Speaker: I will now call the House to order. We will proceed at this time with prayers.
Speaker: † We will proceed at this time with the Order Paper.
In recognition of
Mr. Edzerza:† †††† Mr.
Speaker, it is my honour to rise today on behalf of our government colleagues
to pay tribute to the continuing excellent working relationship our government
has with the State of
The Government of Canada and the Government
We have a very strong working relationship
with our geographical neighbours, which is proving to
be very beneficial to our citizens. The
In December of 2003, Premier Dennis Fentie and Governor Frank Murkowski signed an
intergovernmental relations accord committing both governments to work
cooperatively. Key opportunities to explore within that agreement include
tourism, transportation, trade and commerce, and resource development.
These infrastructure developments have been
of great social and economic benefit to
Our governments are working to promote the
The pipeline will provide the
I am very pleased to remind this
Legislature that we unanimously supported a motion in favour of a proposed railroad
These are but two prospects our governments
are working cooperatively on to enhance the economic viability of
Another noticeable advancement in the
Alaska-Yukon relations is the agreement between Governor Murkowski and Premier
Dennis Fentie to form a joint bilateral working committee
to secure port access for the
and Governor Murkowski travelled together this past February to
Speaker: Are there any further tributes?
INTRODUCTION OF VISITORS
†Speaker: Under introduction of visitors, it is my pleasure today to
Over the years, these exchanges have been a
benefit to our two jurisdictions in furthering our knowledge and understanding
of each other in areas that I have mentioned. Perhaps most importantly, though,
they have provided us with an opportunity to renew acquaintances and to make
new friendships at the legislative level. In this way, the contact between
legislative colleagues from each side of the border contributes to maintaining
a respectful, friendly relationship between both the governing structures and
the citizens of
I would now ask that our guests rise and I
name them. Today we have from the Alaska State Legislature: Senator Fred Dyson,
Senator Donald Olson, Representative Berta Gardner
and Representative Mark Neumann. Joining them in the gallery is Jeannette
James, who was a member of the Alaska House of Representatives from 1992 to
2002, and is here representing Governor Frank Murkowski on railroad matters. I
would ask that all members give a warm welcome to our friends from
Speaker: I would also like to take
this opportunity to welcome many
Are there any further introductions of visitors?
Mrs. Peter: I would like to ask the House to help me acknowledge the many people that we have in the gallery with us today, too numerous to name, who participated in the noon demonstration in support of no drilling in the Arctic National Wildlife Refuge ó thank you.
Speaker: Iíd like to take this opportunity to thank the members of the gallery for your participation, and I would ask from this point on that you do not participate and please respect the Legislative Assembly. Weíre delighted to have you here and thank you for participating, but Iíd ask that that would be the end of it. Thank you.
Mr. Lang: † Mr. Speaker, I would like the House to
welcome a very respected
Speaker: Are there any returns or documents for tabling?
TABLING RETURNS AND DOCUMENTS
Hon. Mr. Jenkins: I have for tabling the new Yukon Health Guide, a copy of which will
be delivered to every
have for tabling a document. Itís an agreement between the Government of Canada
and the Government of the
Speaker: Are there any reports of committees?
Are there any petitions?
Are there any bills to be introduced?
Are there any notices of motion?
NOTICES OF MOTION
Hon. Mr. Jenkins: Mr. Speaker, I give notice of the following motion:
THAT this House urges the Government of Canada and the Government of the United States of America to recognize that the Porcupine caribou herd regularly migrates across the border between our two countries; and
THAT this large, free-roaming herd of caribou comprises a unique and irreplaceable natural resource of great value which each generation should maintain and make use of in a manner that conserves this resource for future generations by abiding by the terms and conditions of the agreement between the Government of Canada and the Government of the United States of America on the conservation of the Porcupine caribou herd, which was signed in 1987.
Thank you very much, Mr. Speaker.
Mr. McRobb: I give notice of the following motion:
THAT it is the opinion of this House, given
the severity of recent information concerning the sea lice infestation of
Pacific salmon on
Mrs. Peter: I give notice of the following motion:
THAT this House urges the Yukon Party
government to ensure that in any negotiations on transboundary
development issues involving the Government of Yukon and the governments of
I give notice of the following motion:
THAT this House urges the Yukon Party government to give all necessary support to the Yukon Salmon Committee to ensure that the comprehensive environmental impact study on the use of Yukon River salmon eggs and milt as genetic material by commercial fish farming operations is completed as soon as possible.
Speaker: Are there any further notices of motion?
Is there a ministerial statement?
This then brings us to Question Period.
Question re:† Arctic National Wildlife Refuge
†Mrs. Peter: My question today is for the Premier. Mr. Speaker, we are honoured to have members of the Alaska State Legislature with us in the gallery today. I would like to assure the Premier and other MLAs that my question for the Premier is not meant to show any disrespect to our visitors.
We, on this side of the House, recognize how important it is to have positive, respectful relationships with our neighbours. Part of that respect includes being straightforward about where we stand on certain issues, even where we may not agree.
Will the Premier now state formally for the record that both sides of this House are opposed to drilling for oil and gas in any part of the Arctic National Wildlife Refuge?
Mr. Fentie: I thank the Member for Vuntut Gwitchin for the question. Indeed, it is very encouraging
to see so many Yukoners out in support of what is a
critical issue not only for the Vuntut Gwitchin people, but for the
Mr. Speaker, the position of the
We have debated this issue more than once in this House and have been unanimous
in our opposition to drilling in the calving grounds of the Porcupine caribou
herd. As the Premier knows, I was in
Will the Premier agree to take part
personally in the next
Hon. Mr. Fentie: The government will not rule out any option in this regard; however, itís very important to understand that this government respects other governmentsí jurisdictions. In this case, through requests by the Government of the Vuntut Gwitchin, we are supporting that government in its endeavours. That is a request by their government to lead on this initiative; we respect that fact, and weíll continue to do so.
