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More P3 projects a good thing?

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SSLL
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Is this announcement a good thing? For transit, for roads, for schools? Or will we get more 407s?
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May 10, 2005. 01:00 AM
Public Infrastructure Minister David Caplan says the McGuinty government intends “to vigorously pursue opportunities to partner with the private sector.” But he adds that Tory-era projects like the Highway 407 electronic toll road, left, would not have met Liberal standards for privatesector involvement in a public project.

Ontario eyes private cash
Budget to unveil plan to seek partners to fix infrastructure

Boost for post-secondary education also expected tomorrow
ROBERT BENZIE, ROB FERGUSON AND KERRY GILLESPIE
QUEEN'S PARK BUREAU

The Ontario government will look to the private sector to help bankroll new roads, toll highways, bridges, hospitals, transit and schools as part of a five-year plan to be unveiled in tomorrow's budget.
"We're falling behind," Public Infrastructure Minister David Caplan told the Toronto Board of Trade yesterday.
"We intend to vigorously pursue opportunities to partner with the private sector in the delivery and financing of public infrastructure. That statement is going to be controversial, but it shouldn't be," the minister said.
"It's not a code phrase for privatizing public services. It is a strategy for building more public infrastructure and, importantly, building it faster."
The new Ontario Infrastructure Projects Corporation will "directly oversee new, large, alternatively financed infrastructure projects." It will report directly to cabinet, unlike its predecessor SuperBuild.
Sources say details of some new infrastructure projects would be revealed in Finance Minister Greg Sorbara's budget. Despite the ambitious plan, there are no tax hikes expected tomorrow and post-secondary education will get a boost.
"Look for us to breathe some life into the Rae report," confided one senior official, referring to former premier Bob Rae's $2.1 billion blueprint to fix higher learning in Ontario, including $1.3 billion more in operating grants, $540 million more for building and $321 million more for student loans.
While Premier Dalton McGuinty secured $5.75 billion in promised federal funding over five years from Prime Minister Paul Martin on Saturday, that largesse is not included in tomorrow's budget, which sources say was "locked down" last Wednesday and has long since been printed.
Caplan's speech yesterday was the strongest signal yet that the province has an aggressive plan to repair Ontario's crumbling infrastructure, which has been left to languish by governments dating back to the early 1980s.
The cost of repairing the province's roads and bridges, upgrading public transit and building hospitals, schools and courthouses is estimated at $100 billion.
Caplan insisted the new initiative to "conquer the infrastructure deficit" will not be the second coming of former Tory premier Mike Harris's SuperBuild program of private-public partnerships (P3), which the Liberals criticized while in opposition.
"SuperBuild was born out of the cabinet committee on privatization. Their goal was quite a bit different both as a communications — obviously political — tool, but also as an ideologically driven privatization arm," said Caplan.
He said Ontario's two P3 hospitals — in Brampton and Ottawa — and the Tories' 1999 sale of the Highway 407 electronic toll road would not have passed the Liberals' test for private-sector involvement in a public project.
Still, Caplan admitted private companies would have a much greater role in building, owning and operating infrastructure in Ontario under the new scheme. The provincial government would also look to "major public-sector pension funds" to help bankroll projects.
The private sector, for example, could pay for the costs of erecting and operating a building with the province signing on to a long-term lease. Private companies or pension plans might also build and own new courthouses, said Caplan, pointing out the province already leases many courthouses, including at College Park.
The only thing totally off the table is private ownership of hospitals, schools and water systems, he said.
"Hospitals, schools and water absolutely will be publicly owned," he said, allowing that a private company could, however, hold the mortgage on a new school or hospital, which would then be paid off by the public sector.
Another Liberal source acknowledged the infrastructure component of tomorrow's budget might not deliver all that is being touted. "It's a little unclear it has any credibility in the back years," said one insider, noting it is questionable whether any five-year plan is meaningful to a government with two years and five months until the end of its first term.
NDP Leader Howard Hampton warned the Liberals are merely finishing what the Tories started. "All of this sounds like back-door privatization to me," he said.
"This will cost the people of Ontario more. When you have private financing, a private company will want to make a profit on all of it and plus their borrowing costs are much higher. That's how you have to think of these projects, not as a one-year thing, but over 10 or 15 years and over 10 or 15 years the province is going to have to pay far more."
Others worried about the budget included pharmacists who descended on Queen's Park yesterday, pushing wheelbarrows filled with half a million petitions.
"Keep your promise to improve health care. Don't cut the drug plan in Wednesday's budget," Rob Modestino, vice-chair of the Ontario Pharmacists' Association, said on the lawn in front of the Legislature.
The association fears the government plans to cut $200 million from the Ontario Drug Benefit plan, which provides prescription drugs to the province's 2.2 million seniors, disabled and welfare recipients. That plan costs about $2.5 billion and continues to rise in price.
One way to reduce costs is "reference-based pricing." Under that system, in use in British Columbia, the government pays the cost of the lowest priced drug in a particular category. If a person wants a more expensive drug, they have to pay the difference themselves.
Health Minister George Smitherman said such concerns are premature.
Unlike the May 18, 2004, budget, which introduced a "health premium" of up to $900 a person, McGuinty and Sorbara have promised no new taxes this year.
However, the province still faces a budget deficit of about $6 billion and the Liberals have all but abandoned their election pledge to balance the books by the 2007 vote.
 
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