00:06:41
>> Steve: A RECENT TD ECONOMICS
REPORT SAYS ONTARIO COULD
BENEFIT FROM MORE PUBLIC-PRIVATE
00:06:44
PARTNERSHIPS ON BIG CONSTRUCTION
PROJECTS.
00:06:48
CRITICS SAY THESE PARTNERSHIPS
ARE EXPENSIVE, AND END UP
COSTING CITIZENS EVEN MORE.
00:06:53
JOINING US NOW FOR THEIR P3
PERSPECTIVES:
MARK ROMOFF, PRESIDENT AND CEO
00:06:57
OF THE CANADIAN COUNCIL FOR
PUBLIC-PRIVATE PARTNERSHIPS;
ENID SLACK, DIRECTOR OF THE
00:07:01
INSTITUTE ON MUNICIPAL FINANCE
AND GOVERNANCE AT THE MUNK
SCHOOL OF GLOBAL AFFAIRS AT THE
00:07:05
UNIVERSITY OF TORONTO;
TOBY SANGER, ECONOMIST WITH
CUPE, THE CANADIAN UNION OF
00:07:09
PUBLIC EMPLOYEES;
AND KAREN STINTZ, FORMER TORONTO
CITY COUNCILLOR AND CHAIR OF THE
00:07:13
TORONTO TRANSIT COMMISSION.
00:07:17
GREAT TO HAVE EVERYBODY HERE TO
FOLLOW UP ON OUR DISCUSSION
BECAUSE WE BARELY TOUCHED ON P
00:07:23
3s THERE AND I THINK WE NEED
TO KNOW MORE ABOUT THEM.
00:07:26
MARK, YOUR HANDY DANDY
DEFINITION OF WHAT THEY ACTUALLY
ARE.
00:07:32
>> Mark Romoff: PRIVATE-PUBLIC
PARTNERSHIPS OR P3s, THE
GOVERNMENT IS WORKING WITH
00:07:37
COMPANIES ON BUILDING
INFRASTRUCTURE: ROADS, HIGHWAYS,
DETENTION CENTRES, PRISONS --
00:07:44
ALL THAT KIND OF INFRASTRUCTURE,
AS WELL AS THE DELIVERY OF
PUBLIC SERVICES.
00:07:48
AND TODAY, CANADA HAS 220
PARTNERSHIPS ACROSS THE COUNTRY,
P3s, AND WE ARE KNOWN
00:07:56
INTERNATIONALLY AS VERY BEST IN
CLASS WHEN IT COMES TO THIS
MODEL.
00:07:58
>> Steve: AND WHO IS IN CHARGE
OF THEM?
00:08:00
>> Mark Romoff: THEY'RE
ORGANIZED BY GOVERNMENT.
00:08:03
SO GOVERNMENT IN FACT ENTERS
INTO THESE AGREEMENTS WITH THE
PRIVATE SECTOR, AND THE UNIQUE
00:08:09
FEATURE OF P3s IS GOVERNMENT
TURN TO THE PRIVATE SECTOR TO
HAVE THEM DESIGN, BUILD, ARRANGE
00:08:15
FOR ALTERNATIVE FINANCING AND
MAINTAIN THESE ASSETS OVER THE
PERIOD OF MAYBE 30, 35 YEARS --
00:08:19
>> Steve: MANAGE THE PROJECT
ALL THE WAY THROUGH UNTIL IT'S
DONE?
00:08:23
>> Mark Romoff: ABSOLUTELY.
00:08:24
AND IN SOME CASES OPERATE IT AS
WELL.
00:08:25
>> Steve: TOBY, WOULD YOU
AGREE WITH THAT DEFINITION?
00:08:28
>> Toby Sanger: THAT'S QUITE A
BROAD DEFINITION OF WHAT A P3
IS.
00:08:31
I THINK THAT'S THE OPERATIONAL
DEFINITION RIGHT NOW AND I THINK
MARK WOULD AGREE IS ONE THAT
00:08:36
INVOLVES PRIVATE FINANCE RIGHT
NOW, BECAUSE GOVERNMENTS ALWAYS
CONTRACT WITH THE PRIVATE SECTOR
00:08:40
FOR DESIGN AND BUILD.
00:08:41
I MEAN, WE DON'T HAVE
GOVERNMENT -- PUBLIC SECTOR
WORKERS BUILDING THINGS.
00:08:47
SO THE REAL OPERATIONAL
DEFINITION RIGHT NOW IS THE
PRIVATE FINANCE AND THE PRIVATE
00:08:52
SECTOR AND THE GOVERNMENT IN
EFFECT BORROWING MONEY FROM THE
PRIVATE SECTOR OVER THE LONG
00:08:59
TERM FOR THESE PROJECTS, AND I
THINK MARK WOULD AGREE ON THAT.
00:09:02
>> Steve: SO I'M CLEAR.
00:09:03
AS OPPOSED TO THE GOVERNMENT
PROVIDING THE NUMBER TO BUILD
THESE PROJECTS UNDER P3s, THE
00:09:08
PRIVATE COMPANY THAT'S BUILDING
THEM GOES TO THE MARKETPLACE TO
GET THE MONEY TO DO THAT?
00:09:13
>> Toby Sanger: USUALLY IT'S A
CONSORTIUM OF THE PRIVATE
COMPANIES AND USUALLY THEY'RE
00:09:20
ESTABLISHED IN WHAT WOULD BE
CALLED A SPECIAL PURPOSE
VEHICLE, A SEPARATE COMPANY THAT
00:09:25
OPERATES EACH PIECE.
00:09:25
>> Mark Romoff: AND IT'S A
PORTION OF THE FINANCE.
00:09:27
GOVERNMENTS CAN ALSO MAKE A
CONTRIBUTION TO THE OVERALL
CAPITAL NEEDS OF THE PROJECT AND
00:09:31
THEN TURN TO THE PRIVATE SECTOR
TO PROVIDE A PORTION OF THAT,
FINANCING EITHER THROUGH EQUITY
00:09:37
OR THROUGH DEBT.
00:09:37
>> Steve: UNDERSTOOD.
00:09:38
KAREN, IN YOUR EXPERIENCE OF
LOOKING AT THESE THINGS, WHAT
PROJECTS MAKE FOR GOOD
00:09:43
CANDIDATES FOR P3s?
00:09:45
>> Karen Stintz: TYPICALLY THE
BEST PROJECTS FOR P3s ARE
THINGS LIKE A COURTHOUSE OR A
00:09:49
STAND ALONE BUILDING.
00:09:51
THOSE LEND THEMSELVES TO PRIVATE
FINANCING BECAUSE THEY TEND TO
BE NOT VERY RISKY TO BUILD.
00:09:57
THE PRIVATE SECTOR CAN FINANCE
IT.
00:09:58
THEY KNOW THEY'RE NOT GOING TO
RUN INTO CONSTRUCTION DELAYS.
00:10:02
THE TYPES OF PROJECTS THAT
AREN'T AS SUITABLE FOR A P3 ARE
ONES THAT I THINK, TRANSIT
00:10:07
PROJECTS -- VERY COMPLICATED
TRANSIT PROJECTS BECAUSE YOU'VE
GOT GOVERNMENT SIGN-OFFS, YOU
00:10:11
HAVE UTILITIES YOU NEED TO
RELOCATE, YOU HAVE THE PUBLIC
THAT NEEDS TO BE CONSULTED, AND
00:10:15
THERE ARE LOTS OF AREAS WITHIN
THAT PROJECT WHICH WOULD CAUSE
DELAYS, AND DELAYS MEAN MORE
00:10:20
MONEY AND THAT MEANS RISK AND
EXPENSE.
00:10:23
I THINK THERE ARE CERTAIN
PROJECTS THAT ARE VERY, VERY
WELL SUITABLE FOR A P3, BUT
00:10:27
OTHERS LESS SO.
00:10:27
>> Steve: HOW DO YOU SEE IT,
ENID, IN TERMS OF WHAT'S GOOD
AND WHAT'S NOT GOOD FOR P3
00:10:33
POSSIBILITIES?
00:10:33
>> Enid Slack: I THINK WE
SHOULD BE CLEAR HERE THAT THIS
IS NOT A NEW REVENUE SOURCE FOR
00:10:37
MUNICIPALITIES.
00:10:37
THIS IS NOT NEW MONEY.
00:10:39
IT'S JUST A NEW FINANCING TOOL.
00:10:40
SO INSTEAD OF THE MUNICIPALITY
BORROWING THE MONEY, THE PRIVATE
SECTOR IS BORROWING THE MONEY.