We are taking this issue very seriously,
and that is why we have engaged with the Prime Minister, who most recently
brought this issue forward to the President of the
The Premier has shown his willingness to go anywhere any time to promote oil
and gas development in the
My final question for the Premier: will the
Premier make a commitment right now that any future negotiations on transboundary development issues involving the Government
of Yukon, the Government of Canada, the
Mr. Fentie: Mr. Speaker, I would hope that we do not reduce the importance of
this issue by maintaining that logging air miles will help bring forward a
solution. The government is working is very hard with the government that we
should work very hard with, the Government of the Vuntut
Gwitchin. And, given that this is an international
issue, Mr. Speaker, with an arrangement, an agreement already in place ó
signed, sealed and delivered in 1987 ó it is now paramount that we focus our
efforts with the Government of Canada so that when they engage with
Question re: †Arctic National Wildlife Refuge
Hardy: Iíd like to welcome the Alaskan delegates and apologize for not
meeting with them, but I didnít want to give them a Canadian flu to take back
I have a follow-up question for the Premier. A few minutes ago, I attended a very well-organized rally in front of this building to show solidarity with the people who are fighting so hard to prevent oil and gas drilling in the Arctic National Wildlife Refuge, and many of them are in here today.
I notice that some of the Alaskan legislators also had the courtesy and the courage to be out there. The Premier was invited to attend and to speak, but he didnít show up. The Premier claims he has raised this issue on many occasions when he has spoken outside the territory, but the question still stands: where and when? He said he brought it up during a very, very brief introduction to President Bush awhile back, and he has already belittled the logging of the air miles that my colleague has mentioned. But I would like to see him walk the walk at least once on this issue.
Why did the Premier snub
Mr. Fentie: I know the member opposite gets quite emotional when it comes to
these matters, but this government is very concerned about the issue of
drilling in ANWR. Now, that said, every Yukoner has
the right to demonstrate. Public demonstration is a fact of our democratic
process. It does not obligate, though, or dictate, government representatives
to be in attendance. We are doing our part in a very significant manner. We are
articulating our position representing
If the members opposite wish to participate
in demonstrations, we encourage them to do so. Today, we chose to continue our
efforts in regard to making sure that the Alaskans understand our position, and
we will continue now to work with
Mr. Hardy: Well, if anybody really wants to see where this Premier and the rest of the Yukon Party stands, all they have to do is look at the environment budget. It is nil. It is gutted. They will travel everywhere ó oil and gas ó everywhere across this country, and beg people to come up here and drill, but they wonít make one single trip to speak about this major issue.
Now, Mr. Speaker, the people who were
demonstrating a few minutes ago have some very pointed questions that the
Premier should answer. They were saying that they donít want this government to
go any further with negotiations on an
These people are saying ANWR should be a deal breaker. What is the Premierís position on that demand? What does the Premier have to say to the people in the gallery who feel so strongly about this issue?
Hon. Mr. Fentie: Well, first I must respond to the preamble. Any inference that this government does not maintain a high priority when it comes to the environment is simply incorrect.
In the budget tabled, which we are debating in the Legislature, the Department of Environment is receiving some $23 million of investment to carry out all the objectives of this government in placing a high priority in the environment. Thatís a three-percent increase over last year. When it comes to economic development, $15 million has been invested in the Department of Economic Development. I think those numbers are testimony to the priority we place in the environment.
In regard to the issue of linking pipelines
and responsible development here in the
Hardy: I donít think the people of the
Now, a few minutes ago my colleagues tabled
the agreement between the
Will the Premier, on behalf of
Mr. Fentie: You know, again the preamble is an issue. We have a responsibility
in this House to make sure the record reflects the facts. It is this government
that established the boundaries of Fishing Branch. It is this government that
implemented the management plan ó something past governments throughout the
latter 1990s could not do. It is this government that has established
It is this government that has put more
investment in the Department of Environment and the Department of Economic
Development to ensure environmental protection and conservation. It is this
government that promotes a balanced approach between the economy and the
environment. Thatís why we are building a better life for Yukoners
today, and we will ensure, and do everything we can, along with the Vuntut Gwitchin, that
Question re:† Arctic National Wildlife Refuge
join with my colleagues in paying particular welcome to the
I have some questions today for the
Premier. A recent announcement of this government celebrated a newly forged relationship
Mr. Speaker, the
†Hon. Mr. Fentie: Well, again, Mr. Speaker, the
simple answer to this question is yes, not once, not twice, but a litany of
times. Weíve made this position clear to all concerned, whatever venue we
happen to be in, and it relates to this issue. The
But I want to point something else out, Mr.
Speaker. Considering where the
March 23 article in the Globe and Mail
reported that Premier Ralph Klein admitted ó and I quote ó ďANWR is close to
Mr. Speaker, it only makes sense to every Yukoner that when the Yukon Premier signs an agreement with
the Alberta Premier, which specifically focuses on cooperation between Yukon and
Alberta on northern energy resource development, then drilling in ANWR becomes
an Alberta issue, and Alberta certainly should have been made aware of Yukonís
position ó indeed, Canadaís position ó particularly when speaking to the media
in Washington. The Premier has said he has made
Mr. Fentie: We agree with
The last time I checked,
Why is the Premier of Alberta unaware of
Mr. Fentie: Enlightening the moment, I think the member opposite is on a
fishing expedition and has come up with a red herring. There is no confusion in
our position. There never has been. I am sure there is no confusion in
Thereís no confusion here, not on this side of the House. It appears to be in the third party. It could be the leadership pressure.
Question re: †Coal-bed methane
Mr. McRobb: At an arctic gas symposium in
Hon. Mr. Lang: He is correct in part of the statement. The fact is we have no regulations in place to deal with natural gas from coal. If we were to get an application, weíd have no regulations to accept it. So whatever he has read in whatever magazine he gets his information from was wrong. There are no regulations in place for natural gas from coal ó one of the others things that was left out of the devolution agreement. It will take time to put those regulations in place. As far as applications to date, there is no application for natural gas from coal.
Mr. McRobb: If the minister would pay more attention to radio transcripts, he would see it was CBC Yukon that delivered that story.
Now, this government continues to actively
Hon. Mr. Lang: Certainly, I appreciate the faith that the member opposite puts in CBC announcements, but the facts are the facts. There are no regulations in place for natural gas from coal. There will be participation from the general public when we do put those regulations in place. Thereís nothing to worry about. Thereís no application. The CBC was wrong. There is no application for natural gas from coal being accepted by this government at this time.
Mr. McRobb: Mr. Speaker, this government is missing the boat. It shouldnít be directing Yukoners to argue in front of industry lawyers at some environmental review. It has the opportunity to ask Yukoners before this industry gets a foothold here.
They refuse to impose a moratorium. What about an information campaign? This government prefers to leave Yukoners in the dark while lighting up the backroom with their close mining friends. It has conducted no studies on coal-bed methane and continues to deny its impact on land, air, water, people and property.
