Alberta’s infrastructure lags behind growth

With plans underway to build nine new schools and a ring road in Calgary using public-private partnerships–P3s–the debate continues on the provincial government’s effectiveness regarding infrastructure management.

“We have a huge infrastructure deficit,” said New Democratic Party MLA Ray Martin, a member of the standing committee on managing growth pressures. “We stopped building infrastructure with the cuts in the mid-90s, and now with an overheated economy and people rolling in here from all over Canada and the world, we just can’t keep up.”

With the government being so far behind on infrastructure projects, P3s are increasingly becoming thought of as the answer to speed up the process within the legislative assembly.

But while the idea of P3s seem to be very effective on paper, Martin stated that P3s are only a quick fix. The government of Alberta had a deal with a private company to build the Calgary Courthouse, but the province backed out when the costs jumped from $300 million to $500 million and the province claimed the design was built to satisfy the developers needs rather than the court’s.

“You have to be very, very careful–especially when it comes to things like education and health care–that the private sector’s profit motivation of the company does not trump [things like] the education of the kids,” said ATB Financial senior economist Todd Hirsch.

The greatest advantages to P3s are in distributing some of the risks of the project onto the private sector company, as well as tapping into the private sector’s expertise in getting things done on time and on budget, Hirsch explained.

Martin expressed concerns that the government has not been forthright in providing important information to the public.

“We’re told this is a good deal,” said Martin. “But [the provincial government] will never give us what we call a public sector comparator, so that we know if it’s good deal or not.”

Hirsch disagreed a comparator was needed, noting that the issue was rather more likely too much consultation.

“I don’t think there is any issue with transparency, I don’t think the government has been doing things secretly behind our backs,” said Hirsch.

However Martin countered that tendering out projects traditionally would prove to be the cheapest.

“Our credit rating at government is better than any private company could get, even if we had to borrow,” said Martin. “Certainly we have enough money rolling in now to do it in the traditional way.”

Hirsch felt the effectiveness of P3s boils down entirely to the way the contracts are drafted and how costs and responsibilities are distributed, and thus must be looked at on a case-by-case basis.

“The experience we have with P3s is sometimes they do end up costing the government more in the long run,” said Hirsch. “Sometimes it’s the opposite case, sometimes the government saves money because it taps into the efficiency of the private sector.”

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