Ontario's Minister of Infrastructure, Bob Chiarelli, dropped by the Canadian Club of Toronto at lunch time Wednesday to urge Ontario entrepreneurs to assume a greater role in building Ontario.
He told the audience that "Over the last several decades, many jurisdictions around the world have recognized that there is not enough revenue available in government to meet infrastructure deficits and growth needs. Even when you hear figures like 180 billion dollars from the Federal Government and 160 billion dollars from the Province… it's still not enough, because the challenge of our infrastructure deficit is so great. So, we need to look to additional resources if we're going to meet that challenge."
He's looking to business to provide those additional resources.
"As Ontario grows," he told the group, "Infrastructure planning and implementation create new imperatives and innovation and this includes a broader toolbox of public-private partnerships. There's a consensus forming in Ontario, in Canada and in many other jurisdictions around the world, that governments do not now have, nor will they have in the foreseeable future, the revenue sources to meet our infrastructure deficits and growth requirements. This means embracing a wider range of public-private partnerships to attract equity investments from the private sector and pools of pension funds and this requires the kind of projects that can deliver a rate of return or larger pools of capital in the P3 [public-private partnership] context."
He explained that, ten years ago, the Ontario government knew it had to do something different to transform how it procured and financed these larger strategic infrastructure projects. It needed to think differently and explore new approaches, he said, so the government realized that it made sense to work with the private sector more effectively.
"We wanted to make the best use of private sector resources and expertise, which helped us develop our own made-in-Ontario model--alternative financing and procurement, or AFP."
The Humber River Hospital was an AFP project, photo, Humber River Hospital
According to Infrastructure Ontario, the "AFP model is an innovative way of financing and procuring large public infrastructure projects". AFP uses private-sector resources and expertise, and transfers project risks to those private-sector teams, which are accountable for delivering the project on time and on budget.
Chiarelli said that AFP model results are impressive. He explained that Ontario is delivering more than 90 AFP projects, valued at $43 billion in capital costs. The first 45 of those projects have had very positive results. Ninety-eight percent of them have been completed on-time and on-budget.
Among many others, some of Ontario's successful AFP projects include:
- the Elgin County Courthouse in St. Thomas;
- the Humber River Hospital -- North America's first fully digital hospital and the most energy-efficient hospital of its size in North America;
- the Mackenzie Vaughan hospital -- the first hospital in Canada to integrate smart technology; and
- the Metrolinx Crosstown LRT line -- the first transit project funded through green bond for environmentally-friendly infrastructure and one of Canada's largest P3 projects.
Now, the Minister said, decision-makers from across Canada and from around the world are coming to Ontario to draw on its expertise. Its reputation for being forward-thinking is opening international doors for many of its private-sector partners.
The Crosstown LRT is an AFP project, rendering, Metrolinx
In the first quarter of this year, he said, Ontario's growth was faster than that of the United States and the G7, and Ontario has been among the top three jurisdictions in North America—tops in Canada—for attracting foreign direct investments. Unemployment this year has reached an eight-year low and, he claims, the government is making good on its commitment to eliminate the deficit by 2017–2018, so its infrastructure policies and investments and priorities will continue to play a major part in its economic recovery.
In the pipeline for Infrastructure Ontario are 30 major projects with a capital value of about $11.8 billion. Ontario has a number of light rail transit projects already in the planning stages or under construction and the regional express rail program in the Greater Toronto Area is ready to launch. Other highlights from the list include multiple highway extensions and expansions, five hospital projects, including two brand new health-care facilities and a number of partnerships with municipalities.
But, the minister warns, the government can't do all this building on its own. "We respect the talent, the creativity, experience and the deep-rooted knowledge in Ontario's companies and your passion for innovation. You've heard me talk about the great projects we have brought to the market and the promise of more to come, but the truth is, we cannot do this without the help and collaboration of Ontario's leading companies and entrepreneurs."
Chiarelli acknowledged that the government still has a role to play in building infrastructure. "There's a lot of the traditional infrastructure that is done--building highways or types of infrastructure of smaller scale that the government will probably continue to support. It will invest in larger projects as well. It's just that the quantity and the scale of the infrastructure that's going to be required when you contemplate, for example, as some people are, high-speed rail--that's going to be unlikely without private-sector funding."
He pointed out that people in New York State are talking about building high-speed rail between New York and Buffalo. "There's no reason why entrepreneurs in Ontario couldn't engage in that process," he said, to extend the high-speed line further north from New York to Toronto. "Conceptually, it makes a lot of sense. Between Niagara Falls and the GTA, there's not a lot of room for widening highways, so rail transportation is the most logical thing to expand. Toronto is the fourth-largest city in North America—you know it's worth contemplating."
Canadian Club Toronto calls itself Canada’s pre-eminent public affairs podium. Operating since 1897, it aims to connect Canadians with world leaders and newsmakers and, it says, is "a leading platform for influencers to engage Canadians on what matters most."