Introduction
Canada is a model country for public-private partnerships also known as P3s. They are understood as a corporative arrangement between two or more private and public sectors for a long-term nature. In Canada, P3s may require a combined effort between the private and public sector on a specific project or entirely having the private sector oversee a government venture. In Canada, there is more than two hundred initiative realized by the public and private partnerships. Notably, this approach is purposed to achieve certain goals. Therefore, it is crucial to analyze whether P3s have been effective in attaining the intended objective with focus on a specific project such as Highway 407 in Ontario.
Highway 407
Highway 407 is an infrastructure feature a public owned segment and a privately owned segment. This road is significant in Canada to individuals from nearby suburbs such as Oakville, Burlington, Brampton, Vaughn, Markham, Whitby, and Oshawa ( Panos, J. (2015) . This highway is especially significant because it was the first electronically operated toll highway in the world. Through a successful collaboration between the Federal Public Service and the privately owned 407 ETR Concession Company Limited, the highway is well maintained and services thousands of vehicles on a daily basis since the late 20th century. For this reason, it is a good study to determine whether P3s are effective in achieving their objectives.
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Notably, the government underwent a complex bidding system to find a private company to complete some extensions of the 407 highway. In this public-private partnership, the highest bidder was expected to design, build, own and operate their portion of the electronically operate highway. In return, the company would then collect toll on the highway to settle their cost during construction for the next ninety-nine years. The main goal for this approach was to ensure that Canadians enjoyed good infrastructure at minimal cost.
Consequently, the financial implications of building and maintaining the 407 highway in Ontario falls partially on the government and the private sector. After paying 3-1 billion dollars to secure the bid, Montreal based SNC-Lavalin has a 23% interest while Grupo Ferrovial of Spain holds a 61% share in the highways profits ( McDonald, 2018) . The southern part of the highway was established by Canadian Highways International Corporation (CHIC). Aside from these big corporations, there are smaller firms included such as Proctor and Redfern, McCormick Rankin and Delcan. These government and private sector entities work hand in hand to ensure the highway stays open and efficient.
Intended Objectives of public-private partnerships
P3s are established with certain theoretic goals that are either attained or not as is noted in the construction of the 407 highway. They include:
• Creating investment opportunities by increasing funding options
The government caters to millions of people in various states. Therefore, their projects or service provision initiatives are often expensive. Relying on taxpayer money for all projects would take away from other sectors and also limit the development process. The economy would take a plunge is the government focused purely on the development and failed in addressing other concerns such as security and health. Consequently, the private sector helps relieve this pressure by increasing funding options and thus creating more opportunities for investment. As a result, such partnerships are encouraged in Canada to execute large ventures that benefit the private sector financing.
This objective was realized in the building of the 407 Highway. Pairing the public and private sector created an opportunity to generate revenue from the electronic toll infrastructure. For the government, their share of the toll creates income for public projects that elevate the community’s living standards. It reduces the pressure on taxpayers when the government can generate their income. Additionally, the 407 construction arrangement increased funding options as each firm was required to bid for their portions of the highway if they wanted to benefit. Therefore, it is safe to conclude that P3s are effective in creating investment opportunities and increasing funding options.
• Achieving value for money in the provision of public services
Another objective of P3s is achieving value for money. This is explained as getting the most benefits out of the smallest investment possible. Such benefits range from finances to expertise. When an entire project falls on the government, they spend a substantial amount of public fund in hiring labor and purchasing resources ( Opara, & Rouse, 2018) . Thus, P3s are encouraged to relieve the cost of planning and execution while getting maximum benefits from the project. This approach takes advantage of the tyranny in numbers where prices or cost are lower when more investors are involved in a project.
Evidently, this objective was attained in the construction of the 407 highway. The cost implications for this venture were high considering it is the first electronically operated toll highway. It definitely needs money, labor, and expertise in large quantities. These needs were attained through a partnership with private sectors that offered financial support in terms of their initial bid ( Bennett, 2018) . Also, it guaranteed expertise from all fields such as engineering, accounting, and construction. Also, each company brought in a team of workers to cover their workload. All these facilities were not possible if the government took on sole responsibility for the project. As a result, P3s are effective in achieving value for money and provision of public services.
• Accountability in the provision of public services
Public-private partnerships are also established to achieve accountability. Since the government is responsible for public funds and investments, they have a responsibility to ensure that every cent is accounted. This duty is challenging especially when large projects are involved. Such ventures are often crippled with vices such as corruption, disregard for environmental laws and lack of work ethics ( Slack, 2016) . However, through delegation, it is easier for the government to establish checkpoints where standards and progress are measured. As a result, there is accountability through the entire process.
A true testament to the accountability of P3s is the 407 Highway project. The government delegated construction to various firms including SNC-Lavalin SNC-Lavalin, Grupo Ferrovial, McCormick Rankin and Delcan. First, these parties were vetted to ensure their businesses were legitimate and they had proper credentials. Secondly, they were given a contract with consequences should they fail to deliver on the task ahead. Additionally, progress reports were a requirement through the entire process to ensure the organizations met their deadlines. For this reason, the government provided the Canadian people with durable infrastructure that will serve generations to come. Also, they kept the level of strikes and other disruptions to a minimum. Therefore, the public and private partnership, in this case, helped maintain accountability in the provision of public services.