00:10:54
WHAT IT IS IS A TRANSFER OF RISK
TO THE PRIVATE SECTOR FOR THINGS
LIKE COST OVERRUNS AND TIME
00:11:00
DELAYS.
00:11:00
>> Steve: AS A TAXPAYER, DON'T
YOU WANT THAT?
00:11:03
>> Enid Slack: YES.
00:11:04
I THINK, YOU KNOW, ON THE
EXPENDITURE SIDE OF THE BUDGET,
THERE IS THE POTENTIAL TO REDUCE
00:11:12
COSTS.
00:11:12
BUT AS I'M SAYING, IT'S NOT NEW
REVENUES.
00:11:14
AND I SAY "POTENTIAL," BECAUSE
EVERY PRIVATE-PUBLIC PARTNERSHIP
IS DIFFERENT.
00:11:20
EACH ARRANGEMENT IS DIFFERENT.
00:11:21
SOME WORK BETTER THAN OTHERS.
00:11:22
THERE'S POTENTIAL FOR COST
SAVINGS.
00:11:24
IT DOESN'T ALWAYS HAPPEN.
00:11:25
>> Steve: ALL RIGHT.
00:11:25
AS YOU LOOK AT THE POSSIBILITY,
THOUGH, OF COST OVERRUNS, WHICH
FRANKLY SEEMS TO BE A DAILY
00:11:31
OCCURRENCE WITH MANY BIG
PROJECTS THESE DAYS, WOULD YOU
RATHER NOT HAVE THE PRIVATE
00:11:34
SECTOR BEARING THOSE COST
OVERRUNS THAN THE PUBLIC SECTOR?
00:11:39
>> Toby Sanger: WELL, I THINK
THAT THERE HAS BEEN A HISTORY OF
WHAT MIGHT BE CONSIDERED SOME
00:11:46
OPTIMISM IN THE PUBLIC SECTOR.
00:11:48
I DON'T THINK THAT IS SO MUCH
THE CASE ANYMORE.
00:11:50
>> Steve: WHAT'S NOT THE CASE
ANYMORE?
00:11:53
>> Toby Sanger: THAT THERE WAS
A LARGE SENSE OF OPTIMISM.
00:11:56
YOU DO SEE SOME COST OVERRUNS,
BUT I THINK THAT THEY'VE BECOME
MORE ACCURATE AND LESS
00:12:08
OPTIMISTIC AT CALCULATING THE
COST.
00:12:14
ENID BROUGHT UP THE ISSUE OF --
WELL, YOU BROUGHT UP THE ISSUE
OF RISK TRANSFER, AND THIS IS
00:12:18
WHAT GETS TO THE NUB OF THE
AUDITOR GENERAL'S REPORT.
00:12:23
THE AUDITOR GENERAL CAME OUT
WITH A REPORT IN NOVEMBER SAYING
THAT THE P3s, INFRASTRUCTURE
00:12:32
ONTARIO, THAT'S THE ONTARIO P3
AGENCY OPERATED, THAT THE
ONTARIO P3 AGENCY, THAT THEY
00:12:39
COST $8 BILLION MORE THAN IF
THEY WERE PUBLICLY FINANCED --
>> Steve: BECAUSE THE COST OF
00:12:47
BORROWING MONEY IN THE PRIVATE
SECTOR THAN IF THE GOVERNMENT
DOES IT?
00:12:51
>> Toby Sanger: EXACTLY.
00:12:52
COULD THE OF BORROWING MONEY IS
ABOUT TWICE THAT.
00:12:55
>> Mark Romoff: I THINK YOU
HAVE TO UNDERSTAND WHAT THE
AUDITOR GENERAL SAID.
00:12:58
WHAT SHE SAID IN HER REPORT WAS
THAT IF GOVERNMENTS COULD
DELIVER PROJECTS ON TIME AND ON
00:13:04
BUDGET, THEN THEY WOULD HAVE
PAID $8 BILLION LESS.
00:13:06
>> Steve: BUT THEY NEVER --
>> Mark Romoff: BUT THE
REALITY IS, THE TRACK RECORD OF
00:13:10
GOVERNMENT IS PRETTY UNEVEN
AROUND THIS, AND THERE ARE LOTS
OF CLASSIC EXAMPLES, ESPECIALLY
00:13:15
HERE IN TORONTO.
00:13:15
YOU CAN START WITH THE SPADINA
EXTENSION --
>> Steve: IN THE DISCUSSION
00:13:19
WITH MATTI, WE WENT THROUGH
EIGHT OF THEM.
00:13:24
ALL PROJECTS THAT ARE TERRIBLE.
00:13:26
>> Mark Romoff: WAY
OVERBUDGET, WAY BEHIND SCHEDULE.
00:13:32
LOOK AT THE PEARSON EXPRESS.
00:13:34
IT WILL BE ON TIME AND ON BUDGET
AND IN TIME FOR THE PAN AM
GAMES.
00:13:38
IT IS IN A SENSE A VERY CLASSIC
EXAMPLE OF HOW YOU CAN DO IT
RIGHT.
00:13:42
I'D DEBATE A LITTLE BIT WITH
KAREN, BECAUSE IF YOU HAD A
CHANCE TO BE IN VANCOUVER, THE
00:13:46
CANADA LINE AT THE AIRPORT,
WHICH IS THE EQUIVALENT OF THE
UNION-PEARSON EXPRESS, GETS YOU
00:13:51
FROM THE AIRPORT TO DOWNTOWN
VANCOUVER.
00:13:53
THAT IS PROBABLY CANADA'S BEST
EXAMPLE OF A PUBLIC-PRIVATE
PARTNERSHIP WHERE THE PRIVATE
00:13:58
CONSORTIUM DESIGNED IT, BUILT
IT, ARRANGED FOR THE FINANCING,
THEY'RE MAINTAINING AND
00:14:03
OPERATING IT AND THEY SAVED THE
GOVERNMENT OF BRITISH COLUMBIA
$90 MILLION, AND THAT PROJECT
00:14:08
CONTINUES TO BE A SUCCESS.
00:14:09
>> Steve: KAREN?
00:14:10
>> Karen Stintz: THE CANADA
LINE IS UNIQUE.
00:14:15
THERE'S NO COMPARABLE PROJECT IN
TORONTO.
00:14:17
THE PRIVATE SECTOR WANTS TO MAKE
MONEY, RIGHT?
00:14:19
IF THEY'RE GOING TO TAKE ON A
RISKY PROJECT, THEY'RE GOING TO
PRICE YOU ACCORDINGLY.
00:14:25
AND SO YOU DON'T HAVE
PUBLIC-PRIVATE PARTNERSHIPS TO
SAVE MONEY.
00:14:29
YOU HAVE PUBLIC-PRIVATE
PARTNERSHIPS TO DELIVER YOUR
PROJECTS ON TIME.
00:14:32
FUNDAMENTALLY IF YOU BELIEVE THE
GOVERNMENT SHOULD NOT BE IN THE
BUSINESS OF PROJECT MANAGING
00:14:36
THESE PROJECTS, THEN YOU WOULD
GO TO THE PRIVATE SECTOR.
00:14:39
ALSO TO ENID'S POINT.
00:14:44
THESE PROJECTS, THEY ARE FUNDED
BY THE GOVERNMENT.
00:14:46
THEY ARE FINANCED BY THE PRIVATE
SECTOR BUT THEY ARE FUNDED BY
THE GOVERNMENT.
00:14:50
SO THE GOVERNMENT EITHER MAKES
THE MONEY AVAILABLE UP FRONT TO
BUILD IT OR MAKE IT AVAILABLE
00:14:54
OVER A PERIOD OF TIME.
00:14:55
IF IT'S BETTER FOR THE
GOVERNMENT TO SPREAD IT OUT OVER
A PERIOD OF TIME, IT MIGHT MAKE
00:14:59
SENSE TO GO TO THE PRIVATE
SECTOR, SAY CAN YOU FINANCE ME?
00:15:03
WE'LL PAY YOU BACK OVER A PERIOD
OF TIME.
00:15:04
BY AND LARGE THESE PROJECTS
AREN'T NECESSARILY CHEAPER, THEY
DO GET DELIVERED ON TIME, AND IF
00:15:09
THEY'RE RISKY PROJECTS, THEY'LL
BE MUCH MORE EXPENSIVE.
