WASHINGTON — Federal lawmakers are examining the Canadian public-private partnership model for lessons to apply in the U.S., where congressional committees have yet to move forward with legislation authorizing the creation of a major infrastructure bank.
The House Transportation and Infrastructure Committee's panel on public-private partnerships held a hearing Tuesday on the Canadian experience with P3s, which America's northern neighbor has embraced more warmly than most U.S. jurisdictions.
The chairman of the full committee, Rep. Bill Shuster, R-Pa., said the Canadian model could provide guidance as the House moves toward a new comprehensive surface transportation bill and reauthorization of Federal Aviation Authority spending.
"I look forward to hearing from the Canadian government especially, as we move forward on a surface bill," Shuster said in opening remarks. "But also looking forward to the future of FAA reauthorization. Looking to Canada, some of the great public-private things they've done up there across-the-board."
Larry Blain, chairman of the board of directors at government-owned P3 planning agency Partnerships British Columbia, told the panel that the most common Canadian P3 model differs from the one most commonly used in the U.S. While U.S. P3s are generally revenue-producing assets such as tolled roads or bridges, private partners in Canadian projects finance the entire project upfront and receive government payments from tax revenue or other general fund dollars.
"A partnership does not need to be associated with a new source of revenue," Blain said. "We have P3 roads that are not toll roads."
David Morley, vice president of business and government strategy at Infrastructure Ontario, said the Canadian model provides the public with the benefit of transferring construction risk to a private party while also allowing a roughly 12% profit for private agencies.
But Rep. Peter DeFazio, D-Ore. seemed unconvinced that the Canadian model solves any problem inherent in traditional government project procurement. The U.S. problem is not necessarily the financial and political risks involved in large infrastructure investments, DeFazio said, it is a matter of being unable to fund them.
"Our problem is we don't have the money, and we don't have the guts to raise the money," he said.
Rep. John Delaney, D-Md., testified that infrastructure spending should be America's "top domestic goal." He is the primary House sponsor of the Partnership to Build America Act. A companion bill has since been introduced in the Senate. The bills would leverage $50 billion of bond proceeds to provide up to $750 billion of loans and loan guarantees to states and local governments for transportation and infrastructure projects.
Blain said an infrastructure bank like that would not be necessary under the Canadian model.