Last fall, the Premier refused to launch an
information campaign on this matter. Will the
Hon. Mr. Lang: Again, there is no application and no regulations are in place. There will be a process put in place for participation by the general public when we go ahead with any concept of natural gas from coal.
As far as Energy, Mines and Resources, we
are a very busy department with all the oil and gas exploration thatís going on
today. Natural gas from coal is not high on our plate today. But when it does
come up, there will be participation by the general public and other
governments in the
It is an issue out there. Iím telling the member opposite that when they go ahead with it, there is going to be participation by the general public and other governments.
Cardiff: Mr. Speaker, last Thursday, the Minister of Community Services gave
notice of a motion to table the
Hon. Mr. Hart: I plan to table this report tomorrow, as I indicated yesterday in the Legislature. I also indicated previously in the House in the fall that I would be tabling the report when received.
Cardiff: Well, maybe the minister can explain some other things about the
motion that he made. For some reason, the motion made reference to the
The report was provided and requested by the trustee after he was appointed by
this government under the Municipal Act
to take control over the Town of the City of
Question re: †Northern Splendor Reindeer Farm
†Mr. Hardy: I have a question for the Minister of Environment.
A few minutes ago, we learned that a partial agreement of some sort has been reached between the government and the owners of the Northern Splendor Reindeer Farm. It is not a final agreement and it does not address the fact that this government, for more than a year, has used its power and authority to have things its own way instead of negotiating fairly with these people.
Will the minister explain todayís agreement and when we can expect negotiations to compensate the reindeer farm operators to begin?
Hon. Mr. Jenkins: I can confirm to the House that an agreement was reached between an official in the Department of Environment and the owners of the reindeer. The details have yet to be finalized. When they are, I will share them with the House.
Mr. Hardy: This government pushed these people to the wall. We all know that; it has been a long story. It was only when they pushed back that the government acknowledged some responsibility for these animals as wildlife, and that is a shame. But that is what they are, Mr. Speaker: ever since the Yukon Act was changed, reindeer have been wildlife. That seems to be what this government struggles with.
The government owes these people compensation for shutting down their business, exactly the same way that government would compensate someone whose property was expropriated to build a highway. There is not much difference here.
Will the minister provide his assurance that the operators will be treated fairly and not put into another take-it-or-leave-it position by this government?
Mr. Jenkins: † Yes, I can confirm that with the new Yukon Act that was brought in under the
previous Liberal government, there was uncertainty surrounding the issue and
definition of reindeer. That was addressed with the owners of the reindeer by
offering them permits to export or sell the reindeer to any bona fide end-user.
We are quite cognizant of our responsibilities in that area. They chose to keep
and raise their reindeer more or less for breeding stock. That market for breeding
stock has collapsed. The borders into provinces and the
Now, this is at the end. Normally when a product and market collapses, the product is either downplayed and sold off ó that wasnít done. We were at an impasse and that was addressed today.
Mr. Hardy: This minister really doesnít understand the Wildlife Act, doesnít understand what these reindeer are. He continues to put information on this floor that can be challenged by the very acts that we live under.
I had a chance to read yesterdayís Blues, and Iíd like to pick on one of the many areas of the ministerís answers that concerned me ó and there were many. Specifically, Iíd like to know why the minister ignored my request to table the recommendations he received on this matter from the Yukon Fish and Wildlife Management Board and his response to those recommendations.
During this discussion on this issue a few months back, members of the Fish and Wildlife Management Board referred to the governmentís position on this issue as a travesty of natural justice. I agreed with that. This whole episode has been a shameful example of misuse of power by at least three ministers of this government, including the Premier.
Will the minister now table the recommendations he received from the Fish and Wildlife Management Board and his response to those recommendations?
Hon. Mr. Jenkins: Iíd be happy to table the last letter I received from the Fish and Wildlife Management Board, and it says nothing of the sort, as the member opposite is suggesting. I will be tabling that at the next earliest convenience.
With respect to the reindeer, the paramount importance of these reindeer is their health and safety, and we are concerned with the contamination of wildlife from disease that may exist in this herd. The step that the government has taken at this juncture is to retain the services of a veterinarian to assess the animalsí health in this reindeer herd belonging the Northern Splendor Reindeer Farm. From there, the next steps will unfold and a determination will be made, but the offer of the government is quite specific as to how we can deal with the reindeer, and we stand by our offer. That is to hire an independent appraiser, ascertain the value of the reindeer and purchase them for that value.
Speaker: The time for Question Period has now elapsed. Prior to proceeding to Orders of the Day, Iíd just like to take this opportunity to again thank the assembled folks here for your attendance and for not participating. I thank you for that.
We will proceed to Orders of the Day.
ORDERS OF THE DAY
motions other than government motions
Motion No. 407
Clerk: Motion No. 407, standing in the name of Ms. Duncan.
Speaker: It has been moved by the leader of the third party
THAT the House urges the Government of Yukon to cease and desist using public/private partnerships (P3s) for major capital infrastructure until a proper policy framework is in place.
Ms. Duncan: Iím sure all members join you in thanking our visitors for attending today.
I appreciate the opportunity to discuss the issue of public/private partnerships again in this Legislature. My motion suggests that the government not make use of this model until such time as there is a clear policy framework in place.
Iím asking my colleagues in the Legislature to recommend to the government that they cease and desist from the use of P3s until such time as this clear policy is in place.
Iím asking for this
because the Premier had committed in this same Legislature that the policy
framework would be developed before the government made use of the model. In
fact, 18 months ago, the Premier said this: ďWe would never enter into a
public/private partnership until a clear, transparent policy is developed. We
will do that so that when we do proceed with a project, itís understood that it
makes sense, the business case is valid, and itís a good project for
That was our current Premier, less than 18 months ago. Now what we have seen is that the government is proceeding on at least two projects, attempting to use a public/private partnership model without the clear policy framework in place.
Iím asking that they cease and desist using this and get their homework done, because the Premier has in fact gone back on his word. The Government of Yukon contracted with Partnerships B.C. to make use of their expertise ó not to develop a policy, but to make use of their expertise in evaluating P3s.
I would like to briefly make note of Partnerships B.C. and what they are about. Partnerships B.C.ís original mandate was to promote, enable and help implement P3 projects and to be the B.C. governmentís conduit for involving the private sector in P3 issues. Their mandate is not to develop the policy for other jurisdictions or to develop a policy framework. Their mandate is to examine P3 projects. It also should be noted that Partnerships B.C. are to examine with a client agency if a public/private partnership is the best alternative for a specific project. Again, itís not about developing a policy for another jurisdiction ó the policy that the Premier committed would be in place before we proceeded. Partnerships B.C. examines specific projects.
