Redford explores new funding models for roads, buildings
EDMONTON — Alberta Premier Alison Redford says she wants to explore new ways of paying for infrastructure projects on a cost-shared basis with the private sector.
The so-called P3 public-private partnership model has worked so well to date — on projects like schools and roads — it may work for other initiatives as well, Redford said Saturday.
“How do we challenge conventional thinking from an Alberta perspective on what else we could use P3 models for?” Redford rhetorically asked reporters at the province’s second economic summit, held at the University of Alberta.
“What else makes sense in terms of cost effectiveness, accountability to taxpayers, and being able to deliver infrastructure projects sooner?”
Academics, politicians, and business leaders hashed out ideas on how to raise money for infrastructure projects and where to invest Alberta’s savings.
Finance Minister Doug Horner said the government is looking at “a whole raft of options when we talk about the next big infrastructure piece.”
Horner said, for example, a new school in his riding of Spruce Grove-Sturgeon-St. Albert will see a partnership with the school board, the YMCA and possibly the developer.
“It’s a combination of P3, the capital infrastructure we used to build the school, and the community coming together to build a wellness centre that is attached to the school for young kids (aged) K-9.
“That’s the kind of thing we want to talk about,” said Horner.
Horner has also raised toll roads as another possible revenue producer.
“We may or we may not go there, but let’s talk about it,” he said, adding that tolls would not be tacked on to existing roads.
“I’m not talking about (tolls on) the stuff that’s already in the ground and already there. That’s something we’ve already amortized.
“We’ve already figured out how we’re going to do that.”
Under a P3, a government signs a contract with a private operator for that operator to design, build, and perhaps maintain or run a project over a set period of time.
The private operator puts up some or all of the cash and is repaid by the government, with interest, after a set number of years.
Alberta has used it to build schools to keep pace with tens of thousands of newcomers each year, numbers that have now pushed the population to four million.
It also funds roads, such as the northeast leg of Edmonton’s Anthony Henday Drive.
That $1.8-billion project is to open in 2016, with the money repaid over the following three decades.
Opposition Wildrose Leader Danielle Smith and NDP Leader Brian Mason, who attended the summit as observers, said P3s are no solution.
Smith said the studies she has seen indicate P3s look good on a government over the short-term because there’s less debt on the books.
But she said the projects ultimately cost taxpayers more in the long run because the financing costs are stretched out for years.
“This government is trying to find all kinds of ways to justify new borrowing,” said Smith.
“They’re talking about P3s. They’re now talking about toll roads. They mention social impact bonds.”
“They have absolutely no plan to get the budget back into balance. They are overspending in multiple areas and it’s causing them to have to go into deeper and deeper debt.
“I think that’s a terrible thing for future generations.”
Smith said the summit is billed as a free exchange of ideas, but is actually a forum for Redford to build public support for more infrastructure debt on top of the $17 billion in red ink already budgeted for by the province by the end of 2016.
NDP Leader Brian Mason said Redford is scrambling to find more cash because her government refuses to fix its broken financial model.
Mason said the province does not get a fair share of oil royalties, forcing it to budget a third of day-to-day spending on the roller-coaster vagaries of oil prices.
He said Redford has also failed to rectify income tax cuts to wealthy individuals and corporations imposed under former premier Ralph Klein.
Like Smith, Mason said P3s are short-term gain for long-term pain.
“P3s is an entirely bogus concept. Private-sector investors borrow money at a higher rate, plus they earn a profit — and all of that is eventually paid back by the taxpayer,” said Mason.
The summit follows up on one held in Calgary in February. They are designed to give the government input on budget priorities.
The province is also launching open houses next week and seeking online feedback from citizens on spending and saving.