00:15:12
>> Steve: ONE OF THE REASONS
WE'RE TALKING ABOUT THIS TONIGHT
IS THE HEAVENS FELL IN WHEN THE
00:15:16
MAYOR OF TORONTO ANNOUNCED THAT
THE SPADINA EXTENSION, WHICH WAS
THE WESTERN-MOST OF THE TWO SORT
00:15:22
OF NORTH-SOUTH SUBWAY LINES LOOP
IN TORONTO IS WAY OVER BUDGET
AND WAY BEHIND SCHEDULE.
00:15:27
MR. DIRECTOR, ROLL IT, PLEASE.
00:15:29
>> TODAY WE'RE TALKING ABOUT THE
YORK-SPADINA SUBWAY, BUT THE
FACT IS OVER THE YEARS WE HAVE
00:15:35
LURCHED FROM ONE FIASCO TO
ANOTHER, COSTING TAXPAYERS
MILLIONS OF DOLLARS, TENS OF
00:15:40
MILLIONS OF DOLLARS, AND JUST AS
IMPORTANT, DELAYING THE DAY WE
GET DESPERATELY NEEDED TRANSIT
00:15:45
INTO SERVICE TO MOVE PEOPLE.
00:15:47
SUFFICE IT TO SAY, ALONGSIDE THE
PEOPLE OF TORONTO, I AM FURIOUS
THAT THIS HAPPENS OVER AND OVER
00:15:54
AGAIN ON THE CITY'S WATCH.
00:15:55
>> Steve: OKAY.
00:15:57
I HAVE TO GO FIRST TO THE FORMER
CHAIR OF THE T.T.C. HERE WHO MAY
HAVE HAD A LITTLE BIT OF THIS
00:16:03
HAPPEN ON HER WATCH.
00:16:04
WHAT HAPPENED HERE?
00:16:05
>> Karen Stintz: AGAIN, IT'S
BEEN A WHILE SINCE I WAS CHAIR
OF THE T.T.C.
00:16:09
WE KNEW THIS PROJECT WAS GOING
TO BE OVERBUDGET BECAUSE WE HAD
A CONTRACTOR WHO WASN'T
00:16:13
DELIVERING AND HE WAS BUILDING A
CRITICAL STATION AT THE FRONT OF
THE LINE.
00:16:18
IT'S A CHALLENGE BECAUSE WE
TRIED TO NEGOTIATE WITH THE
CONTRACTOR, THEY STOPPED WORK,
00:16:22
THEY WANTED US TO PAY THEM FOR.
00:16:24
THEY WERE AWARDED THE PROJECT
BECAUSE THEY BID THE LOW BID AND
TOLD US THEY COULDN'T DO THE
00:16:28
WORK FOR WHAT THEY BID.
00:16:29
SO IT'S A VERY --
>> Steve: THIS, JUST TO BE
CLEAR, WAS NOT A P3.
00:16:34
>> Karen Stintz: NO.
00:16:35
>> Steve: BECAUSE THE T.T.C.
00:16:37
WAS CONTRACTING OUT DIRECTLY.
00:16:38
>> Karen Stintz: YES, TO THE
PRIVATE SECTOR TO BUILD THE
STATION.
00:16:41
I MEAN, THE TUNNELS WERE BUILT
ON TIME, THE OTHER STATIONS WERE
BUILT ON TIME.
00:16:44
WE HAD ONE STATION THAT WAS NOT.
00:16:46
AND IT WAS -- THERE'S NO
QUESTION THAT THE PUBLIC -- WE
DIDN'T MANAGE PUBLIC
00:16:50
EXPECTATIONS VERY WELL ON IT AND
THEY RIGHTLY FEEL THAT BILLIONS
OF DOLLARS HAVE BEEN WASTED AND,
00:16:57
AGAIN -- BUT HAVING A
PUBLIC-PRIVATE PARTNERSHIP DO
THIS PROJECT WOULDN'T HAVE
00:16:59
HELPED.
00:17:00
>> Steve: MARK, WOULD IT HAVE
HELPED IF IT WERE A P3 INSTEAD
OF THE T.T.C. DIRECTLY MANAGING
00:17:04
IT?
00:17:05
>> Mark Romoff: I THINK SO.
00:17:07
BECAUSE A PUBLIC-PRIVATE
PARTNERSHIP IS AN AGREEMENT
BETWEEN GOVERNMENTS AND THE
00:17:10
PRIVATE SECTOR.
00:17:10
IT'S A FIXED PRICE CONTRACT WITH
WELL ARTICULATED OUTCOMES AND
EXPECTATIONS OVER THE COURSE OF
00:17:15
THE PROJECT, AND THE PRIVATE
SECTOR, AS A TEAM, THE
CONSORTIUM THAT'S BIDDING THIS
00:17:21
PROJECT, IS IN FACT MAKING SURE
THEY INTEGRATE THE DESIGN WITH
THE CONSTRUCTION, WITH THE
00:17:28
FINANCING FROM EXTERNAL SOURCES
ALONG WITH THE MAINTENANCE.
00:17:31
IF YOU HAVE A BAD DESIGN, THE
CONSTRUCTION GUY CAN'T SAY "I
CAN'T BUILD THAT.
00:17:36
THE DESIGN DOESN'T WORK FOR ME"
BECAUSE THEY ARE A TEAM.
00:17:39
IF IN FACT THERE IS A COST
OVERRUN BECAUSE OF DESIGN
CHANGES OR CONSTRUCTION
00:17:44
SCHEDULES, THE NATURE OF THIS
ARRANGEMENT REQUIRES THAT IT'S
THE PRIVATE SECTOR COMPANIES AS
00:17:48
A TEAM THAT ACTUALLY ABSORB THE
COST, ANY COST OVERRUN.
00:17:52
>> Steve: KAREN STINTZ?
00:17:53
>> Karen Stintz: IF YOU HAVE A
BAD CONTRACTOR, YOU HAVE A BAD
CONTRACTOR, AND THE PRIVATE
00:17:56
SECTOR IS ONLY GOING TO ABSORB
THE COST UNTIL THEY DON'T MAKE A
PROFIT.
00:18:00
BUT THE PRIVATE SECTOR DOES NOT
DO THIS AS A VOLUNTEER
OPPORTUNITY OR FOR FREE AND
00:18:05
THEY'RE ONLY GOING TO DO IT IF
THEY GET PAID.
00:18:07
AS SOON AS THEY STOP GETTING
THEIR MONEY AND RETURN, BECAUSE
EVERYONE HAS SHAREHOLDERS, SO AS
00:18:11
SOON AS THE PRIVATE SECTOR STOPS
GETTING THEIR RETURN, THEY WILL
GO BACK TO THEIR GOVERNMENT
00:18:15
FUNDER AND SAY WE NEED MORE
MONEY.
00:18:16
>> Steve: IS THERE ANY REASON
TO BELIEVE THIS PROJECT WOULD
NOT BE SO OVERBUDGET AND BEHIND
00:18:21
SCHEDULE IF IT HAD BEEN A P3, A
PRIVATE-PUBLIC PARTNERSHIP, FROM
THE BEGINNING, AS OPPOSED TO THE
00:18:25
WAY IT WENT?
00:18:27
>> Enid Slack: IT DEPENDS ON
THE ACTUAL AGREEMENT THAT IS
STRUCK.
00:18:30
WE DON'T KNOW WHAT THAT WOULD
HAVE BEEN LIKE.
00:18:32
MARK'S RIGHT.
00:18:34
WHEN YOU COMBINE DESIGN, BUILD,
OPERATE, FINANCE -- YOU KNOW,
THERE'S EFFICIENCIES YOU CAN
00:18:38
HAVE WHEN YOU'RE DOING ALL THOSE
THINGS TOGETHER.
00:18:41
POTENTIALLY THAT COULD HAPPEN.
00:18:43
YOU CAN PUT THE RISK OF COST
OVERRUNS AND TIME DELAYS ON THE
PRIVATE SECTOR IF YOU STRUCTURE
00:18:49
THE CONTRACT IN A WAY THAT DOES
THAT.
00:18:51
BUT YOU'RE GOING TO PAY FOR
THAT.
00:18:53
IF THE PRIVATE SECTOR'S GOING TO
BID WITH THOSE RISKS, THEY WANT
SOME RETURN FOR THAT.
00:18:57
>> Steve: AT LEAST IT MIGHT
GET DONE ON TIME AND ON BUDGET.
00:19:00
>> Enid Slack: WELL, IT MIGHT.