The other very important point about
Partnerships B.C. that should be noted for the record is that Partnerships B.C.
proceed with a very specific B.C. government policy in place.
So, a capital asset ó say, a bridge or a mobile communication system ó is examined within the context of a capital asset framework agreement before Partnerships B.C. looks at it as a possible P3 project.
All Iím asking in the motion today is that the government have a similar policy, have a policy framework in place, as the Premier committed to do, before we go ahead with a P3 model. The government hasnít done this. The correct reference is the capital asset management framework that is in place, and some of that asset framework and policy thatís in place evaluates such things as how the asset is going to be disposed of when it reaches the end of its useful life, and a procurement model. Partnerships B.C., it should also be noted, is an armís-length corporation from the B.C. government.
Iíd like to speak about the P3 context in
The Canadian context of the public/private partnerships, as Iíve noted, was the Saskatchewan Institute for Public Policy, which has one of the better articles on this particular subject, and thereís also substantial information available from the Canadian Council for Public/Private Partnerships, which has published a number of reviews of P3s in use in Canada, and they are supported by Industry Canada. Thatís readily available on the Government of Canada Web site. There is such other information as a hundred different P3 projects that have been done across the country and the varying degrees of experience with them.
The most famous, if you like ó or infamous
ó Canadian P3 project is, of course, the Northumberland Strait crossing ó the
bridge that was constructed in Maritime Canada. The Auditor General made a
significant report on the
Now the government has contracted with Partnerships B.C. in lieu of developing a policy. I certainly do not, in my remarks, in any way denigrate the ability of Partnerships B.C. They have certainly been successful in a number of areas. Partnerships B.C.ís success and work is in evaluating public/private partnership projects. Their expertise is not in developing the policy, and the policy needs to be in place.
Certainly, the Government of Yukon should
examine the work that has gone before. Also what is critically lacking in the
task that is before Partnerships B.C., which we are paying some $300,000-plus
for, is a
The more complex public/private partnership that Yukoners are also familiar with is the Connect Yukon project, and the Connect Yukon project was a very elaborate agreement with laudable intentions. However, it had a number of drawbacks, not the least of which were the significant balloon payments left to succeeding governments. Iíd just like to explain that.
The NDP government entered into the Connect
Yukon agreement. There were many questions about it. There was no clear policy
framework in place in terms of a public/private partnership, and it was also
entered into at a time when this was a relatively young field in
There were many questions inside and
outside this Legislature about Connect
That was entered into under the NDP
government. The way the deal was structured was that there were specific payments
spread over a series of years with a balloon payment required in 2003 ó I
believe it was in the 2002-03 fiscal year. The difficulty with structuring the
payment over a series of years is that at that time Yukon was also governed by
a very strict Yukon Party initiative ó the Taxpayer
Protection Act. The Taxpayer
Protection Act said very clearly that you could not show the
I am struggling to ensure that I am explaining this very clearly. Because the public/private partnership model spreads out the payments over a series of years ó under the old Taxpayer Protection Act, it severely limited future governments and limited the number of projects that could be entered into.
Because projects were expensed in the year in which they were built, it was difficult under the former Taxpayer Protection Act for governments to contemplate a public/private partnership. An example is: (a) you have to show that youíre able to pay for it in subsequent years, that the financing is there and that youíre not taking the territory into deficit ó that you have the money in the bank; and (b) this procedure of accounting for capital assets in the year they were expensed.†
So, the public/private partnership model was pursued in a very, very limited way under previous governments, and there was not a policy framework that guided it. It was done within this context of the Taxpayer Protection Act and done within this context of expensing for capital assets in the year in which theyíre incurred.
Enter the Yukon Party government in November 2002, and youíve had the public/private partnership model evolve across the country. They change the Taxpayer Protection Act, change the method of accounting, and the Premier commits publicly on the floor of the House that, ďWell, we wonít go further in this public/private partnership model until weíve got a policy in place that will guide us.Ē He made that very clear commitment. He even used the word ďnever,Ē which every politician is counselled not to use ó ďDonít use that one. Never say Ďneverí, because it will come back to haunt you.Ē And itís coming back to haunt the government today. They said theyíd never do it, and theyíre doing it.
The government side is arguing, ďWell,
weíve contracted Partnerships B.C. to evaluate this project, and weíll go ahead
with that in lieu of getting this policy in place.Ē Thatís not good enough. Partnerships B.C. doesnít evaluate projects without a policy
framework in place. They have a policy framework in place. They donít have the
The other thing theyíre lacking in the
Chapter 22 isnít about negotiating one-off agreements with the First Nations. Chapter 22 is very specific about working together in a government-to-government relationship. One absolutely can argue, for example, that the mobile communications system, MoCS, that the government is embarking upon is a Yukon-wide infrastructure project ó a Yukon-wide essential piece of infrastructure, I would argue. It has far-reaching implications. Itís also an economic development opportunity.
Absolutely chapter 22 should apply. If you are evaluating the MoCS, the mobile communications system, as a possible P3 model, without this Yukon context and understanding of chapter 22, without this Yukon context of our formula financing agreement, without this Yukon context of our past limited experience and without a government policy to guide them, my argument is that Partnerships B.C. certainly could be used to help us develop the policy, but we need to do the policy work, and the government is not. The government is examining the projects without having a policy to guide them.
If youíll just allow me an aside story, Mr. Speaker, one of the very first presentations was about contracting and about when a contract becomes a contract and the bidding process. There were a great number of nods by the public servants and the private sector in the room. It was very enlightening to everyone there. I applaud the private sector for this kind of education initiative. It was well done and I believe it was very well-received by all who attended.
I also note that the Yukon Employees Union
is working on bringing up a guest speaker. Workers have tremendous concerns
about public/private partnerships, and quite rightly so. An example is
The guest lecturer has not yet come to
People, Yukoners, need to be considered and there needs to be a policy that is developed with consensus and collaboration ó as the Premier is fond of saying ó and it needs to be open to all Yukoners. We need to know what the rules are before we embark upon this kind of model.
