But it was the provinces that really led the way in PPPs during the 1990s. Nova Scotia procured the first provincial highway PPP in 1994, a 45-kilometre section of the TransCanada Highway in northern Nova Scotia, followed by the first PPP for school construction in 1997. That same year, New Brunswick procured the first provincial healthcare facility, a 50-bed psychiatric ward in Saint John. And the decade ended with what is still the biggest infrastructure deal in Canadian history - the $3.1 billion lease of Ontario's 407 Express Toll Road, which had been procured under a PPP agreement two years earlier.
"Our goal is to demonstrate to the federal government that it gets better bang for its dollars through PPP investment" |
"Initially, the decision to undertake PPPs was really a way to try to get some off-balance sheet financing, which is probably not the best policy reason," says Cynthia Robertson, executive director of the Canadian Council for Public-Private Partnerships, a trade group that's been documenting the growth of the sector since 1993.
"But then, other provinces - in particular Ontario, Québec and British Columbia -recognised that there were some really good business reasons for entering into partnerships with the private sector," Robertson adds. These included the cost savings and efficiency gains demonstrated by some of the provinces' early projects.
This realisation propelled PPPs into their second stage of development: the creation of central procurement agencies and centres of excellence to move projects forward. Alberta created the first such body in 1999. British Columbia followed in 2002, Québec in 2004 and Ontario in 2006.
Together, these four provincial programmes powered the growth of the PPP industry throughout most of the 2000s. As of November 2010, Ontario had 21 operational PPP projects and another 22 under construction, followed by British Columbia at 12 operational projects and five under construction. Alberta had five operational PPPs and another three under construction, while Québec had seven under construction, according to a PPP managed by the Canadian Council for Public-Private Partnerships.
The provinces' success caught the eye of the Federal government, which began mulling ways in which it too could support PPPs. In November 2006, the government for the first time backed the concept of a nationwide office to promote PPPs in its long-term economic plan. In 2009, such an office finally found form in PPP Canada.
And with it opened the third stage of Canada's PPP industry, one in which the federal government will take a stronger leadership role in coordinating private investment in infrastructure. A $1.25 billion fund for PPPs helps it do exactly that.
In 2010, PPP Canada closed the second round of competition for the fund, receiving funding requests for 73 proposals across 11 provinces and territories. By the end of 2011, it expects to see $300 million of the fund committed, according to chief executive John McBride.
"Our goal is to demonstrate to the federal government that it gets better bang for its dollars through PPP investment," McBride says. "And if we can do that - which I think we are, and will - then I expect that it will make the logical decision to put more of its funding through the PPP mechanism."
In other words, as long as PPPs keep delivering the same value they have, there will likely be a bright future for them in Canada.