Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

Archive for July 9th, 2010

“Private-public partnerships back on track in B.C.”

with 2 comments

Globe and Mail

Frances Bula writes on the Province’s Request for Qualifications for bidders on the Evergreen Line.

The provincial government is confident that it’s going to be able to work out an amicable deal with TransLink on how to find its one-third of the money for the $1.3-billion line.

Its confidence appears to be tied to the attitude of the current Mayors’ Council head Langley City Mayor Peter Fassbender. But despite them having “quieter conversations” than previous mayors, there is no indication that either the province is likely to come up with a new revenue source for the Translink $400m share of this project or that the other Mayors will allow this to be met from property tax which has always been the Province’s preferred source.

And, apparently, P3s are back on again because they are cutting out the middle men – the (foreign) banks – and going straight to the institutional investors

pension funds and insurance companies, are looking at lending on government projects because they are seen as stable investments that provide long-term returns.

That is to say, the taxpayers are backstopping the deal – so despite the spin that risk is being transferred to the private sector in a P3 that isn’t happening at all.  In fact these same institutions have always bought long term government bonds (known as “gilts” on the London market) because they are at very low risk of default. Unless there is a revolution, of course. Imperial government bonds from Russia and China had a market at one time as wallpaper.

So why is the government convinced it can now get a deal? I suspect because it has the power to force one if it has to, through legislation. And there is still time in its present mandate to do that. Fassbender better have something much better up his sleeve. I cannot imagine what that might look like.

Written by Stephen Rees

July 9, 2010 at 10:48 am