Intro to P3s

Intro to P3sIntro to P3s

Week 2Week 2

The Context of the The Context of the Debate over P3sDebate over P3s

An Infrastructure DeficitAn Infrastructure Deficit

Fiscal Pressures (“The Fiscal Challenge”)Fiscal Pressures (“The Fiscal Challenge”)

Ideological climate: neoliberalism and Ideological climate: neoliberalism and NPMNPM

Actors or Interests (“Private Sector Actors or Interests (“Private Sector Opportunism”)Opportunism”)

Context: Infrastructure Context: Infrastructure DeficitDeficit

Federation of Canadian Municipalities (FCM) Federation of Canadian Municipalities (FCM) report – report – Danger Ahead: The Coming Collapse of Canada’s Danger Ahead: The Coming Collapse of Canada’s Municipal InfrastructureMunicipal Infrastructure, 2007., 2007.

““for the past 20 years, municipalities have been for the past 20 years, municipalities have been caught in a fiscal squeeze caused by growing caught in a fiscal squeeze caused by growing responsibilities and reduced revenues. As a responsibilities and reduced revenues. As a result, they were forced to defer needed result, they were forced to defer needed investment, and municipal infrastructure investment, and municipal infrastructure continued to deteriorate, with the cost of fixing it continued to deteriorate, with the cost of fixing it climbing five-fold from an estimated $12 billion in climbing five-fold from an estimated $12 billion in 1985 to $60 billion in 2003. This cost is the 1985 to $60 billion in 2003. This cost is the municipal infrastructure deficit, and today it has municipal infrastructure deficit, and today it has reached reached $123 billion$123 billion.”.”

FCM: Danger Ahead, 2007FCM: Danger Ahead, 2007 ““The deficit continues to grow and compound as The deficit continues to grow and compound as

maintenance is delayed, assets reach the end of maintenance is delayed, assets reach the end of their service life, and repair and replacement their service life, and repair and replacement costs skyrocket.”costs skyrocket.”

““Across Canada, municipal infrastructure has Across Canada, municipal infrastructure has reached the reached the breaking pointbreaking point. Most was built . Most was built between the 1950s and 1970s, and much of it is between the 1950s and 1970s, and much of it is due for replacement. We can see the due for replacement. We can see the consequences in every community: potholes and consequences in every community: potholes and crumbling bridges, water-treatment and transit crumbling bridges, water-treatment and transit systems that cannot keep up with demand, traffic systems that cannot keep up with demand, traffic gridlock, poor air quality and a lack of affordable gridlock, poor air quality and a lack of affordable housing.”housing.”

Crumbling InfrastructureCrumbling Infrastructure

July 2011, “Concrete slab collapses in July 2011, “Concrete slab collapses in Montreal tunnel”Montreal tunnel”

September 2006, “Overpass collapse September 2006, “Overpass collapse kills five” in Laval, Quebeckills five” in Laval, Quebec

FCM: Danger Ahead, 2007FCM: Danger Ahead, 2007

““The $123-billion estimate includes The $123-billion estimate includes “sub-deficits” for key categories of “sub-deficits” for key categories of municipal infrastructure: water and municipal infrastructure: water and waste water systems ($31 billion), waste water systems ($31 billion), transportation ($21.7 billion), transit transportation ($21.7 billion), transit ($22.8 billion), waste management ($22.8 billion), waste management ($7.7 billion) and community, ($7.7 billion) and community, recreational, cultural and social recreational, cultural and social infrastructure ($40.2 billion).”infrastructure ($40.2 billion).”


““As defined here and in previous studies, As defined here and in previous studies, the “municipal infrastructure deficit” the “municipal infrastructure deficit” reflects the cost of maintaining and reflects the cost of maintaining and upgrading existing, municipally owned upgrading existing, municipally owned assets. The municipal infrastructure deficit assets. The municipal infrastructure deficit does not includedoes not include infrastructure owned by infrastructure owned by other orders of government (e.g. hospitals, other orders of government (e.g. hospitals, schools, military bases, highways) or the schools, military bases, highways) or the cost of building new or expanded facilities cost of building new or expanded facilities to meet new needs or provide additional to meet new needs or provide additional infrastructure capacity.”infrastructure capacity.”

FCM: Danger Ahead, 2007FCM: Danger Ahead, 2007 ““Between 1955 and 1977, new investment Between 1955 and 1977, new investment

in infrastructure grew by 4.8 per cent in infrastructure grew by 4.8 per cent annually. This was a period of intense capital annually. This was a period of intense capital investment that closely matched Canada’s investment that closely matched Canada’s population growth and rate of urbanization. population growth and rate of urbanization. This period stands in stark contrast to the This period stands in stark contrast to the 1978 to 2000 period, 1978 to 2000 period, when new investment when new investment grew on average by just 0.1 per cent per grew on average by just 0.1 per cent per yearyear. Although the rate of population growth . Although the rate of population growth also declined, this does not account for the also declined, this does not account for the radical reduction in capital investment radical reduction in capital investment during this period. Clearly, all orders of during this period. Clearly, all orders of government were under-investing.”government were under-investing.”