00:19:01
AGAIN, IT DEPENDS ON THE WAY THE
AGREEMENT IS STRUCK AND HOW THE
RISKS ARE SHARED AND WHO'S
00:19:05
PAYING FOR THOSE RISKS.
00:19:07
>> Toby Sanger: KAREN'S
ABSOLUTELY RIGHT.
00:19:09
THE AUDITOR GENERAL REPORT
IDENTIFIED WHAT I'VE SEEN IN A
NUMBER OF THE P3 BUSINESS CASES,
00:19:19
AND THAT IS THAT THERE IS
ABSOLUTELY NO EVIDENCE FOR THE
RISK TRANSFER.
00:19:24
ABSOLUTELY NO EVIDENCE.
00:19:25
ALL OF THE P3s IN ONTARIO ARE
ASSUMED ON THE BASIS THAT
MASSIVE AMOUNTS OF RISK WAS
00:19:31
TRANSFERRED TO THE PRIVATE
SECTOR, BUT THERE'S NOT A SHRED
OF EVIDENCE FOR THAT.
00:19:40
THAT.
00:19:40
NOW, YOU JUST TALKED ABOUT IT
BEING ON TIME AND ON BUDGET, AND
THE PRIVATE SECTOR BEARING THAT
00:19:45
RISK.
00:19:47
YOU CAN HAVE A TRADITIONAL
PUBLIC PROCUREMENT THAT'S A
FIXED PRICE CONTRACT IN THAT
00:19:52
WAY --
>> Steve: WHAT ABOUT A CASE
LIKE THE SPADINA LINE WHERE THE
00:19:56
CONTRACTOR IS BAD AND DOESN'T
FULFIL THEIR END OF THE BARGAIN?
00:20:00
>> Toby Sanger: THAT CAN BE
THE CASE BUT ALSO, AS KAREN
SAID, WITH A P3 OFTEN, IN A P3
00:20:07
GENERALLY THE PRIVATE SECTOR
ONLY PUTS UP ABOUT 10% OF THE
COST OF IT IN EQUITY.
00:20:12
THEY CAN ALWAYS WALK AWAY.
00:20:14
THAT'S WHAT HAPPENED IN LONDON,
IN THE U.K. WITH THE METRO NET.
00:20:19
THEY WALKED AWAY.
00:20:20
IN OTTAWA THERE ARE A NUMBER OF
P3s FOR ARENAS.
00:20:27
THREE YEARS INTO THE PROJECT,
THESE ARE PROFITABLE
CORPORATIONS.
00:20:31
THEY SAID, NOT ENOUGH MONEY, WE
WANT MORE MONEY --
>> Steve: TOBY, IS IT YOUR
00:20:35
VIEW WE SHOULD NEVER DO THESE
AGAIN?
00:20:38
>> Toby Sanger: IT'S MY VIEW
THEY SHOULD BE TRANSPARENT.
00:20:40
THERE'S ABSOLUTELY NO
TRANSPARENCY.
00:20:41
YOU TRY TO FIND THE BUSINESS
CASES AND RATIONALIZATIONS FOR
THIS, THEY'RE NOT AVAILABLE.
00:20:47
THAT'S WHY WE HAVE TO RELY ON
THE AUDITOR GENERAL.
00:20:49
>> Steve: THAT WASN'T MY
QUESTION.
00:20:51
SHOULD WE EVER DO THESE AGAIN?
00:20:53
>> Toby Sanger: NONE OF THEM
ARE JUSTIFIED ON THE BASIS OF
WHAT -- ON THE BASIS OF WHAT WAS
00:20:59
SEEN.
00:20:59
>> Steve: KAREN, IS THAT A
FAIR CONCLUSION?
00:21:02
>> Karen Stintz: I WOULD
DISAGREE WITH YOU SOMEWHAT ONLY
THAT IF THE GOVERNMENT DOESN'T
00:21:04
HAVE THE MONEY RIGHT NOW UP
FRONT TO DO THE CONSTRUCTION
PROJECT AND WANTS TO BORROW OVER
00:21:09
TIME OR HAS A REVENUE STREAM
OVER TIME, THEN PRIVATE
FINANCING MIGHT MAKE SENSE.
00:21:14
THERE ARE RISKY PROJECTS AND
LESS RISKY PROJECTS AND I WOULD
ALWAYS ARGUE THAT THE LESS RISKY
00:21:20
PROJECTS ARE BETTER FOR A
PUBLIC-PRIVATE PARTNERSHIPS.
00:21:23
>> Steve: YOU PUT YOUR FINGER
ON ONE OF THE REASONS
GOVERNMENTS MAY LIKE THESE
00:21:26
THINGS.
00:21:27
MARK, IF YOU DO THIS, IF YOU DO
A P3 INSTEAD OF GOVERNMENT BEING
IN CHARGE OF MANAGING THE
00:21:32
PROJECT ITSELF, THE MONEY'S
TECHNICALLY NOT ON THE
GOVERNMENT'S BOOKS THAT YEAR,
00:21:39
RIGHT?
00:21:39
>> Mark Romoff: NO IT'S ON THE
GOVERNMENT'S BOOKS FROM THE
STARTS.
00:21:43
>> Karen Stintz: IT'S NOT.
00:21:44
>> Mark Romoff: THERE IS NO
OFF-BOOK ACCOUNTING WITH RESPECT
TO P3.
00:21:48
>> Toby Sanger: NOT THE
LONG-TERM LIABILITIES.
00:21:51
THE LONG-TERM LIABILITIES
ASSOCIATED WITH THE P3s,
ASSOCIATED WITH P3s IN
00:21:56
ONTARIO, AMOUNT TO TENS OF
BILLIONS OF DOLLARS AND THOSE
ARE NOT ALL REFLECTED ON THE
00:22:00
GOVERNMENT'S BOOKS.
00:22:01
>> Steve: ENID, HELP US OUT.
00:22:02
I GUESS THE POINT I'M TRYING TO
MAKE IF YOU'RE A GOVERNMENT
TRYING TO BALANCE THE BOOKS AND
00:22:06
YOU DON'T HAVE TO LIABILITY YEAR
END, THAT HELPS YOU IF YOU'RE
DOING A P3.
00:22:12
>> Enid Slack: BUT THE
GOVERNMENT, AS I SAID EARLIER,
HAS TO PAY BACK THAT MONEY TO
00:22:16
THE PRIVATE SECTOR, SO IT'S
THERE.
00:22:17
>> Steve: YEARS DOWN THE ROAD.
00:22:19
>> Enid Slack: MUNICIPALITIES
IN CANADA ARE ALLOWED TO BORROW
MONEY TO MEET CAPITAL
00:22:23
EXPENDITURES.
00:22:24
THERE ARE SOME RESTRICTIONS ON
HOW MUCH THEY CAN BORROW, BUT
MOST OF THEM ARE WELL BELOW
00:22:29
THOSE BORROWING LIMITS.
00:22:30
THEY COULD ACTUALLY BORROW MORE
AND MORE CHEAPLY THAN THE
PRIVATE SECTOR.
00:22:34
THEY OFTEN CHOOSE NOT TO.
00:22:36
THEY OFTEN DON'T LIKE TO PUT
THAT BORROWING ON THE BOOKS AND
IT'S A VERY VISIBLE DEBT.
00:22:41
I THINK THE BIGGER QUESTION
HERE, STEVE, IS HOW ARE CITIES
GOING TO PAY FOR THE
00:22:45
INFRASTRUCTURE WE NEED?
00:22:46
>> Steve: WHAT WOULD YOU
ESTIMATE THE NEED TO BE RIGHT
NOW?
00:22:49
>> Enid Slack: THERE ARE SO
MANY NUMBERS FLOATING AROUND.
00:22:52
THE LATEST NUMBER WE HAVE IS AN
OLD NUMBER FROM 2008 FROM THE
FEDERATION OF CANADIAN
00:22:56
MUNICIPALITIES THAT SAYS THE
INFRASTRUCTURE DEFICIT IS
$123 BILLION.
00:23:00
>> Steve: IS THAT NATION-WIDE?
00:23:02
>> Enid Slack: THAT'S
NATION-WIDE AND THAT'S ON THE
RISE.
00:23:04
WE LOOKED AT TORONTO RECENTLY AT
OUR INSTITUTE AND THEIR STATE OF
GOOD REPAIR BUDGET FOR THIS YEAR
00:23:11
IS OVER $2 BILLION.
00:23:13
SO THAT IS JUST MAINTAINING THE
EXISTING INFRASTRUCTURE THAT
THEY HAVE, TO KEEP IT IN GOOD
00:23:19
REPAIR, IS 2 BILLION.
