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Winnipeg Free Press - PRINT EDITION

Katz pumps public-private deals

Feds request additional details on partnerships

By: Mia Rabson

Posted: 10/24/2012 1:00 AM | Comments: 0

OTTAWA -- Winnipeg Mayor Sam Katz sang the praises of public-private partnerships in an appearance before a parliamentary committee here Tuesday.

But he left with a request to provide more information to back up his claims.

The House of Commons government operations committee is studying the usefulness of P3s, in which the public sector contracts out the design, construction, operations and maintenance of public infrastructure to the private sector. Governments pay a lease fee to the private consortium over a set period. The private sector is responsible for most maintenance and operations costs.

Katz said he has seen the completion of three P3 projects in Winnipeg since becoming mayor and called them a "phenomenal tool" that can help municipalities fix crumbling infrastructure.

"They are not the right fit for every project but for major infrastructure renewal they make good sense for municipalities that need to stretch their infrastructure dollars further," he said.

The Chief Peguis Trail extension and Disraeli Freeway upgrade saved the city $31 million and $47.7 million respectively, compared to traditional financing and construction projects, said Katz.

He said P3s provide budget certainty to cities because the project's price is fixed up front, they provide contract discipline because private-sector companies don't want to pay for construction overruns or for delays, and they provide maintenance guarantees during the life of the contract.

Opposition MPs on the committee asked Katz and others presenting in favour of P3s to provide documentation supporting their assertion P3s offer great value.

Key to the claims appears to be an understanding of risk transfer, which refers to the costs of construction delays and maintenance issues that normally would be borne by the public sector but are transferred to the private sector during the life of the contract.

Most P3 proponents say the private sector is better at delivering projects on time and on budget than governments. The private sector bears the extra costs if the P3 project fails to meet deadlines and cost estimates.

University of Toronto geography Prof. Matti Siemiatycki, who has studied P3s for a decade, told the committee he was concerned the value-for-money assessments were unclear. He said P3s provide savings to the public sector only if the risk transfer is great enough to outweigh the higher interest costs the private sector pays, he said.

Siemitycki said in his study of 28 P3s in Ontario worth about $7 billion, the average risk transfer was 49 per cent of what the project would have cost if the public sector did it on its own.

mia.rabson@freepress.mb.ca

Republished from the Winnipeg Free Press print edition October 24, 2012 A6

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