The current Premier has also expressed
reservations about public/private partnerships. For those who werenít in the session
He said that he was not convinced that this one particular way, public/private partnerships, was the be-all and end-all. He said, ďI believe itís a dangerous game to play to pre-commit future public sector revenues. We must not compromise the future in any way. I donít believe going into debt today is the answer. The risk factor is the critical one, Mr. Speaker, because if we were to proceed with a project, and should that project get into a situation where it is not solvent, for whatever reason, in this type of partnership, the public ó the taxpayer ó would have to absorb that risk. I think thatís a very important consideration. We must be conscious of the fact that spending the money is easy; paying it back is the hard part ó the ability to pay it back. Although I agree that looking at innovative ways is a very good step for governments to take, within this particular concept there are most certainly disadvantages.
ďWhen we look at the capital projects, we have to consider another fact. In this arrangement, if the private sector undertakes the project instead of the government, there would likely be an overall increase to project cost due to financing charges. And thatís an important fact, Mr. Speaker, because no matter how you get the money, if itís borrowed, thereís a cost to that.
ďSo, in closing, Mr. Speaker, I support government searching and coming up with innovative ways, but I donít necessarily agree that public/private partnerships are one of them.Ē
All those quotes are taken from a speech
that the Member for
Thatís all Iím asking the government to do today. Iím asking my colleagues in the Legislature to support a motion that says letís cease and desist with a public/private partnership model for major infrastructure projects until such time as the clear policy framework is developed and is in place.
Iím asking the Legislature and members in this House to support the Premier living up to his word to Yukoners in the Legislature. I believe itís fundamental that we have this policy in place.
We cannot simply delegate the
responsibility and hire Partnerships B.C. to evaluate specific projects because
Partnerships B.C. does not have the Yukon context of our history ó where we
have been in terms of our financing, in terms of our previous experience in a
very limited way with this model, or different variations of the model ó nor do
they have a full understanding of the Taxpayer
Protection Act and how it has been changed and about our formula financing
agreement with Ottawa. They do not have the work and understanding of chapter
22 of the Umbrella Final Agreement
and the working relationship between the Government of Yukon and self-governing
First Nations, and they do not have the
Other jurisdictions have been very clear and their experience has been very clear. The Auditor General has written at length about other governmentsí experience.
As I mentioned at the outset, I do not intend to speak at length. Those are the arguments that I have chosen to make this afternoon. I would commend and be quite willing to share with others a list from a literature review of some of the articles I have examined on this particular subject. I would gladly share the information in the interests of ensuring that we, as legislators, do what we say weíll do, which is what Yukoners ask us to do.
I would ask the Legislature and members in this House to support the motion.
Thank you, Mr. Speaker.
Hon. Mr. Kenyon: It gives me great pleasure to rise today to talk about P3 initiatives and some of the ways to work with P3s. One of the things that I have found over the last few months is that there is a rather horrible lack of understanding of what a P3 involves. I have seen numerous members of this House get up a number of different times and speak at length on what they think a P3 is. In reality, very little has actually been said about P3s at all.
One of the things that is relatively obvious as we work our way through government is the fact that there is not an awful lot of information; there is not an awful lot of understanding of basic economics, of basic procedures. It is one thing to sort of put on your economic dunce cap and sit in the corner and try to interpret something you donít understand, but it is much better to get proper information, proper evaluation.
One of the things I learned very early in my business was to hire good chartered accountants and good lawyers and listen to them. Thatís where you are going to go with this and do the best with it. That has become more and more obvious over the past few days actually, as the members opposite get up and talk about government spending and how government spending is all spending, spending, spending, and it has nothing to do with the income. The income is simply an accident.
Well, I think anybody who has been in business knows that a business is run on a balance sheet. You always look at the income side of the ledger, and you always look at the expense side of the ledger. The problem with that, of course, is that you can do many, many things in a business that will influence one side or the other, or in some cases both. You can lower taxes to stimulate more investment into the business, which thereby increases the number of businesses, which thereby increases the amount of taxes that come back at you.
But to totally ignore the income side and work that has been done in the last two years to increase the income of our ledger, I think, shows a horrible lack of understanding of really what the economy is all about and what economics is all about.
The media doesnít make this any easier at times. And I donít say that critically, Mr. Speaker, because the media has made great strides over the last number of years. Being an avid reader of newspapers from all over the world, itís often quite amazing how they completely misinterpret things, as well. Sometimes theyíll try to report on something that someone said, possibly with understanding, possibly with no understanding at all or an understanding that has been crafted for a certain effect. Oftentimes, theyíll just sort of wing it, and there is where we get into our problems and our basic economics.
The media has a purpose. They have a great purpose, but the real purpose is to sell papers or to increase the readership or increase the number of people who are listening. So therefore the nature of the business really isnít economics. You canít simply go back to school or basically take a course.
To their credit, however, there is another place where this goes completely sideways, and that is, you constantly look at special interest groups of various political stripes or thought stripes. Again, I donít say that critically. You can no longer hire someone from the Conservation Society to evaluate a project any more than you can hire somebody from the Chamber of Mines. You have to have somebody to evaluate a business who is totally third party, who is detached, has understanding, good economic basis, good everything else, and therefore has an ability to look at it in a detached and third-party way. You canít simply search out a catchy or confrontational person, bring them in, have them put on a nice presentation and show a special interest and, really, when it comes down to the bottom line, Mr. Speaker, with all the best of intentions, most of these people donít have a clue about economics, either.
I donít say that I do, but, again, my advice has always been to hire the best people that you can and listen to them, understand what is going on and understand what the issues are. That can be an expensive process sometimes ó this is true.
Most of the presentations Iíve been to and most of the articles written on this really donít have a clue of what is promoting a balanced discussion into an issue. They are looking at one side or the other. They canít really comment on free trade. They canít really comment on a P3 construction project. Basically itís always the individualís ideology that comes to the forefront, and that is something that we on this side have to constantly avoid.
It is work. It is difficult. But, frankly, curling up with Adam Smith or Economics for Dummies as a way of avoiding a Swedish hockey game is really not a real solution to the problem.
P3s go back a long way. The member opposite has mentioned a number of different things that are interesting. Bull, Housser & Tupper, who were brought in by Lackowicz, Shier & Hoffman, made a good presentation; it was an excellent presentation. The individual that the member opposite referred to as ďsomewhat involvedĒ is actually general counsel for Partnerships B.C. He is a little bit more than involved; he is their main lawyer.
The reality of that is that he was quite impressed with the way we were proceeding on this, he has offered his help on this, reviewed some of it, and indicated that he is happy with what we have done. Again, I take his advice over someone else taking a shot at it.
I have a problem with a number of other
things that have come out here. One of the things that we have been working on
very hard is initially developing a process that would work, a process that
would allow us to know how this works. We have engaged one of the best
companies in the world that has been working in this area and has a very good
knowledge of the whole thing. We do have to look at what happened in the past.