00:23:20
THAT HAS NOTHING TO DO WITH THE
NEW INFRASTRUCTURE THEY NEED TO
FINANCE GROWTH.
00:23:24
>> Steve: DO YOU THINK P3s
ARE A VIABLE OPTION FOR DEALING
WITH THAT INFRASTRUCTURE
00:23:30
BACKLOG?
00:23:31
>> Enid Slack: IT'S A
FINANCING TOOL, NOT A REVENUE
TOOL.
00:23:33
IT CAN BE PART OF THE TOOL KIT.
00:23:35
BUT, YOU KNOW, MUNICIPALITIES
CAN BORROW.
00:23:36
THEY CAN RAISE PROPERTY TAXES.
00:23:38
THEY HAVE USER FEES.
00:23:40
THEY CAN CHARGE DEVELOPERS
DEVELOPMENT CHARGES TO PAY THE
GROWTH-RELATED COSTS -- CAPITAL
00:23:44
COSTS ASSOCIATED WITH NEW
DEVELOPMENT.
00:23:46
SO IT'S ONE PART OF A BIG
PACKAGE OF TOOLS THAT THEY NEED
TO --
00:23:49
>> Steve: I'M ASKING THAT IN
PART BECAUSE WE HAVE A
SCARBOROUGH SUBWAY IN TORONTO
00:23:53
THAT IS ALLEGEDLY GOING TO BE
BUILT OVER THE NEXT DECADE.
00:23:56
SHOULD WE DO A P3 PROCESS TO GET
THAT BUILT?
00:23:59
>> Karen Stintz: ABSOLUTELY
NOT.
00:24:00
IF YOU'RE BUILDING A IN HAD YOU
HOSPITAL OR LONG-TERM CARE
FACILITY OR SCHOOL, ABSOLUTELY
00:24:05
100 PERCENT PUBLIC-PRIVATE
PARTNERSHIPS IS THE WAY TO GO.
00:24:07
>> Steve: WHY NOT FOR A
SUBWAY?
00:24:10
>> Karen Stintz: THE
SCARBOROUGH SUBWAY -- IT'S AN
EXTENSION OF AN EXISTING ASSET
00:24:14
SO IT'S HARDER TO FINANCE THAT.
00:24:16
THERE'S MORE RISK INVOLVES IN
UTILITY LOCATES AND BUILDING A
COMPLICATED PIECE OF
00:24:21
INFRASTRUCTURE.
00:24:21
THE T.D.S.B. BY THEIR OWN
ADMISSION, THEY DON'T BUILD
SCHOOLS.
00:24:25
THERE'S NO CAPACITY, NO
COMPETENCY TO BUILD SCHOOLS.
00:24:28
YOU COULD ARGUE THE T.T.C.
00:24:29
DOESN'T HAVE ANY COMPETENCY IN
BUILDING PROJECTS BUT THEY
ACTUALLY DO.
00:24:32
THEY'VE JUST HAD A SITUATION
THAT WAS UNFORTUNATE.
00:24:35
BUT THE MINISTRY OF HEALTH, THEY
DON'T BUILD HOSPITALS.
00:24:39
THE PUBLIC-PRIVATE SECTOR
PARTNERSHIP IS VERY APPROPRIATE
FOR THAT.
00:24:43
>> Steve: SCARBOROUGH SUBWAY?
00:24:44
>> Mark Romoff: ABSOLUTELY.
00:24:45
I THINK QUITE FRANKLY THE BIGGER
THE RISK, THE MORE REASON TO IN
FACT GO AHEAD WITH A P3 BECAUSE
00:24:52
IT'S EXACTLY THAT RISK THAT IS
ALLOCATED TO THE PRIVATE SECTOR
WHO HAS THE CAPABILITY TO IN
00:24:58
FACT DELIVER ON THAT PROJECT.
00:25:00
AGAIN, I MENTIONED EARLIER THAT
THERE WERE 220 PROJECTS ACROSS
CANADA.
00:25:04
WE RECENTLY COMMISSIONED AN
INDEPENDENT STUDY OF P3s IN
CANADA OVER THE PAST DECADE, AND
00:25:10
THE ECONOMIC IMPACT IS QUITE
REMARKABLE.
00:25:14
OVER 290,000 DIRECT JOBS
CREATED, A CONTRIBUTION TO
CANADA'S GDP -- DIRECT GDP, MORE
00:25:19
THAN $25 BILLION.
00:25:20
SAVINGS TO GOVERNMENT,
$9.9 BILLION --
>> Steve: HANG ON.
00:25:24
HANG ON.
00:25:25
I WANT TO FOLLOW UP ON THAT ONE.
00:25:29
MADAM FORMER CHAIR OF THE
T.T.C., LATEST FIGURE FOR
BUILDING THE SCARBOROUGH SUBWAY,
00:25:33
HOW MUCH?
00:25:34
>> Karen Stintz: $1.8 BILLION.
00:25:35
>> Steve: HOW MUCH OF A
PREMIUM DOES THE PRIVATE SECTOR
WANT ON THAT IN ORDER TO BUILD
00:25:38
IT UNDER A P3?
00:25:40
>> Mark Romoff: THAT WILL BE
WHAT THE NEGOTIATION AND
COMPETITIVE PROCESS DETERMINE.
00:25:44
>> Steve: BALLPARK.
00:25:46
>> Mark Romoff: CAN'T SAY.
00:25:46
EVERY ONE OF THESE PROJECTS IS
DIFFERENT --
>> Karen Stintz: THERE'S NO
00:25:49
QUESTION THEY'LL SAY FOR
$3 BILLION WE WILL BUILD YOUR
SUBWAY ON TIME AND SUBJECT FOR
00:25:56
$3 BILLION.
00:25:56
THAT'S RIGHT.
00:25:57
BECAUSE THERE IS NO WAY.
00:25:58
THERE IS NO WAY THEY'RE GOING TO
TAKE RISK AROUND UTILITIES,
AROUND PROBLEMS THAT COME UP,
00:26:03
DELAYS, GOVERNMENT APPROVALS --
LIKE, ALL OF THOSE THINGS HAVE
RISK AND THE PUBLIC SECTOR --
00:26:08
>> Mark Romoff: BUT THAT'S THE
WHOLE POINT IN DOING IT AS --
LOOK AT THE LRT IN OTTAWA.
00:26:14
THAT IS A PUBLIC-PRIVATE
PARTNERSHIP.
00:26:16
IT HAS EXACTLY THE SAME
FEATURES.
00:26:18
>> Karen Stintz: NO, IT
DOESN'T.
00:26:19
>> Mark Romoff: IN FACT, THOSE
RISKS ARE TRANSFERRED TO THE
PRIVATE --
00:26:23
>> Steve: SAME FEATURES AS THE
SCARBOROUGH SUBWAY?
00:26:26
>> Mark Romoff: IT'S LIGHT
RAIL.
00:26:28
>> Karen Stintz: THEY'RE NOT
REMOTELY COMPARABLE.
00:26:31
>> Mark Romoff: THEY ARE
TRANSIT PROJECTS.
00:26:33
THEY SHARE THE SAME KIND OF
FEATURES.
00:26:35
>> Karen Stintz: NO, THEY
DON'T.
00:26:36
>> Mark Romoff: THEY HAVE THE
SAME RISK.
00:26:38
THE FACT YOU HAVE A COMPETITIVE
BIDDING PROCESS, YOU GET THESE
VARIOUS CONSORTIA TO BID
00:26:45
COMPETITIVELY, THAT BRINGS THE
PRICE DOWN AND DRIVES UP
INNOVATION.
00:26:49
THAT'S EXACTLY THE OUTCOME WE'VE
HAD TIME AND TIME AGAIN ACROSS
CANADA.
00:26:54
>> Toby Sanger: I HAVE A
NUMBER OF POINTS HERE.
00:26:55
FIRST OF ALL, I DON'T THINK ANY
P3s IN CANADA HAVE BEEN
JUSTIFIED IN TERMS OF VALUE FOR
00:27:00
MONEY.
00:27:00
BAD DEAL.
00:27:01
I'LL TALK A LITTLE BIT MORE
ABOUT THAT.
00:27:05
SECONDLY, THE RISK ALWAYS --
ALWAYS REMAINS WITH THE PUBLIC
SECTOR.
00:27:10
THE PUBLIC SECTOR ALWAYS PAYS
FOR IT, ALWAYS RESPONSIBLE FOR
DELIVERING THE SERVICE.
