Great Futures asked John McBride, CEO of PPP Canada, how private-public partnerships are helping to fund infrastructure now, and where they are headed in the future.
Is infrastructure a reliable investment?
Recent years have seen growing interest, with federal, provincial, territorial, and municipal governments alike reaffirming their commitments to infrastructure projects in Canada. In regards to public-private partnerships (P3s), the market for investment has continued to evolve. 2010-11 was a year of growth for the Canadian P3 market, which demonstrated good liquidity in capital markets, continued pressure on credit spreads, and increasing interest in the Canadian market as a P3 leader and attractive investment destination. Ongoing infrastructure spending, added to the attractive returns on P3 deals, strong government ratings at all levels of government, low inflation risk, and stable P3 deal flow for the foreseeable future, continue to make infrastructure a reliable investment.
What is a recent project funded by PPP that was particularly successful? Why was it such a success?
To date, PPP Canada has announced funding commitments towards six P3 projects across Canada, varying in size, procurement structure, and infrastructure sector. Every one of these project announcements is a success, as they reflect growing interest among the provinces, territories, and municipalities as they consider a P3 approach in delivering the public infrastructure Canadians need.
Most recently, the Chief Peguis Trail Extension, one of the first projects to be announced through the P3 Canada Fund, opened to traffic approximately one year ahead of its original completion date, a notable milestone for PPP Canada. As a P3, the Chief Peguis Trail Extension project benefitted from accelerated construction, private-sector expertise and innovation, and increased competition.
What are ways cities can ensure they’re getting the proper funding they need?
We recognize that municipalities have jurisdictional responsibility for delivering a large portion of Canada’s major infrastructure needs, including local roads, water and wastewater, district energy, and public-transit projects. Our fund is set up to assist the municipalities in tackling these large investments. In many cases, these types of public-infrastructure projects lend themselves well to P3 procurement, given their size, complexity, or long-term maintenance risk characteristics.
Since the launch of the first round of calls for proposals under the P3 Canada Fund, we have seen a marked increase in interest, in particular from the municipalities. Round 3, which closed on June 30, 2011, saw 121 applications submitted – 80 of these were from various municipalities across the country.
Looking forward, what are your thoughts on the future of private-public partnerships?
Across Canada, governments have begun to recognize the value of engaging the private-sector innovation to build more for less, where possible, and generate savings that will help fill the infrastructure gap. We hope our work at PPP Canada will encourage all levels of government across Canada to consider P3s as an intrinsic part of their infrastructure policy frameworks.
This interview has been edited for clarity.