The use of P3s across Canada has always been something of a patchwork, with the model sometimes proving to be popular with some provinces while falling out of favor with others.
This was perhaps starkly highlighted at this year’s CCPPP conference in Toronto, which in recent years has become the heart of the P3 industry not just in Canada, but the world. Infrastructure Ontario (IO) has led the way in its development of the P3 model, introducing a range of approaches to get projects across the line and deliver an array of infrastructure schemes.
Just days before the conference began, IO announced financial close on the $9bn Ontario Line P3 package, underlining its position as a major force in the P3 world.
And at the conference itself, the agency published its latest pipeline, setting out its plans for the year to come with a long program of projects to be delivered through a variety of methods. Overall, it listed 39 projects in pre- and active procurement, estimated at a combined total of $35bn of schemes.
This movement also has strong political support: Ontario’s infrastructure minister Kinga Surma attended the event to formally launch the latest pipeline, announcing that the government’s capital plan is “one of the largest and most ambitious in the province’s history”.
Surma’s enthusiasm for the investment program was clear to see, and is fully behind IO’s approach to use a wide variety of tools to deliver schemes. “We will continue to be flexible and innovative,” she told delegates. In an interview with P3 Bulletin following the announcement, she doubled down on this, pledging that the province is using “the right model for the right job”.
IO chief executive Michael Lindsay also confirmed this approach from the agency, saying it plans to “use a proliferation of models to deliver infrastructure”. He added: “We want the right tool for the right job, to bring the right outcomes to the people of Ontario.”
However, Ontario is looking increasingly isolated in its determination to use a range of P3 options to deliver its infrastructure program. Some delegates at the conference raised concerns that IO’s use of design, build, finance (DBF) to deliver projects could harm the reputation of P3, by failing to deal with the maintenance element that has often been a key benefit of the P3 model.
Furthermore, some questioned whether using such a wide range of models could end up muddying the waters and making it more difficult for both procurers and private parties to understand the models being used.
At a more fundamental level, there was far less enthusiasm for the P3 model from other jurisdictions. During a panel session involving representatives from several of the different provinces’ infrastructure agencies, the pipelines of these regions were outlined, with P3 seen as a smaller part of the solution.
Kyle Toffan, deputy minister of SaskBuilds and Procurement within the Government of Saskatchewan, spoke of his authority’s commitment to spend $20bn on infrastructure by 2030 - but added that P3 is not in the mix in the way it was a few years ago in the province.
“We don't have any P3 projects in late planning or procurement right now, but we are reviewing the applicability of the model to projects in our pipeline,” he told P3 Bulletin. “SaskBuilds and Procurement is agnostic as it relates to choosing delivery models.”
Toffan pointed to the Regina General Hospital parkade project, which he described as “not a traditional P3”, but one that is structured very similarly. “While we do not retain ownership at the end, we will have long-term financing, maintenance/operations for 30 years and a similar procurement process.”
Meanwhile, in British Columbia, the P3 model has barely been used since the political leadership in the province changed in 2017. After winning a second term in 2020, the incumbent New Democratic Party has continued to pursue a largely non-P3 approach to its infrastructure program.
Mark Liedemann, president & chief executive of Infrastructure BC, said that the province is instead focusing on making use of “collaborative” procurement approaches, including a progressive design-build model. Alliancing has also been used by the province, but the typical P3 option using private finance to deliver schemes has for the most part been avoided.
Nonetheless, the province still has plenty of work on its hands in relation to the P3 model, as it begins to consider the expiry and handback of legacy projects. For the most part, Leidemann anticipates that such contracts will simply be returned to the public sector, with the public authority taking on the responsibility for maintenance and operations. He admits there may, in some cases, be special circumstances in which it makes more sense for the private sector to continue maintaining the facility.
And while P3 may not be popular in BC at the moment, a change could be only two years away. Giving a keynote address at the CCPPP conference, Opposition leader Kevin Falcon berated the current administration for failing to utilize the P3 model, and underlined the success that his party had achieved using P3s when it was last in power.
While such speeches can be easy to dismiss as the views of a politician who is not in power, similar comments were made a few short years ago, when an opposition upstart by the name of Justin Trudeau addressed the conference.
BC may still become a focus of P3s once again, but its fortunes are now heavily tied to the political machinations of the province - something that might make investors think twice even if Falcon’s Liberals were to seize power in 2024.
Finally, perhaps the most interesting development in the Canadian P3 landscape was made clear by the lack of representation from Alberta’s government on the stage. While officials may have been in attendance at the event, the province’s infrastructure leadership was conspicuous by its absence on any of the panels, including the final session bringing together infrastructure agency heads from across the country.
In recent years, Alberta had been rivalling Ontario for headline space when it came to P3s, aggressively promoting the method and backing it to deliver a range of new projects and programs. During 2022, the province has restarted the Green Line rail project, broken ground on its first batch of school P3s, and sought consultants to conduct a review of its P3 plans in order to scale up the model's use.
Optimists will hope that the fact it is carrying out a review of its P3 plans might explain why the province’s infrastructure leaders did not want to discuss future plans at the conference. A week after the event, KPMG was appointed to run the review, which will look at “identifying alternate delivery and financing for capital projects”.
But the silence also needs to be set against the backdrop of some difficult P3 situations for the province over the course of 2022. In July, the government rejected an unsolicited proposal for the Calgary-Banff rail P3 project, calling for a more “realistic proposal”.
And in the same month, it canceled the procurement of the C$410m Deerfoot Trail highway P3, with Minister of Transportation Prasad Panda saying that high inflation and pricing volatility made the P3 procurement “not economically viable”. It has since re-tendered the contract without a P3 element.
This last action in particular will raise concerns over how many other projects might no longer make economic sense in the current environment. It is a question facing projects around the world at present - and is perhaps an important reason why Ontario is so busy developing a wide array of approaches in an attempt to solve the problems of today with new methods.