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canadianlawyermag.com/inhouse february 2015
I n d u s t r y S p o t l i g h t
aS canaDian governments build hospitals,
schools, and transportation in an era of budget
constraint and slowing growth, they are turning to
the private sector to construct, manage, maintain,
and even operate a range of vastly different
infrastructure projects.
Initial building costs are possibly higher, given
that the private sector typically pays more to borrow
than governments do. But measured over a 20-, 30-,
or even 40-year life span, the major players agree the
model of a public-private partnership, an alternative
method of building and fi nancing known by its P3
initials, is here to stay. They tout fewer cost
overruns, faster construction times, and a
transparent long-term management plan.
"Government needs infrastructure, but
may not have the capital resources at any
given time to fund what's required," says
Brian Swartz, executive vice president
and chief legal offi cer for Toronto-based
construction company Aecon Group Inc.
"By using the private sector to borrow the
money over time . . . it allows governments to
fi nance other things and other priorities and
at the same time build their infrastructure.
It has worked in Canada and it has worked
around the world."
Swartz says the P3 model has fuelled
Aecon's growth in recent years. But he
insists it's been successful for governments
too. He and others active in the P3 space,
say the model is only going to grow.
And grow, even despite a scathing
report issued in December by Ontario
auditor general Bonnie Lysyk which said
Infrastructure Ontario's use of private-
public partnerships has cost $8 billion more
than traditional public fi nancing.
Infrastructure Ontario responded
quickly, saying the $8 billion number
doesn't tell the whole story.
"AFP [alternative fi nancing and
Private cash for
public projects
Private cash for Private cash for
public projects
Public-private
partnerships
are transforming
Canadian
infrastructure
but at what cost?
by JaNeT guTTSmaN
