Infrastructure Opportunities

A healthy quality of life and economic competitiveness depend on creating and maintaining efficient and productive infrastructure assets, ranging from transportation and electrical power systems to health care facilities and educational centres. Many economically advanced and developing nations have come to understand that providing all the infrastructure that society deserves is a heavy cost burden that governments can no longer carry alone. For example, Canada requires as much as $125 billion of new capital in the next five to ten years to develop and replace public assets that carry forward important social and economic public policies at the federal, provincial and municipal levels.

Historically, virtually all assets characterized today as infrastructure assets were owned by governments. In the past 20 years, there has been a substantive and beneficial shift to involving the private sector in financing, developing and operating infrastructure facilities and services within public policy frameworks. Increasingly, governments are gaining confidence in turning to the private sector to provide capital, corporate leadership and asset management skills through public/private partnerships and other investment vehicles. All governments face an infrastructure deficit at a time of fiscal strain when it is difficult to raise the revenue needed to meet all public service demands. The situation will intensify as the proportion of retired workers to taxpaying workers escalates by 2030, when the last of the boomer generation will have retired.

Public/private alliances can play a positive and vital role in assisting governments to advance public policies without compromising service delivery, while freeing up tax revenues for other social service priorities.
As the guardians of the public interest, governments have a political interest in preserving and regulating infrastructure assets and services. They seek to balance commercial interests, primarily customer service and economic efficiencies, with access to public services. This solution has proven highly successful in Britain, where between 10 and 15 per cent of public sector projects are being developed by public/private partnerships.

In drawing on innovative arrangements, the private sector governments continue to maintain full control over public policies in areas such as health, career education, energy, transportation, technology, and the environment. Consequently, the public receives the services it normally expects, often more efficiently and at lower overall taxpayer cost. Part of the reason is that the involvement of private sector investors as equity risk takers in public/private partnerships brings discipline to project design, development and management. For investors, this should mean reliable and superior risk-adjusted long-term investment returns compared with more conventional investments like stocks and bonds.