There is an old story of those who donít study or read history having the great
pleasure of reliving it. That has been very, very prevalent in the history of
this territory and, really, in the history of
The member opposite asked, what are the rules? Well, the rules are set out with each individual project. Thatís the nature of a public/private partnership, and Iíll come back to that and talk about how that actually is set up. Partnerships B.C. does have policies in place. They have frameworks in place. They have a good concept of that process and how to undertake it. Itís not empirical; itís a best practices approach. Basically thatís considerate of what they learn from project to project. Jumping in on it and trying to develop a policy by any name or structure is setting up a system that simply wonít work. Youíre trying to define something that you have absolutely not a clue about. To me, that doesnít sound like good government; it really doesnít. But to engage a group like Partnerships B.C., which has a wide range of interest, a wide range of experience ó theyíve built major projects, they are building major projects ó we can pull down their best practices. Previous governments, when the leader of the third party mentions that they were in the process of developing a P3 policy ó Iíll get back in a moment and give a very good example of how that policy was clearly worst practices, how not to run a project and how to ensure that if that project can go sideways, it certainly will.
As the business world is constantly
evolving, so, too, must the policies and guidelines so that the best solution
is always applied to each project. That best solution may be slightly different
from project to project. It may involve local considerations. It should. It has
to involve local considerations. I donít care whether youíre doing a bridge,
and that you have to consider the Umbrella
Final Agreement here or you have to build a RAVline
Itís the same thing with the Sea to
Establishing a cast-in-stone policy could limit important opportunities that could be beneficial to a project. To establish a policy regime that is rigid makes no sense. It has to have the flexibility. Hence, ďbest practices,Ē not ďworst practices,Ē as weíve seen in some of the previous projects that people think might have a relationship to a P3, and Iíll come back to one of those.
We canít cast a policy or anything like that in stone. It will be flexible and change from time to time. It will change with the local people in that area; it will change with international incidents; it will change with First Nation involvement. It will change with all these things.
As I mentioned earlier, weíre learning a great deal about P3 application from organizations with considerable experience. Thatís why we went there. Weíre looking to create the best P3 policy to serve our needs. We want to get it right, rather than fast.
Thereís an old saying, and actually itís a nice little sign over the cash register of a local printing company that Iíve dealt with for a number of years: ďYou can have it fast, you can have it cheap or you can have it right. Pick two because you ainít getting three.Ē We can get it fast, and we can get it cheap, but it wonít likely be right. You can get it cheap and right, but that wonít be fast ó and so on.
The problem is that in previous studies ó Iím certainly more than happy to talk about one here ó they didnít get it fast. Theyíve been working on it for years. We sure didnít get it cheap. A $17-million project is $40 million and climbing. Weíll be lucky if we get it in under twice what it was projected. That sounds like a few other projects over the last number of years. They sure didnít get it right; it still has major problems.
Out of those three, the previous government didnít meet any one of them. Thatís where I have a problem with all of this. But the member opposite said that the Liberal government was working on a P3 policy, and again, worst practices.
Youíre certainly very right with the one
statement: spending money is easy, paying it back is
the hard part. This is another one of the projects where the spending was easy
by previous governments, and now weíre trying desperately to get it back on
track and itís costing us a fortune, but weíll get it there, weíll certainly
get it there. But it wasnít cheap and it wasnít quick, and, as I say, weíre
still working on this thing. Iím referring, of course, to the
If we got to the Auditor Generalís report ó and the member previous was quite complimentary of the Auditor General, and I agree that the Auditor General does a great job, so I have no problems at all going back to what the Auditor General has to say about this on the Mayo-Dawson transmission line.
To refresh membersí memory on that, the
corporation has a capacity to generate 75 megawatts of power from hydro facilities
In June 2000, the Yukon Energy Corporation Board of Directors approved the construction of a wood-pole transmission line at a projected cost of $27,246,000.
The proposal at the time was to get us off diesel generation and help the environment ó very good things to be looking at ó and to reduce the cost of hydro for all Yukoners. It was a nice theory. It didnít work, but it was a nice theory.
So, in June, the board of directors
approved that $27,246,000. The project was to be completed before the end of
2002 ó and my watch and the little thing on the wall there says that itís a
little late on that ó and would transmit hydro from Mayo to Dawson City, a
distance of 223 kilometres. The transmission line with a design capacity of 15
megawatts would serve a population of approximately 2,000. We know that
actually goes up in the summer for the Town of the City of
In August 2000, the minister responsible for both the Yukon Development Corporation and the Yukon Energy Corporation approved that project, and away we went. How was it done? Was this a P3? Well, in the old Department of Economic Development before it was gutted and trashed by the previous Liberal government ó it always struck me as a bit strange that the best way to promote economic development was to kill the department that was working on it, but that is another story.
In April 1999, the corporation hired an
engineering firm to complete a peer review of the feasibility study. The review
indicated that the estimated overall project cost may have been underestimated
by $2 million or $3 million. In the spring of 2000, the engineering firm came
up with an estimated cost of about $25.5 million ó $23 million for
construction, $2.5 million for internal costs. We can keep going through some
of those figures. On
But there were other things here. The Yukon Energy Corporationís analysis of cost-savings showed that the present value of the cost associated with the continued use of diesel over 40 years was an estimated $42,184,000. These figures are from the Auditor General. In comparison, the corporation estimated the present value of the costs of the transmission system over the same period at $27,964,000. That means that replacing diesel generator power with hydro power would produce a net savings of $14 million. It sounds pretty good. Hey, no problem at all. That sounds like a project that everybody could support. But itís still not a P3.
The Auditor General points out there are substantial risks using a design/build approach. The proposal of the Yukon Energy Corporation Board of Directors in June 2000 suggested a single contract to construct the project using the ďengineer-procure-construct-and-manage approachĒ. The proposal also indicated the management plan to proceed with a small project management team that would include a term employer or contractor who would act as the project manager. The Yukon Energy Corporation selected this approach in the belief that it would reduce the time needed to complete the project and minimize the need for some in-house staff involvement. However, it doesnít appear that the board of directors was fully briefed about the risks associated with using the engineer-procure-construct-and-manage approach. That approach was later dubbed the design/build.
So weíve got a problem. Weíre proceeding. Weíre not really informing people. People donít really have an understanding of it. That is not a P3.
