three times higher interest rates compared with public borrowing and requires financiers to provide a return on investment for their shareholders. This results in significantly higher project costs with no added benefit for municipalities.
Contrary to what some might view the situations as, in a review of 74 public-private partnerships in Ontario in 2014, the Auditor General concluded that they cost the province $8 billion more than if they had been procured publicly. A similar report by the B.C. Auditor General suggested the 16 P3 projects cost the province nearly twice as much compared with public financing. The Ontario and B.C. governments wasted billions of public dollars.
P3s deliver less, and this in a time when the climate crisis requires us to move quickly to decarbonize everything, including infrastructure. Publicly owned and operated infrastructure delivers more quickly than P3s, which are prone to failures and delays. In an attempt to cut corners and maximize profits, private companies operating P3s often try to reduce their workforce and avoid “unnecessary” investments in the public interest, delivering poorer quality. The business case for P3s often includes a significant risk transfer amount, presumably as the private sector takes on the risks associated with the project. However, the Ontario Auditor General has reported that this risk transfer factor in P3 projects is regularly inflated without evidence, often to favour the P3 option.
When it comes to essential services like water, sewage treatment, or transit, the community and municipality still bear the consequences, and higher costs, when things go wrong. P3s lack accountability and remove community control. Governments need the flexibility that comes with public infrastructure financing in order to enact strategic industrial policy. Hiding behind confidential contracts, the entire process of negotiating and procuring P3s is behind closed doors. The contract, once signed, takes away public control of the infrastructure and services, undermining that needed flexibility for several decades.
In March 2018, for example, Ottawa city councillors had only three weeks to review their P3 contract for stage two of the light rail transit here before signing. They did not learn until after the fact that the winning consortium failed to meet the minimum technical score.