If governments in Canada are able to put in place measures that produce a firmer foundation for effective P3 policies, this would not only provide clearer guidance to private interests, but it would also help mitigate government policy flip-flops - i.e. the expansion of Coquihalla highway in B.C., the Island Airport Bridge in Toronto. It seems commonplace for governments to backtrack on policy due to the miscommunication of its objectives, the lack of broader public acceptance or the inaccurate assessment of risk from the onset. This only serves to raise the cost of doing business with the private sector by undermining their confidence and ambition for P3 projects. Without steady policy and political commitment, firms will be reluctant to develop the necessary resources that are required to bid for and carry out contracts. Not to mention that bidding on government projects is a complex and costly venture for private firms, so if the government decides to pull the plug under political pressure, the private sector is left holding the bill. As a result, firms may adopt a "once bitten, twice shy" mentality, which would reduce the pool of competitors and/or require greater government compensation to private firms due to greater risks and costs incurred in the bidding process.
LAYING A FOUNDATION FOR A COMPETITIVE Political commitment: intergovernmental cooperation, consistent internal policies/objectives, long-term funding commitment by all levels of government. Reduced bid costs: standardize contracts, solid deal flow brought forward at an early stage by government departments and procuring authorities. Expertise: public sector equipped with the necessary expertise to evaluate in-house project costs, risks and value for money. Accountability and Transparency: a consistent national PSC model, disclosure of long-term payment responsibilities, continual evaluation of project performance, whole-of-life costing of projects. |
To be clear, there's nothing wrong with the government opting to follow a traditional public model rather than a P3 when the private sector is unable to create sufficient value in the project. However, the government should make every attempt not to surrender to political or public pressure when an alternative public model neither benefits the state of government finances, nor the policy objectives of the public.