老司机直播

Financiers are now controlling public works, much to the public's confusion

老司机直播's Mariana Valverde & The Conversation

In the 1990s the large, nationally owned British Railways was split off into dysfunctionally separate entities and sold off to private owners in a world-famous example of complete privatization.

During the recent British election, polls revealed that most citizens now support the Labour Party鈥檚

This may not seem very relevant to Canadians, because we never went through wholesale privatization 鈥 in part because we never had the wholesale nationalizations that Britain had in the 1950s.

But suddenly these international debates have indeed become relevant to Canada, although the issues here are being obscured by the downright Orwellian terminology used by infrastructure insiders.

In Canada, outright privatization was promoted in the mid-1990s by the neoconservative government of Ontario Premier Mike Harris. But one of the first instances of infrastructure privatization, southern Ontario鈥檚 407 toll highway, and so enthusiasm quickly faded.

But while they may have shied away from completely selling off major public works, Canadian governments at all levels have still found ways to go along with the global trend of giving private capital a bigger role in public works.

Not really partnerships

As I鈥檝e learned as an academic researching infrastructure governance, what鈥檚 emerged as the main Canadian model goes by the name of 鈥減ublic-private partnerships.鈥 and British Columbia are its key promoters, though the Ontario government prefers to use the obscure term 鈥淎lternative Finance and Procurement,鈥 which does not contain the politically sensitive word 鈥減rivate.鈥

If George Orwell, that foe of euphemistic , was still with us, he鈥檇 likely point out that 鈥減artnership鈥 is a highly misleading term. Major provincial infrastructure projects like hospitals, bridges and transit lines do bring public and private sector 鈥減artners鈥 together, but they鈥檙e not partnerships.

A legal partnership is a long-term agreement to join forces and share financial risks over time 鈥 such as a law firm with partners.

But today鈥檚 public-private partnerships are actually arrangements whereby corporations provide financing, engineering, construction and design services for projects chosen by governments and ultimately funded by governments. The construction folks do their work and leave. The lenders stick around to be repaid over a long period. And any project that cannot be made attractive to the big financial players simply does not get built.

Infrastructure financiers, including pension funds, make big profits. But in Canada, public-private projects have so far remained publicly owned. Some of these will generate revenue 鈥 like transit lines via passenger fares 鈥 but many will not, since in Canada road and . That鈥檚 one major reason why the financiers don鈥檛 really want to own the assets.

The bill isn鈥檛 due for decades

Why do governments continue to overpay for private finance, as Ontario鈥檚 auditor general

Because of the time frame. Infrastructure investors, especially pension funds, want to secure revenue streams 30 and 40 years in the future. Even youthful Justin Trudeau will have long retired when the private finance credit-card bill comes due.

Another reason for the popularity and success of the Ontario/B.C. model is that governments are happy to use big contractors who hire union labour. And hospitals and prisons built through private finance and private procurement are staffed by the same public sector union workers as older facilities. So opposition from labour and NDP opposition is muted.

Nonetheless, the infrastructure model used for the past decade, in which major infrastructure projects continue to be publicly owned and union labour is protected, is now in danger.

The federal government is making noises that it will fund the new 鈥淚nfrastructure Bank鈥 鈥 which is not actually a bank but an infrastructure agency, to confuse Canadians even further 鈥 by , mainly airports.

The Liberals鈥 Infrastructure Bank might not ever do much; its predecessor from the Stephen Harper era, Public-Private Partnerships Canada, hardly made a dent.

It sounds virtuous 鈥 but isn鈥檛

But a very real danger lies in what insiders call 鈥渁sset recycling,鈥 an approach The term sounds vaguely ecological, but it means selling off choice public assets to raise funds for infrastructure capital costs, as Ontario did with 51 per cent of Hydro One. That selloff netted the province $9 billion.

The Ontario Ministry of Infrastructure鈥檚 2017 update states that in addition to Infrastructure Ontario鈥檚 public-private projects, 鈥渦nlocking the value of existing assets 鈥ll net revenue gains from the sale of designated assets are to be credited鈥 to support the province鈥檚 key infrastructure priorities.鈥

If you did this at home, you鈥檇 essentially be selling your backyard to pay for a new summer cottage. You can make it sound somewhat virtuous by calling it 鈥渁sset recycling,鈥 but that鈥檚 what it is.

And we won鈥檛 see governments selling off dilapidated public housing, which could actually use new investment. Instead, they鈥檒l sell well-maintained, revenue-generating assets 鈥 those that would, if they remained in public hands, provide steady revenues into the future.

So the privatizations that Ontario鈥檚 neocon Mike Harris dreamed of in the 1990s?

They may be at long last be successfully implemented by a host of Liberals.

 is an urban law and governance, and infrastructure researcher. She is a professor of criminology at the . This article was originally published on . Read the .

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