Infrastructure for Jobs and Prosperity Act: PPPaving the Way for More PPP Transactions

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The Government of Ontario recently introduced Bill 141, An Act to enact the Infrastructure for Jobs and Prosperity Act, 2013 (2nd Sess., 40th Leg., Ontario, 2013) (the “Act”) which, if passed, would create substantial opportunities for public-private partnership (“PPP”) transactions in the province. Introduced on November 26, 2013, the Act would require Ontario to regularly table a long-term infrastructure plan in the legislature covering a period of at least 10 years. As stated by Infrastructure Minister Glen Murray, the Act focuses “on better evidence planning — not to just understand the cost of things but to actually understand what the return on investment [would be].” The first plan is to be tabled within three years of the legislation coming into force and subsequent plans are to be tabled every five years. As Christopher Hume of the Toronto Star points out, public institutions must commit to long-term planning in order to break free of the downward spiral of immediate cost concerns.

The Act’s emphasis on long-term planning is a much needed legislative response to Ontario’s crumbling infrastructure. For example, many of the province’s transit systems require urgent infrastructure renewal and investment. According to EDI Weekly, severe gridlock and congestion in the Greater Toronto and Hamilton Area is estimated to cost C$6 billion a year in lost productivity. If passed, the Act would ensure that future infrastructure projects in Ontario respond to these infrastructure needs with considered and deliberate planning. Such planning will no doubt include an increased involvement of PPP transactions, given the efficiency and effectiveness provided by PPP projects. The Act’s dedication to long-term infrastructure planning is bolstered by Premier Wynne’s promise to spend C$35 billion on infrastructure over the next three years.

The guiding principles of the Act would require the public sector to consider economic trends and economic competitiveness when planning infrastructure projects. This mandate increases the attractiveness of PPP transactions, since these transactions provide a cost-effective commercial approach to infrastructure development and help reduce government debt by transferring risk to the private sector. Factors that would be considered when prioritizing planned projects include the following: a full consideration of all related capital and lifecycle costs; a long-term return on investment; a maximized tax-base growth; and protection of the environment through a consideration of the impacts of severe weather on infrastructure. The Act’s principles also promote innovative technologies and require the involvement of architects and experienced design experts for certain projects. A focus on innovation and the use of design professionals further enhance PPP transaction opportunities, given that private sector expertise and experience can encourage creative modernization and better quality in design.

Additionally, the Act would prioritize infrastructure projects that align with provincial plans, including the growth plan for the Greater Golden Horseshoe; transportation plans under the Metrolinx Act, 2006; the Lake Simcoe Protection Plan; and municipal water sustainability plans under the Water Opportunities Act, 2010. As a result, PPP transactions for infrastructure projects in these areas would have even greater potential for public sector support. Recognizing the province’s need for skilled trade workers, the proposed legislation would also require the government to involve apprentices in the construction of certain provincial infrastructure projects. Overall, if passed, the Act would amplify opportunities to invest in Ontario infrastructure and consequently open doors for private sector involvement and PPP transactions.

CONNECT