There are a number of advantages and disadvantages listed in the Auditor Generalís report. Some of the advantages: a firm commitment to cost, time and scope of construction. Well, itís three years later, it still has major problems, and the cost now is probably going well over $40 million. Obviously, thereís not much advantage to that. The leader of the third party would have us believe that a P3 is going to cost us more. That government didnít even come close. It would be difficult to think that we could do worse.
Another advantage is that itís a single contract for the corporation. Well, thatís a nice advantage, but I think I would want to know who held the contract. Thatís much more important than the fact that itís only one.
Thereís a minimal need for YEC resources. Well, that might be an advantage. Itís a possibility. Frankly, I think Iíd want the YEC resources involved. Iíd certainly want the board involved, but there were some problems there too.
There is no need for detailed technical input from the corporation because the system is defined by a performance contract. Weíre going in the opposite direction right now from a P3. We havenít agreed to anything. We havenít really defined who weíve agreed or not agreed with, and we havenít set any kind of parameters. Weíve just said, ďWell, go ahead and design it and build it.Ē That is not a P3. It has nothing whatsoever to do with a P3.
The Auditor General continues with some disadvantages. Design/build contractor is not a local company. Again, that has nothing to do with it being a P3. A P3 can certainly involve numerous local companies. It can be written into the contract, which I will get to later. P3s are based on contracts and contractual arrangements. How you build that contract and what requirements you put on that contract to all proponents ó that is what a P3 is about.
Another disadvantage is that the total project scope is not known, which can lead to cost overruns. Good god, that was one part of the report that they hit dead on ó $17 million, up to $22 million, up to $27 million, and now weíre over $40 million. That qualifies pretty well as a cost overrun ó not even close. It has nothing to do with a contract of a P3, with proper insurance, proper guarantees, proper tying up of assets ó whatever that contract happens to be. You donít sit there and watch projects double. I canít think of a more poorly advised way ó to be polite, construction for dummies.
Another disadvantage is limited owner
involvement once a design/build contract is awarded. Well, that makes a lot of
sense ó weíll award a contract to somebody to build it, and weíll go to
Another disadvantage ó project risk assigned to one contractor who must incorporate in the tender price. The whole idea of a P3, which Iíll get to, is the fact that itís shared risk. Could it cost a little bit more in the first place? Did it really matter if the estimates on this project were $30 million rather than $27 million? Itís going to cost us well over $40 million. A P3 would lock those prices in and lock those structures in by contract.
Limited opportunity for First Nationsí involvement is a disadvantage in this project. In a P3, you write that into the contract: necessary to use local labour force, necessary to use local contractors, necessary to consult with the local First Nation. There are all sorts of things that can be built into that to satisfy chapter 22 obligations. You do not limit the opportunity for First Nationsí involvement in a P3.
Another disadvantage of the whole
design/build as the Mayo-Dawson transmission line came out is loss of design/build
advantage because the designer and the builder are not located in the same
area. This makes even better sense, Mr. Speaker. Letís hire a designer from
There is a potential for conflict of
interest, since the designer and builder are from one company. Again, this is
all covered by contract. This has nothing whatsoever to do with a P3. Project
bonding requirements will exclude medium sized but very capable contractors
from participating. Again, you can write into the contract the necessity to
involve smaller or medium-sized local contractors. For instance, the bridge in
Large contractors could bring affiliated labourers, increasing overall costs ó in other words, they could bring in labourers from other areas. That is why we have the business incentive plan, or the BIP. That is why we can write into the contract the necessity to do this in a more metered and more reasonable way ó an enforceable contract, Mr. Speaker; what a novel concept.
One of the things that the Auditor General mentioned was that they expected to find a project brief with a statement of objectives that clearly defined roles, responsibilities, accountability, implementation, approach, detailed budgets, and controls for this capital project; however, we did not find such a document.
It would appear that the approach that the leader of the third party refers to as their examination of policy on P3s did not in fact clearly define roles, responsibilities, accountability, implementation, approach, detailed budgets, and controls for this capital project ó a scenario for an absolutely worst practices policy and framework, certainly not best policy.
Another comment the Auditor General made was that itís not clear who the initiator of the transmission system project was: ďÖfound a continual change of leadership for the project between 1999 and 2004.Ē Well, of course we know what happened by 2004. We made a few changes and tried to get everything back on track. But again, with no clear contract and no clear guarantees, this is where itís going to go ó right in the gutter.
Another comment is: ďHowever, it was not
clear who the project manager reported to.Ē Well, I suppose if my analogy of
To successfully manage a project, the
project manager has to have a clear understanding of his or her role and
authority. We had to hire the Auditor General of
Although the Yukon Energy Corporation did issue a request for proposals in a few cases for the project, the Auditor General found that it awarded 12 contracts, each with payments over $50,000, on a sole-source basis ó no competition, no request for qualifications, no chance to see if any of these groups had the ability to actually perform or the background to perform, nothing. There were 12 different sole-source contracts on the same project with no coordination.
The tendering construction contract that
Yukon Energy Corporation issued was a request for proposals on
During the construction contract
negotiations in March 2001, the corporation also became aware that the firm
lacked experience in energy transmission and substation construction. They
noticed it almost a year after the contract. A request for qualification and
vetting that through an independent committee consisting of public and private
input ó no one group should control that ó but again, have a third party look
at it, evaluate and make those determinations. A year after, and they noticed
that there was no experience in the field. It signed a construction contract, a
design/build agreement, on
Well, here we are in 2005 and weíre still in court. In fact, weíre in court and I believe itís several different areas. Lack of safeguards is one of the more polite terms Iíve ever seen in an Auditor Generalís report.
It notes further, too, that the project manager contract was not awarded on a competitive basis. Well, we wonít get into how that might have been awarded ó but, you know, again, no ability to adequately look at it, evaluate it, choose your best practices, engage people with great experience in this field, pick from the best and get on with the project with good safeguards.
The contract for the firm acting as project engineer was also awarded without competition. It appears that no attempt was made to get competitive bids for the contract ó absolutely against the P3 process. This is what people are holding up as an example of why P3s are bad. The contract itself was signed on behalf of the director of technical services, a corporation employee at a supervisor level who did not have the authority to enter into the contract. The employee wasnít an officer of the corporation. So not even the appropriate people signed the contract, which was very poorly drawn in the first place.
