Alberta government urged to explain why it rejects public-private partnerships

Several groups are urging the Alberta government to be transparent and explain why it is turning its back on public-private partnerships.

The government finished a review of P3s in the spring, but decided not to make the report public. It is not clear what the report said, but Premier Rachel Notley's government announced it would not be going forward with any new P3s until it had more time to review the report.

"The reality is the world has become a very collaborative place," said Jyoti Gondek, director of the Westman Centre for Real Estate Studies at the University of Calgary. "Frankly, we need to work together, we need to work together a whole lot better than we do. So to step away from a P3 at this point is going backwards."

P3s are a way of constructing public infrastructure that transfers a significant amount of financing and construction risk to the private sector. The projects are usually large in scale and can include designing, planning and long-term maintenance.

"We need to be a little wider in perspective and tinker with how things could work, rather than saying it won't work," said Gondek.

While the NDP cabinet says it will make a final policy decision on P3s by the end of the year, the government is already holding off an any new P3 deals.

For instance, the former PC government announced in 2014 the new cancer centre in Calgary would be constructed and financed using P3s.

The NDP announced this month it is accepting construction bids for the revised project and picked two companies to make project proposals, using the traditional method of financing.

"No, it has not been made," said infrastructure minister Brian Mason on Thursday about a final decision. "I've been working on a report for my cabinet colleagues and I expect we will be able to make some of assessment on that issue by the end of the year."

Mason has suggested even the best P3s don't make financial sense in the long run.

P3 success

The former PC government used P3s for several projects including for Calgary's southeast ring road. The massive roadway cost $769 million, stretched 25 kilometres, and took three years to build. The contractor was late to complete the project and was fined $70,000 for each day beyond the missed deadline.

"In the past we've seen across this province the P3 model generate a lot of success in terms of not only effective project financing but efficient product delivery," said Justin Smith, a policy director at the Calgary Chamber of Commerce.

There are hundreds of P3 projects across Canada, and experts wonder why Alberta is now rejecting them.

Smith wants to know what data was included in the report, which was kept private.

"In a free, open, democratic society, information like this is integral to good policy decision making," he said. "We want to know whether the P3 model makes sense in certain circumstances to ensure taxpayers are getting great value out of that substantial investment."

Private documents

Earlier this year, CBC filed an Access to Information request to obtain the 62-page report, however it was denied by Alberta Infrastructure because much of the document relies heavily on confidential cabinet and Treasury Board discussions. The Office of the Information and Privacy Commissioner of Alberta supported the department's decision to not make the document public.

"Fundamentally, we want to understand how the government arrives at its conclusions," said Frederick Vine, chair of the Calgary Construction Association.The organization's members have varying views about P3s, but Vine says understanding what data the government studied is useful to know.

For instance, a government will often conduct a value for money equation to see if P3s are a good fit for a certain project. Vine expects those evaluations are often based on many estimates.

"I would think it's a very complex process and subject to a lot of assumptions on the future."

The debate over P3s escalated in 2014 after Ontario's Auditor General Bonnie Lysyk found they cost taxpayers an extra $8 billion over the previous nine years compared to if the projects were managed publicly. Part of the explanation for higher costs is that private companies pay much more for financing. Infrastructure Ontario defended the the $8 billion extra price tag by suggesting P3s ensured the projects were built on time and on budget, and saved the province from $18.6 billion in potential cost overruns.

Alberta's NDP government avoiding P3s could be more of an ideological decision, say critics, rather than a financial one.

Notley was critical of P3s as an MLA before her party formed government. She argued against using P3s to build medical facilities in 2014, saying "We're not talking about building cement highways. We're talking about building highly technical, precise hospitals."

In 2012, she said P3s for building new schools "is a failed model that can't accommodate a changing community."