00:27:15
THE PRIVATE CONSORTIUMS CAN WALK
AWAY AND JUST LEAVE THEIR
EQUITY, WHICH IS USUALLY ABOUT
00:27:20
10% OF THE PROJECT, AND
MEANWHILE THE ASSUMPTIONS FOR
TRANSFERRING RISK ARE ABOUT 50%.
00:27:25
GETTING TO HOSPITALS.
00:27:26
ABOUT HALF OF THE VALUE OF P3s
IN ONTARIO HAS BEEN HOSPITALS.
00:27:30
I'M JUST GOING TO USE A SPECIFIC
EXAMPLE HERE.
00:27:33
NORTH BAY REGIONAL HOSPITAL.
00:27:37
A COST ESTIMATE WAS
$200 MILLION.
00:27:40
THEN IT GOT PROPOSED AS A P3.
00:27:42
THE CAPITAL COST WAS
$400 MILLION --
>> Steve: SUDBURY AND THUNDER
00:27:46
BAY TOO, THAT HAPPENS TO
EVERYONE.
00:27:49
>> Toby Sanger: THE TOTAL
AMOUNT THEY'RE GOING TO PAY FOR
THAT CONTRACT OVER THE 30 YEARS
00:27:52
IS A BILLION DOLLARS.
00:27:54
AND IF THAT WAS PUBLICLY
FINANCED, THE ACTUAL COST FOR
IT, THE ACTUAL INTEREST COST FOR
00:28:01
IT, WOULD HAVE BEEN $200 MILLION
LESS.
00:28:04
THAT'S A SIGNIFICANT AMOUNT.
00:28:06
OVER 30 YEARS, THAT MEANS $
$7 MILLION MORE IN PRIVATE
FINANCING COSTS THAN IF IT WAS
00:28:13
PUBLICLY DONE.
00:28:14
NOW, WHAT'S HAPPENED?
00:28:16
THAT WAS OPENED UP LESS THAN
FIVE YEARS AGO.
00:28:18
ALREADY WE'RE HAVING -- ALREADY
THEY'VE LAID OFF 100 FRONT LINE
STAFF, THEY'VE CLOSED 23 BEDS --
00:28:25
>> Steve: THAT'S NOT RELATED
TO THE P3 PROCESS?
00:28:33
>> Toby Sanger: YES, IT IS.
00:28:36
IF THEY'RE PAYING MORE IN
FINANCING COSTS, YES, IT IS.
00:28:38
>> Steve: WHAT ABOUT THE
HOSPITAL IN BRAMPTON?
00:28:43
>> Toby Sanger: THE AUDITOR
GENERAL, WE WENT TO COURT TO TRY
TO GET INFORMATION ON THAT
00:28:47
BECAUSE THEY WEREN'T OPEN ABOUT
IT.
00:28:48
WHEN THE AUDITOR GENERAL LOOKED
AT IT, THEY SAID THAT IT COST
$200 MILLION MORE AS A P3 THAN
00:28:55
IF IT WAS PUBLICLY FINANCED.
00:28:56
$200 MILLION MORE.
00:28:57
>> Steve: HERE'S THE QUESTION:
WAS IT WORTH IT TO THE PEOPLE
WHO EVENTUALLY GET THEIR HEALTH
00:29:01
CARE SERVICES THERE BECAUSE
EVENTUALLY, EVEN IF IT WAS
$200 MILLION MORE, IT GOT DONE
00:29:07
ON TIME AND PROBABLY BETTER
THAN, HAD THE PROVINCE OF
ONTARIO MANAGED THE CASE ITSELF
00:29:12
BECAUSE THEY SEEM TO BE DOING A
BAD JOB OF MANAGING A LOT OF
THINGS THESE DAYS.
00:29:16
IS THAT POSSIBLE?
00:29:17
>> Toby Sanger: NO, I WOULD
SAY -- I WOULD SAY THAT THEY'RE
DOING A BAD JOB -- I MEAN, LOOK
00:29:22
AT THE GAS PLANT.
00:29:23
THAT WAS A BILLION DOLLAR
SCANDAL.
00:29:25
THAT WALKED AND TALKED --
>> Steve: THAT'S A DIFFERENT
CASE --
00:29:28
>> Karen Stintz: I CAN GIVE AN
EXAMPLE.
00:29:29
>> Steve: KAREN, HANG ON.
00:29:32
>> Karen Stintz: I CAN GIVE
YOU A GOOD EXAMPLE OF A P3
PROJECT, THE CONFEDERATION
00:29:38
BRIDGE.
00:29:38
>> Steve: PRINCE EDWARD
ISLAND?
00:29:40
>> Karen Stintz: PRINCE EDWARD
ISLAND.
00:29:41
IT WAS FINANCED BY THE PRIVATE
SECTOR.
00:29:42
THEY CHARGE A TOLL FOR PEOPLE TO
USE IT WHICH GOES BACK TO PAY
BACK THE PRIVATE SECTOR, SO
00:29:46
THERE'S MINIMUM GOVERNMENT
FUNDING THAT WAS REQUIRED UP
FRONT AND ACTUALLY MINIMUM IN
00:29:50
THE LONG-TERM BECAUSE THERE'S A
DEDICATED REVENUE STREAM TO PAY
BACK THE FINANCING.
00:29:53
>> Steve: SAME AS THE 407 HERE
IN ONTARIO.
00:29:56
>> Karen Stintz: THOSE ARE THE
KIND OF PROJECTS WE ALL COULD
AGREE MAKE SENSE.
00:30:01
DEDICATED FINANCING STREAM.
00:30:05
>> Toby Sanger: I WOULDN'T
AGREE ON THAT.
00:30:07
THE FEDERAL AUDITOR GENERAL SAID
THAT IT COST $35 MILLION MORE
FOR THE P3 ON THE CONFEDERATION
00:30:13
BRIDGE ON THAT.
00:30:15
HIGHWAY 407, I THINK THE ONTARIO
GOVERNMENT HAS DECIDED THAT THAT
WAS A BAD DEAL IN THAT WAY.
00:30:21
THE FEES ARE HIGHER.
00:30:23
BUT KAREN DID IDENTIFY ONE
THING, AND THAT IS THAT THERE'S
SOME DEMAND RISK INVOLVED WITH
00:30:28
THOSE PROJECTS.
00:30:30
MOST P3s IN CANADA DON'T HAVE
THAT DEMAND RISK, REVENUE RISK.
00:30:35
SO THERE'S VERY LITTLE RISK
TRANSFER.
00:30:38
NOW, YOU SAID WITH RESPECT TO
THE WILLIAM OSLER HOSPITAL THAT
PEOPLE ARE HAPPIER BECAUSE THEY
00:30:44
HAVE A HOSPITAL THAN THEY DIDN'T
BEFORE.
00:30:46
WELL, WHAT'S HAPPENING NOW IS
THAT SERVICES ARE BEING CUT,
JUST AS IS HAPPENING IN THE
00:30:51
U.K., BECAUSE THE BALLOONING
COSTS OF THESE P3 PAYMENTS.
00:30:58
SO THE NORTH BAY HOSPITAL.
00:31:00
LESS THAN FIVE YEARS.
00:31:01
THEY'RE ALREADY LAYING OFF
STAFF, HUNDREDS OF STAFF, MANY
OF THOSE FRONT LINE.
00:31:06
THEY'RE CLOSING BEDS.
00:31:08
WE'RE BEING CONCERNED ABOUT
P3s BECAUSE WE THOUGHT THIS
WOULD EVENTUALLY HAPPEN.
00:31:12
>> Steve: LET ME ASK ENID
THIS --
>> Toby Sanger: HAPPENING
00:31:16
RIGHT NOW.
00:31:17
>> Steve: HANG ON.
00:31:17
CAN YOU DRAW A DIRECT LINE
BETWEEN THE PREMIUM YOU HAVE TO
PAY TO DO IT AS A P3, BECAUSE
00:31:22
THE PRIVATE SECTOR IS ASSUMING
MORE OF THE RISK, TO NURSES
GETTING LAID OFF TODAY BECAUSE
00:31:29
THE PROJECT COST MORE?
00:31:30
CAN YOU ACTUALLY MAKE THAT
DIRECT CONNECTION, IN YOUR VIEW?
00:31:33
>> Enid Slack: I DON'T KNOW
THE ANSWER TO THAT.
