Noticeable by its absence from the grand transit funding announcement, MoveOntario, last Friday was any mention of public-private partnerships. Making up for lost ground, Premier McGuinty was quoted in today’s Metro as saying:
There will be public ownership, and public control, and public accountability. But in order for us to move aggressively, we will be using private sector partners — where that makes sense to do so.
Those who read this blog know that I am not a fan of PPP arrangements as they tend to overwhelmingly favour the private partner who would not undertake most risks associated with transit systems on their own. PPPs are also notoriously difficult to manage as many in Great Britain have found. Our own Highway 407 is a sterling example of a sweetheart deal with a private company who bought a public asset at fire-sale prices with a guarantee of constantly increasing returns whenever they decided to jack up the tolls. A fine example of Tory stewardship of public assets.
There are various ways the private sector could be involved in MoveOntario. Most obviously, they will do most of the design under contract to agencies like the TTC who maintain only a small inhouse engineering department, and they will do all of the construction. Vehicles, too, will come from the private sector.
The oft-heralded expertise of the private sector should be manifest in competitive pricing, and the ongoing series of contracts will quickly reveal those who bid low and produce shoddy, untrustworthy products.
Another area of private sector involvement lies in finance, although it’s odd to think of my pension fund (one of the large public sector employee funds) as the “private sector”. Whether the return on “MoveOntario Bonds” will be adequate to attract investors from these funds remains to be seen.
Finally, the private sector is sometimes touted for design/build contracts with either a long term lease or operating agreement. The argument is, in essence, that the private sector can manage the design and construction process better than the public sector and deliver a superior price/performance to us, the client. Well, maybe. If they skimp around the edges, this may not be visible for years after a line opens and our recourse may be limited.
I have no problem with the private sector bidding on design, construction and supply contracts for MoveOntario. With any luck, they should make a decent profit and happily bid on more work. However, the assets must stay in public hands. We’re paying for them.