““The health of Canada’s economy is The health of Canada’s economy is closely linked to the scope and closely linked to the scope and quality of municipal infrastructure quality of municipal infrastructure investment. investment. Our quality of life and Our quality of life and our productivity and competitiveness our productivity and competitiveness depend on infrastructure depend on infrastructure investmentinvestment.”.”


““By definition, infrastructure By definition, infrastructure spending relates mainly to long-lived spending relates mainly to long-lived capital assets. Capital investments capital assets. Capital investments have inherent long-term have inherent long-term characteristics: investment in new characteristics: investment in new infrastructure must include plans to infrastructure must include plans to repair and eventually replace the repair and eventually replace the asset.”asset.”

FCM: Danger Ahead, 2007FCM: Danger Ahead, 2007 ““As infrastructure investments declined in the late As infrastructure investments declined in the late

1970s and 1980s, 1970s and 1980s, maintenance, repair and maintenance, repair and rehabilitation activities were often deferred, even rehabilitation activities were often deferred, even at the risk of jeopardizing assets and reducing at the risk of jeopardizing assets and reducing their service lifetheir service life. Reversing this neglect is much . Reversing this neglect is much more expensive than regular maintenance, so more expensive than regular maintenance, so much so that it may not be possible to rehabilitate much so that it may not be possible to rehabilitate an asset, which instead must be decommissioned, an asset, which instead must be decommissioned, demolished and constructed anew at an exorbitant demolished and constructed anew at an exorbitant cost to the taxpayer.”cost to the taxpayer.”

““One of the principal causes of the extensive One of the principal causes of the extensive deterioration of Canada’s infrastructure is deferred deterioration of Canada’s infrastructure is deferred maintenance during fiscally difficult times.”maintenance during fiscally difficult times.”


““the projected need for new the projected need for new infrastructure is $115 billion…a infrastructure is $115 billion…a projection of overall investments projection of overall investments required to meet growing or changing required to meet growing or changing needs in our communities.”needs in our communities.”

$123 billion$123 billion



Context: Infrastructure Context: Infrastructure DeficitDeficit

CBC News Special Report: CBC News Special Report: The Big FixThe Big Fix CBC The National: video from The Big CBC The National: video from The Big

Fix, Fix, ““The Big Crawl”The Big Crawl” ““Time for Tolls”Time for Tolls” ““Better Bridges”Better Bridges” ““Who Pays for Sewage Cleanup”Who Pays for Sewage Cleanup”

Context: Fiscal PressureContext: Fiscal Pressure

Federal and provincial governments Federal and provincial governments have focused on cutting taxes. have focused on cutting taxes.

As a result, they have weakened As a result, they have weakened their capacity to maintain, repair or their capacity to maintain, repair or renew the country’s infrastructure. renew the country’s infrastructure.

Context: Fiscal PressureContext: Fiscal Pressure ““The 2000 Federal Budget decreased CIT The 2000 Federal Budget decreased CIT

rates from 28% to 21% between 2001 and rates from 28% to 21% between 2001 and 2004. The 2006 Federal Budget further 2004. The 2006 Federal Budget further decreased them from 21% to 18% by 2010. decreased them from 21% to 18% by 2010. They dropped again to 16.5% on January They dropped again to 16.5% on January 1st, 2011 and are scheduled to drop one 1st, 2011 and are scheduled to drop one last time to 15% at the start of 2012. last time to 15% at the start of 2012. Between 2000 and 2012, the rate that Between 2000 and 2012, the rate that profitable corporations pay in income taxes profitable corporations pay in income taxes will have been almost halved. This is a will have been almost halved. This is a dramatic change in corporate tax policy in dramatic change in corporate tax policy in Canada.” (Macdonald, 2011). Canada.” (Macdonald, 2011).

Context: Ideological ClimateContext: Ideological Climate

neoliberalism and NPM: ideological neoliberalism and NPM: ideological critique of statism, support for critique of statism, support for market solutions and alternative market solutions and alternative service deliveryservice delivery

Context: Actors and Context: Actors and InterestsInterests

It’s not just an issue related to a It’s not just an issue related to a theoretical critique of the public theoretical critique of the public sector.sector.

There is money to be made through There is money to be made through P3s. Obviously, this attracts the P3s. Obviously, this attracts the attention of a variety of for-profit attention of a variety of for-profit corporations. corporations.

Discussion questions for next Discussion questions for next weekweek

1.1. What are P3s?What are P3s?

2.2. Why have P3s emerged as a Why have P3s emerged as a common feature in Canada?common feature in Canada?

3.3. Who are the main players in the Who are the main players in the debate over P3s in Canada?debate over P3s in Canada?

4.4. What are the main arguments for What are the main arguments for and against P3s?and against P3s?

Documents

Intro to P3s