00:31:35
I THINK WHAT WE'RE HEARING HERE
IS P3s THAT HAVE WORKED, P3s
THAT HAVEN'T WORKED.
00:31:40
IT COMES DOWN TO WHAT I SAID AT
THE BEGINNING.
00:31:43
IT COMES DOWN TO THE AGREEMENT
THAT YOU STRIKE AND WHO'S
BEARING THE RISKS AND HOW YOU'RE
00:31:47
PRICING THOSE RISKS.
00:31:47
>> Steve: SO THEY ARE NOT IN
AND OF THEMSELVES EVIL.
00:31:51
>> Enid Slack: THEY AREN'T
EVIL AND THEY AREN'T GREAT.
00:31:54
THEY HAVE POTENTIAL TO LOWER THE
COST TO A MUNICIPALITY IF THE
AGREEMENTS ARE STRUCK, YOU KNOW,
00:32:01
IN THE RIGHT WAY, AND THAT WE
HAVE, YOU KNOW, THE
MUNICIPALITIES HAVE DONE A COST
00:32:07
BENEFIT ANALYSIS AHEAD OF TIME,
THEY KNOW WHAT THE COSTS ARE
GOING TO BE TO THEM, THEY KNOW
00:32:11
WHAT THE BENEFITS ARE, THEY'VE
PRICED THE RISKS, WRITTEN A GOOD
AGREEMENT.
00:32:15
THEY CAN WORK.
00:32:17
YOU'VE HEARING CASES THAT DIDN'T
AND DIDN'T.
00:32:20
>> Mark Romoff: TOBY, YOUR
COMMENTS ARE UNSUBSTANTIATED.
00:32:24
THE NEXT SHOW IS YOU WANT THE
CEOs OF THESE HOSPITALS.
00:32:30
THERE ARE MANY HOSPITALS IN
ONTARIO, MANY HOSPITALS IN
ONTARIO THAT HAVE GONE AHEAD AS
00:32:35
P3s, AND WHAT THEY'LL SAY IS
IF IT WOULDN'T HAVE BEEN FOR THE
GOVERNMENT WORKING WITH THE
00:32:40
PRIVATE SECTOR, THEY NEVER WOULD
HAVE HAD THAT HOSPITAL BUILT.
00:32:43
THAT'S ANOTHER FEATURE OF THE P3
APPROACH.
00:32:45
>> Steve: CAN I FOLLOW UP.
00:32:46
WHY NOT?
00:32:47
WHY WOULD THAT HOSPITAL NOT HAVE
HAPPENED?
00:32:50
>> Mark Romoff: BECAUSE
GOVERNMENTS WOULDN'T GO AHEAD
WITH IT IF THEY HAVE TO ASSUME
00:32:53
THE FULL FINANCIAL RISK AND ALSO
TAKE ON ALL OF THE
RESPONSIBILITY FOR THAT PROJECT.
00:32:56
SO IN THE CASE OF THE SAULT AREA
HOSPITAL, IT'S A CLASSIC, IT
WENT AHEAD BECAUSE THE
00:33:05
GOVERNMENT DECIDED TO GO WITH AN
ALTERNATIVE FINANCING PROGRAM.
00:33:10
>> Toby Sanger: THE REASONS
WHY MARK WOULD SAY THAT THAT'S
HAPPENING IS BECAUSE,
00:33:15
UNFORTUNATELY, UPPER LEVELS OF
GOVERNMENT, THE FEDERAL
GOVERNMENT AND PROVINCIAL
00:33:20
GOVERNMENTS, ARE ONLY APPROVING
FINANCING AND PROVIDING THAT
FINANCING AS P3s BECAUSE THEY
00:33:27
WANT TO KEEP A LOT OF THAT DEBT
OFF THE BOOKS.
00:33:30
>> Enid Slack: THEY DON'T WANT
TO BORROW THE MONEY.
00:33:33
YOU'RE RIGHT.
00:33:34
THESE THINGS ARE BEING BUILT
THAT MIGHT NOT HAVE BEEN BECAUSE
THE GOVERNMENT DOESN'T HAVE TO
00:33:38
BORROW THE MONEY.
00:33:39
IF THEY HAVE TO WAIT UNTIL THEIR
FINANCIAL HOUSE IS MORE SOLID,
THEN THERE'S A TIME DELAY --
00:33:47
>> Toby Sanger: MASSIVE
LIABILITIES IN THE FUTURE AND
THE REAL PROBLEM IS THEY'RE
00:33:50
ALSO -- I MEAN, FEDERAL AND
PROVINCIAL GOVERNMENTS CAN ISSUE
MORE DEBT.
00:33:55
ONTARIO WILL HAVE, YOU KNOW,
TENS MORE BILLION DOLLARS OF
DEBT THAN THEY HAVE BECAUSE OF
00:34:02
P3s, BUT THEY'RE ALSO
FORCING -- THE REAL PROBLEM IS
THEY'RE ALSO FORCING OTHER
00:34:06
LEVELS OF GOVERNMENT,
MUNICIPALITIES, TO ENGAGE IN
P3s IN THAT WAY, AND THOSE ARE
00:34:12
LEVELS OF GOVERNMENT THAT CANNOT
EASILY ISSUE --
>> Steve: LET ME TRY THIS WITH
00:34:16
YOU.
00:34:16
YOU WOULD ACKNOWLEDGE THERE ARE
SOME THINGS THE PUBLIC SECTOR
DOES AND DOES BETTER THAN THE
00:34:22
PRIVATE SECTOR.
00:34:23
YOU MIGHT SAY THIS TELEVISION
STATION IS AN EXAMPLE OF THAT.
00:34:25
YOU MIGHT SAY THAT.
00:34:26
WOULD YOU ACKNOWLEDGE THERE ARE
SOME THINGS THE PRIVATE SECTOR
DOES BETTER THAN THE PUBLIC
00:34:30
SECTOR?
00:34:31
>> Toby Sanger: PERHAPS THERE
ARE SOME THINGS.
00:34:32
>> Steve: OKAY.
00:34:32
NAME ONE.
00:34:33
NAME ONE.
00:34:34
>> Toby Sanger: THEY CAN GO
BANKRUPT.
00:34:36
>> Steve: SERIOUSLY.
00:34:38
NAME ONE.
00:34:39
NAME ONE THING YOU'RE PREPARED
TO ACKNOWLEDGE THE PRIVATE
SECTOR ACTUALLY DOES BETTER WHEN
00:34:43
IT COMES TO PROJECTS?
00:34:44
>> Toby Sanger: WELL, THEY
BUILD INFRASTRUCTURE.
00:34:47
THE GOVERNMENT DOESN'T BUILD
INFRASTRUCTURE.
00:34:50
ABSOLUTELY.
00:34:50
BUT TO BORROW MONEY FROM THE
PRIVATE SECTOR AT TWICE THE RATE
THAT THE PUBLIC SECTOR CAN
00:34:57
BORROW AT --
>> Mark Romoff: THAT'S NOT
TRUE.
00:34:59
>> Toby Sanger: MAKES NO
SENSE.
00:35:00
>> Steve: IT'S NOT TWICE THE
RATE?
00:35:03
>> Mark Romoff: IT'S NOT TWICE
THE RATE.
00:35:04
THAT'S NOT TRUE, AND FURTHER
MORE, RATES ARE GOING DOWN AS
WELL.
00:35:07
YOU'RE GOING TO FIND THAT RATES
BETWEEN WHAT THE PRIVATE SECTOR
CAN GET MONEY AT AND THE PUBLIC
00:35:12
SECTOR ARE VERY CLOSE NOW.
00:35:14
SO THAT ARGUMENT --
>> Karen Stintz: AGAIN, IT ALL
DEPENDS HOW RISKY THE PROJECT
00:35:17
IS.
00:35:18
IF YOU'RE LOOKING AT THE
CONSORTIUM LOOKING TO BUILD THE
EGLINTON CROSS-TOWN, THAT'S A
00:35:23
BIG CONSORTIUM.
00:35:24
THAT'S THE LRT THAT'S GOING TO
GO THROUGH THE CENTRE OF THE
CITY.
00:35:26
THAT'S A VERY, VERY RISKY
PROJECT.
00:35:28
>> Steve: HOW LONG IS THAT?
00:35:32
>> Karen Stintz: TWENTY
KILOMETRES AND TEN UNDERGROUND
AND I THINK THEY'RE BUILDING
00:35:35
SEVEN STATIONS.
00:35:36
>> Steve: HOW LONG?
00:35:38
>> Karen Stintz: 2019.
