The government should capitalize on the vitality of the private sector when making public infrastructure investments so that the country can achieve economic growth and fiscal consolidation at the same time, John McBride, chief executive officer of PPP Canada Inc., said.
Governments worldwide face the need to invest in infrastructure and they are “looking to get best values out of their infrastructure dollars, to make sure they go as far as possible,” McBride told reporters recently.
PPP Canada is a public corporation promoting the use of public-private partnerships (P3) to deliver public infrastructure in Canada.
“In Canada, it’s about reinvestment in infrastructure that was aging but also investing for economic growth,” he said. “My own view is that P3 is an important tool to achieve successful infrastructure investment. It’s a tool that can achieve great results.”
McBride said he looks forward to “sharing experiences” with government officials as Prime Minister Shinzo Abe’s administration seeks to utilize P3 in its growth strategy.
Canada is one of the leading countries for the use of the P3 model in infrastructure investment.
McBride explained that significant needs for reinvestment in aging public infrastructure and failures in government projects resulting from budget overruns and other problems prompted Canada to “search for a new approach,” and early on a couple of provinces started to utilize the financial strength and ideas of the private sector by introducing the P3 model.
Referring to Canada’s successful use of P3 to put a number of facilities in place for the 2010 Vancouver Winter Olympics, McBride recommended a similar strategy for the 2020 Tokyo Olympics.
Noting the use of P3 projects to build a highway connecting Vancouver with ski event locations, as well as for the railway transport system from the airport to downtown Vancouver, McBride said, “Those P3 examples were delivered on time, very important for Olympics that the project coming on time and on budget.”
By contrast, he said there were a number of Olympics-related projects that did not involve P3 and that these faced significant cost overruns and time delays.
“I would strongly encourage people to take a look at the P3 model for dealing with facilities for the Tokyo Olympics,” he concluded.
McBride also recommended P3 projects as investment destinations for pension funds in Japan, many of which are conducting portfolio reviews.
Large pension funds in Canada have very much targeted infrastructure as part of their portfolios, partly because this gives them diversification from asset classes such as stocks and bonds, McBride said.
The nature of infrastructure projects as long-term assets also matches pension funds’ strategy of making long-term investments, he added.