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TTC should look to private partners, Flaherty suggests

Moscoe rejects P3 option

Jacqueline Thorpe, National Post

Published: Saturday, November 25, 2006

Jim Flaherty, the Finance Minister, yesterday said GTA transit authorities must consider partnerships with the private sector if they want federal funding.

“We need people to be able to move and do business in the Greater Toronto Area so there will be more to come on that,” Mr. Flaherty told reporters after speaking to a packed crowd of business leaders in Toronto.

Public-private partnerships — known as “P3s” — run the gamut from contracting-out arrangements to private financing of public utilities to outright private ownership of public assets. They have become a major plank in the Conservative government’s infrastructure strategy.

This week, Lawrence Cannon, Minister of Transport, Infrastructure and Communities, confirmed that Ottawa was considering making a major expansion of the Windsor-Detroit border crossing a P3.

And they got a big boost on Thursday when the Finance Minister said in his fiscal update he would set up a federal P3 office and make consideration of P3s mandatory for all national infrastructure projects. Provinces and municipalities, meanwhile, would be required to consider P3 options for larger projects receiving federal funds.

Yesterday, Mr. Flaherty said Toronto public transit could be considered national infrastructure. Like the Detroit-Windsor corridor, it is of national economic significance, he said.

“If you look at the Greater Toronto Area, and you look at some of the transportation and transit — public transit issues in the Greater Toronto Area — they are also of national economic significance,” Mr. Flaherty told reporters in Toronto yesterday.

“This is the headquarters of the financial-services sector in Canada, employing more than 600,000 people.”

TTC chairman Howard Moscoe, however, said P3s were a non-starter for public transit in Toronto. The profit motive was contrary to a public utility, he said.

“In transit we call them public-pirate partnerships,” he said in a telephone interview from Ottawa, where he was attending a meeting of the Federation of Canadian Municipalities. “All the experience has been bad. There’s no profits to be made on sewage and there’s no profits to be made on transit.”

He discounted arguments that the private sector could run utilities more efficiently and less expensively.

“Sure I could do things quite efficiently if I fired all my public transit workers and paid minimum wage,” he said. “Is that what efficiency is? I don’t think it’s possible. Transit service is a unionized sector. Whether it’s run by the public or the private, you’re not going to save money on the wages, and that’s where the big money is.”

Many Torontonians’ negative experiences of Highway 407 has discoloured their view of P3s.

Some argue it it was sold for a song to a private consortium by the previous Conservative government of Mike Harris. Tolls have skyrocketed, and there have been endless problems with the electronic equipment used to track drivers, with many ending up being charged for trips they never took.

Mayor David Miller has urged the city to consider P3s for some of its public infrastructure needs but has said he believes the scope for them is fairly narrow and that governments can usually borrow money more cheaply for infrastructure than can private companies.

P3 proponents argue huge cost savings over the lifetime of the projects swamp lower interest payments. Cost overruns are tightly contained so they don’t eat into profits, whereas cost overruns in the public sector have to be absorbed by taxpayers. P3s have swept countries such as Britain, Australia and have taken off in British Columbia and Quebec, which each has its own provincial P3 agency.