00:35:39
I DON'T THINK THAT'S POSSIBLE.
00:35:40
BULL WE'LL SEE.
00:35:40
>> Steve: LONGER THAN THAT,
PROBABLY.
00:35:43
>> Karen Stintz: PROBABLY.
00:35:44
>> Mark Romoff: WITH A P3,
MAYBE NOT.
00:35:47
>> Steve: IS IT A P3?
00:35:49
>> Karen Stintz: IT IS.
00:35:50
THE STATIONS HAVE BEEN SEPARATED
OUT FROM THE TUNNEL.
00:35:52
IT'S A VERY COMPLICATED, VERY
RISKY PROJECT --
>> Mark Romoff: WHICH IS WHY
00:35:58
IT'S BEING PROCURED AS A
PUBLIC-PRIVATE PARTNERSHIP?
00:36:01
>> Karen Stintz: NO.
00:36:02
THE GOVERNMENT DOESN'T HAVE THE
MONEY ON THEIR BOOKS TO DO IT.
00:36:05
THEY'RE AMORTIZING OVER 30
YEARS --
>> Mark Romoff: THAT'S WHY YOU
00:36:08
CAN GET A MORTGAGE WHEN YOU BUY
A HOUSE.
00:36:10
IF I CAN'T AFFORD TO PAY FOR IT
UP FRONT --
>> Karen Stintz: YOU CAN'T
00:36:14
ASSUME IT'S GOING TO BE A BETTER
MANAGED PROJECT BECAUSE THE
PRIVATE SECTOR IS --
00:36:23
(Mixed voices)
>> Karen Stintz: THIS IS
SOLELY ABOUT FINANCING.
00:36:26
>> Mark Romoff: IT'S A
PROCUREMENT APPROACH, NOT A
FINANCING APPROACH.
00:36:28
IT'S NOT A FINANCING TOOL, IT'S
THE WAY IN WHICH YOU PROCURE.
00:36:31
THERE ARE TWO WAYS TO DO IT, AS
A P3, ALONG THE LINES WE
DESCRIBED, OR A MORE TRADITIONAL
00:36:39
DAY WHICH IS A DESIGN, BUILD,
BIDAPPROACH.
00:36:45
WE HAVE SEEN WHEN WE'VE MOVED
AHEAD WITH A
00:36:49
WE'VE HAD RESULTS THAT ARE VERY
STARTLING AND THEY ARE ON TIME,
ON BUDGET, CHEAPER, AND --
00:36:54
>> Steve: LET ME GO WITH KAREN
HERE FOR A SECOND BECAUSE I WANT
TO UNDERSTAND THIS.
00:36:58
IT'S RIGHT OUTSIDE OUR STATION
THIS THING.
00:37:00
IT'S GOING TO GO RIGHT PAST THE
STATION HERE.
00:37:02
YOU'RE SAYING PART OF IT IS A P3
AND PART HAS BEEN DIRECTLY
CONTRACTED AND MANAGED BY THE
00:37:07
T.T.C.
00:37:08
>> Karen Stintz: NO, NO, BY
METROLINX.
00:37:10
SO THE TUNNEL IS BUILT ENTIRELY
OUTSIDE OF ANY P3 MODEL.
00:37:13
THE STATIONS HAVE BEEN BUNDLED
INTO A CONSORTIUM, AND AGAIN,
IT'S VERY, VERY EXPENSIVE,
00:37:19
UPWARD OF A BILLION DOLLARS.
00:37:21
THERE'S NOT A LOT OF PRIVATE
COMPANIES THAT HAVE A BILLION
DOLLARS ON HANDING TO BUILD
00:37:25
STATIONS TO GET PAID BACK OVER A
PERIOD OF 30 YEARS.
00:37:29
THE ENTIRE ENDEAVOUR IS VERY
RISKY JUST BECAUSE OF THE
NUMBERS THAT WE'RE TALKING ABOUT
00:37:35
AND THE LENGTH OF THE LINE AND
OF ALL THE INHERENT THINGS THAT
CAN GO WRONG, IT IS A VERY, VERY
00:37:41
RISKY PROJECT, AND THE PRIVATE
SECTOR HAS PRICED IT
ACCORDINGLY.
00:37:43
>> Steve: HERE'S THE FOLLOW-UP
QUESTION: IS THERE ANY REASON TO
BELIEVE THE PART THAT IS COVERED
00:37:48
BY THE P3, THAT THE PRIVATE
SECTOR IS FINANCING, MANAGING,
BUILDING, ET CETERA, WILL COME
00:37:55
IN ANY BETTER ON TIME AND ANY
BETTER ON BUDGET THAN THE PART
THAT METROLINX IS IN CHARGE OF?
00:38:00
>> Karen Stintz: AGAIN, WHEN
THE PRIVATE SECTOR SETS THE
BUDGET, THEY'LL SET IT AT
00:38:06
$2 BILLION TO BUILD THE STATIONS
AND THEY'LL PROBABLY COME IN AT
$2 BILLION.
00:38:09
>> Steve: THEY PUT A CUSHION
IN THERE.
00:38:13
>> Karen Stintz: ABSOLUTELY
THEY HAVE.
00:38:15
>> Toby Sanger: THE SAME THING
IS IF YOU BUY A HOUSE.
00:38:19
BUT YOU'RE NOT GOING TO GO FOR
HIGHER COST FINANCING AND PAY
TWICE THE RATE.
00:38:23
RIGHT NOW THE ONTARIO GOVERNMENT
CAN BORROW AT LESS THAN 3% OVER
30 YEARS.
00:38:28
THE PRIVATE COST OF FINANCING,
THE BLENDED RATE IS PROBABLY AT
LEAST 6% WITH THOSE PROJECTS --
00:38:33
>> Steve: THE QUESTION
BECOMES: IS IT WORTH THE PREMIUM
WE'RE PAYING TO HAVE IT DONE
00:38:37
THIS WAY?
00:38:38
>> Toby Sanger: NO, NO,
ABSOLUTELY NOT.
00:38:40
ANOTHER THING THAT THE AUDITOR
GENERAL BROUGHT UP IS THAT
THERE'S VERY LITTLE COMPETITION
00:38:43
IN THE P3 INDUSTRY.
00:38:47
FIVE FIRMS GOT 80% OF THE
CONTRACTS.
00:38:50
THERE'S BIAS -- ANOTHER BIG
PROBLEM WITH THESE P3 AGENCIES
IS THEY'RE ALL CHARGED WITH
00:38:55
PROMOTING P3s AND ALSO
ASSESSING THEM.
00:38:58
SO THEY'RE THE REFEREES AS WELL
AS THE PROMOTERS.
00:39:00
>> Steve: CONFLICT OF
INTEREST?
00:39:03
>> Toby Sanger: ABSOLUTE
CONFLICT OF INTEREST.
00:39:05
YOU ALSO SEE THAT PEOPLE IN
THOSE P3 AGENCIES, THERE'S A BIT
OF A REVOLVING DOOR WITH THE
00:39:11
PRIVATE SECTOR.
00:39:12
SO THERE'S A REAL PROBLEM THERE.
00:39:13
THE OTHER BIG PROBLEM --
>> Steve: I'VE GOT TO JUMP IN.
00:39:16
I DON'T HAVE TIME FOR THE OTHER
PROBLEM BECAUSE WE'RE PLUM OUT
OF TIME.
00:39:21
WHO KNEW IT COULD BE JUST AN
ENGAGING AND EXCITING TOPIC?
00:39:26
I'VE GOT 20 SECONDS LEFT.
00:39:27
IS THERE LIFE AFTER POLITICS?
00:39:29
>> Karen Stintz: THERE IS LIFE
AFTER POLITICS AND IT'S A GOOD
ONE.
00:39:31
>> Steve: WHAT ARE YOU DOING?
00:39:36
>> Karen Stintz: WE HELP ARTS
FACILITIES BUILD CAPITAL
PROJECTS.
00:39:40
>> Steve: MARK ROMOFF, GOOD OF
YOU TO JOIN US TODAY FROM THE
CANADIAN COUNCIL OF PUBLIC
00:39:45
PRIVATE PARTNERSHIPS, TOBY
SANGER WITH CUPE, ENID SLACK AT
THE MUNK SCHOOL, KAREN STINTZ
00:39:51
FORMER TORONTO COUNCILLOR AND
T.T.C. CHAIR.
00:39:53
THANK YOU, EVERYBODY, FOR COMING
INTO TVO TONIGHT.