• Harnessing private sector efficiency and innovation
The public sector and the private sector in Canada work at different speeds for various reasons. The public sector is notably slower than the latter because there are many processes involved in decision making. While these processes are designed for accountability they drag on projects. However, the private sector is faster because there is constant competition and their networks are purposed to provide quality services in the shortest time possible. Therefore, public-private partnerships help inject the positive traits of the private sector in public service provision. Notably, achieving this goal ensures that communities grow faster through increased infrastructure and quality services for generations to come.
Highway 407 is an example of an efficient and innovative project from a public-private partnership. Planning for the infrastructure began in the 1950s and took about twenty years ( Siemiatycki, 2015) . This process was initiated by the government. This is actually a significant amount of time that would have been avoided. However after privatization of certain stretches building the road actually took a shorter time than the planning period. Notably, the private sector also brought innovation by setting up the first electronically operated tools that calculate the distance by scanning the number plate and charging accordingly. Therefore, this partnership benefited the project and gave it a sense of longevity through guaranteed quality maintenance.
• Creating employment and earning opportunities for the private sector
The public sector under the government strives to create employment and investment opportunities for the citizens. This approach helps to improve the national economy and standards of living as well. Such opportunities often arise in large government projects as the leaders allow the private sector to take part and make a profit within given guidelines. With this opportunity, the private sector then hires more personnel and acquires more financial income to support their business. As a result, there is an increased circulation of money and the economy becomes stronger.
Highway 407 is a perfect example of a public-private partnership that created employment and earning opportunities. This road was constructed by thousands of laborers and professionals who earned enough to support their families and invest more in their business. In fact, through the toll system, these companies have a guaranteed income for the next 99 years ( Boardman, A. E., Siemiatycki & Vining, 2016) . This collaboration has secured the financial status of all the companies and professionals awarded tenders for the construction of Highway 407. This great investment reflects on the government positively as they enjoy taxes from all the shareholders making money on highway 407.
Ineffective public-private partnership goals
Unfortunately, there are some goals that pp3 fail to meet in large projects such as the construction of Highway 407. For example:
• Respect for labor and environmental concerns
It is expected that public-private partnerships should enhance proper labor and environmental practices due to the delegation of duties. In fact, during the vigorous vetting process prior to such partnerships, approaches labor and environmental concerns are discussed and enforced. However, private companies are often focused on making money and overlook environmental concerns at the expense of the community around them. Therefore, such partnerships do not meet the objective of enhanced labor laws and environmental practices effectively.
Highway 407 is not an exception to this ineffective practices. During constructions, controversies of underpaid and overworked personnel were common. Even with government intervention, no major change was seen in companies that were accused of subjecting their laborers to harsh working conditions. Additionally, there was plenty of pollution from the construction process especially in the areas where the private companies worked. Evidently, their major concern was setting up the toll system so that they could start billing. Sadly, this system also faces challenges of efficiency it is accused of overcharging and not recognizing certain number plates.
• Effective and continuous management of infrastructure
Another goal that P3s fail to meet is the continuous and effective management of infrastructure. It is expected that the government and private companies will not misappropriate funds or resources that belong to the public during construction and the maintenance process. However, there are known cases where private companies take underhand approaches to increase their profits at the expense of the public. Unfortunately, the government has little control in such instances and thus the public suffers at the hand of the private sector with no option but to endure these unfair conditions.
Highway 407 is no exception to these unjust practices. In 2004, the 407 ETR increased tolls without informing the relevant government authorities. The government did not support this approach and took the company to court. Eventually, the court upheld the 407 ETR’s decision at the expense of the public’s suffering ( Siemiatycki, 2015) . Also, a panel of engineers that has since analyzed the highway found that there were shortcuts taken during the construction such as shorter loops that pose safety risks to the users. These shortcomings have not been repaired to this day because of the cost implications and lack of corporation between the public and private sector.
Conclusion
In conclusion, public-private partnerships are effective in achieving their objectives to a great extent. For instance, they create investment and increase funding opportunities for the government, they harness the private sector’s efficiency and innovation, the create employment opportunities and achieve value for money in the provision of public services. As the construction of the 407 highway proves, when the public and private sector come together all parties stand to benefits from the process, as well as, the community that will use the facility. Notably, there are challenges that arise from these arrangements because both sectors have different priorities. While the government is focused on providing services for the people, the private sector is money oriented. With this information in mind, public and private partnerships should be encouraged. However, the private sector should be educated on the fact that their projects should go beyond a monetary stand and positively impact the community and the environment. As is the case with Canada, p3s should set realistic objectives prior to any project so that they can act as measures of progress as the collaboration continues. Such partnerships prove fruitful and should be embraced in all countries around the world.
References
Slack, E. (2016). Sustainable development and municipalities: getting the prices right. Canadian Public Policy , 42 (s1), S73-S78.
Bennett, M. M. (2018). From state-initiated to Indigenous-driven infrastructure: The Inuvialuit and Canada’s first highway to the Arctic Ocean. World Development .
Boardman, A. E., Siemiatycki, M., & Vining, A. (2016). The theory and evidence concerning public-private partnerships in Canada and elsewhere.
McDonald, D. A. (2018). Building a pro-public movement in Canada. Studies in Political Economy .
Opara, M., & Rouse, P. (2018). The perceived efficacy of public-private partnerships: A study from Canada. Critical Perspectives on Accounting .
Panos, J. (2015). Public Services Private Profits: The Political Economy of Public-Private Partnerships in Canada, John Loxley, with Salim Loxley, Halifax: Fernwood Press, 2012, pp. 224. Canadian Journal of Political Science/Revue canadienne de science politique .
Siemiatycki, M. (2015). Public Private Partnerships in Canada. In Public Private Partnerships (pp. 79-93). Routledge.
