August 15, 2012

Manitoba looks at full disclosure for P3 projects

The Manitoba Government is planning to pass a law which requires the disclosure of information about public works projects built under a public-private partnership (P3) model, but some believe the proposal is premature and undemocratic because it was tabled without meaningful consultation.

“This or any elected government certainly has the ‘right’ to pass any legislation and/or regulation it chooses having been democratically elected,” said Chris Lorenc, president of the Manitoba Heavy Construction Association, in a recently released position paper.

“However that right is tempered by a responsibility to exercise best efforts to ensure that proposed legislation or regulation respects the best interests of all citizens. Respectfully in this instance, at this time, that responsibility has not yet been discharged.”

Finance Minister Stan Struthers recently proposed the Public-Private Partnerships Transparency and Accountability Act for major capital projects.

A P3 is a long-term agreement where the responsibility for financing, building and operating major public sector capital projects are transferred to a private sector partner.

They are usually used in the procurement of larger-scale assets that are designed and built by a private sector company for government.

The proposed legislation would require the government of Manitoba and municipalities that wish to enter into P3 agreements to do the following:

conduct a detailed risk and value-for-money analysis to determine if a P3 arrangement provides the best value for the money;

consult with the public before proceeding with the bidding process;

appoint an independent fairness monitor to oversee and review the bidding process;

publicly report the terms of the P3 contract; and

provide regular status reports during the term of the partnership.

The government claims public consultation will be an important part of the proposed legislation, but Lorenc is not so sure this will happen.

“First and foremost we are very disappointed that legislation introduced to enable transparency and accountability was itself crafted and tabled without any apparent prior consultation with Manitoba private sector stakeholders and practitioners, who would not only have an interest, but experience to offer,” said Lorenc.

Winnipeg Mayor Sam Katz argued that the proposed legislation is creating uncertainty and hinders the ability of the city to work with the private sector to deliver on-time, on-budget infrastructure projects.

“The provincial government appears to be ideologically opposed to public-private partnerships,” said Katz.

“That’s the only explanation I can see for throwing roadblocks in front of a process that has been so positive for the taxpayers of Winnipeg.”

The City of Winnipeg was the first municipality in Canada to get money from the P3 Canada Fund, when the Chief Peguis Trail Extension received $23.7 million.

As part of the process, the city signed a deal with a public/private sector stakeholders group of more than 30 individuals.

The group assessed the overall merits of proceeding with the project, which links north Main Street to Lagimodiere Boulevard, before making a project and process selection decision.

The $109 million project opened in December 2011, a year ahead of schedule.

The project was named Manitoba’s best-managed project for 2012. It involved public consultation, independent financial analysis and oversight by the a city auditor.

Lorenc is also concerned about accessibility to P3 projects and the lost funding opportunities if the legislation and its associated regulations discourage private sector participation.

“The necessity of P3s in today’s world of budget deficits should be apparent to any objective observer of Manitoba’s roughly $14 billion and Canada’s roughly $240 billion municipal infrastructure deficit,” he said.

“By appearing as the act currently crafted does, to limit, interfere, add process and cost, all restricting municipalities’ access to P3 delivery methods, the province will directly be preventing infrastructure projects from being completed on the municipal front and because of the act’s broad application, to provincial infrastructure needs as well.”

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