Then we look at the final recommendations on this whole thing. There is the recommendation that the Yukon Energy Corporation should establish and follow a contracting policy and clear contracting procedures that provide for transparency and competition and ensure best value. It should ensure that contracting requirements are properly planned for, contracts are entered into only by those who have the authority to do so, contracts clearly specify deliverables, maximum price and cost ceilings, contracts include provisions for auditing claims where appropriate, and payments are made only within authorized limits. It sounds like a pretty good start toward a policy framework.
Mr. Speaker, this is what is held up to us day after day as an example of why P3s donít work. I submit to you, and I submit to this House, that this is a good example of why we need P3s and why this is just simply not a way to go.
We have had a number of P3 information sessions over the last while, and weíve looked at this. I was really pleased to see members of the third party there. I donít even remember if members of the official opposition were there, but Iím suspicious there were. It was a good presentation. It was an excellent presentation. I certainly understand their interest in that because when you go back to 1996 and look at the Yukon Liberal Party platform, Building an Open and Accountable Government, it says ďYukon Liberals believe that private sector investment is key to building a strong economy. Governmentís role is to provide competitive and fair regulatory processes; provide essential infrastructure, like powerĒ ó power line ó roads and bridges; and, to ensure the departments are responsive to the current and future needs of business.Ē
On the next page, it goes on: ďThe steps we
will take to empower
The Liberal leader of the day basically saw this as one way for First Nations to spend settlement money.
There are a number of ways ó that has to be a decision of each individual, independent First Nation government, but there are all sorts of possibilities.†
There were a number of assumptions there ó
that long ferry lineups in
The Liberals calculated 17 financing options. Boy, I wish they had spent that much time on trying to figure out what they were going to do with that transmission line. There were 17 different financing options that were variable on factors such as the federal contribution interest rates and territorial contributions.
Discussing the worst case scenario ó well, weíve got some experience in worst case scenarios, donít we ó the Liberal leader of the day suggested a $19.5-million bridge, less a $4.3 million contribution from the territorial government in lieu of a ferry upgrade. That would leave $15.2 million in the capital cost. This is another point that gets rather humorous, sitting on this side of the House and listening to the arguments. We have grown from $20 million to $30 million, to $50 million, to a $60 million, to $80 million, and I believe two days ago we were back down to $20 million. In all this, none of the proposals have come back on the P3 request for proposals. We donít know what it is going to cost. Why would anyone on the other side of the House think that their crystal ball is better? Why does it go up and down each time somebody wants to make a point? We donít know what the final cost will be. That will be determined when that P3 comes in.
The Liberal leader of the day thought that
an issue of bonds ó they could be paid for by a variety of investors or sold on
the open market. One of the things that came out of that is that ó again, this dates
back to an article of
One local economist estimated $30 per
crossing. If thatís true, you donít buy a house over in west
The Liberal leader said he didnít have a
problem charging tourists to cross, especially $5 a trip. But
what about $30? Is that going to be different? Well, he wasnít impressed
with that and said he wouldnít consider it, and Iím glad to hear that. But itís
part of our infrastructure. Do we charge for the Riverdale bridge?
Do we charge for the
But the one thing he did say at that point
in time, which I do agree with, and I quote: ďA bridge in
You know, there are times that the Dempster isnít open, but it serves the great purpose and itís a lifeline. Infrastructure, and particularly transportation infrastructure, is critical for northern development.
I had the great pleasure of going to the
federal-provincial-territorial meetings of ministers responsible for northern
development. It actually would have been a federal-provincial-territorial
meeting if the federal government had bothered to show up. They didnít. They
sent a policy advisor who wouldnít talk to the three territories, so we had our
own meeting and it was pretty good. We accomplished an awful lot and it gave us
an ability to talk with ministers responsible for all three territories,
Interestingly enough, in 1996 the Liberals also did some calculations on a second ferry. Again, Iím not at all sure where this one came from. I mean, if we get a big enough boat we can park it broadside, I suppose, and just have people walk across from the bow to the stern, but letís get real. Weíre not talking a second ferry at this point; weíre talking about a bridge and a P3 to produce it.
I guess at the time they were talking about tolls only for foreign licence plates, but Yukon licence plates would be permitted across, which will probably spur a whole new industry on e-Bay for somebody who wants to cross on a more regular basis ó just put a fake licence plate on and keep driving.
None of this makes the least bit of sense to the whole situation. The reality is that the bridge, as a P3, will have the highest probability and will solve a lot of our problems. We cannot let something of that magnitude go to where the Mayo-Dawson line went. That doesnít make any sense.
The other thing that really obfuscates the
whole thing is that we can always say that, yes, it was reported in 1996 that
Mayor Glen Everitt was very much in favour of the
bridge, and there were clashes on that. Members in this House have referred to
the fact that the bridge is the result of lobbying from the Yukon Party Member
Those sessions over the last few weeks were very good. I had the opportunity to attend one. Actually, I attended part of a second one, when I walked into the wrong room and thought that was a lot more fun than the meeting I was supposed to go to. But they have taken place with key stakeholder groups before the one that the lawyers ó Bull, Housser & Tupper ó put on.
Weíre building a body of knowledge and experience through our involvement with all these P3 practitioners through this project. It doesnít make sense to write a policy without investigating and going through this and developing a framework of best practices. Thatís what itís all about.
In early spring of 2004, over 40
businesses, community and government representatives participated in a P3
session with PricewaterhouseCoopers, a firm with considerable P3 experience.
This workshop explained the P3 processes and alternative service delivery
model, and it explained it in considerable detail. The public information
sessions included a discussion of what P3s are, how they benefit taxpayers and
what they mean for the private sector, how risks are shared ó thatís a huge
part of this ó in P3 arrangements and situations when P3s are perhaps not the
best procurement option. P3 information sessions have also been held with the
deputy ministers subcommittee on economic development and the policy review
Our government will continue to build on
its body of best procurement practices to achieve
This framework will provide guiding principles and outline procedures to ensure fair, transparent and consistent processes. The information sessions included costs for facilitation services, facilities rentals, refreshments and materials provided by the Department of Economic Development.
The business incentive policy, or BIP, will apply to the procurement of the bridge. If the existing program is applied, costs could exceed $1.4 million for structural steel alone, and that is going up every single day. Thatís a problem that we face.
The Department of Highways and Public Works and Economic Development are working together on that P3 framework development and the entire project. Letís look at that a little bit more and maybe add to a few details and then get on to what is an actual P3, because, again, I donít think that many people really have an understanding of what it is. Best practices, as I said before, are always the best policy. Weíve partnered with one of the top national bodies for P3 procurement to learn through their best practices.
The historic information on these things,
of course, is the original P3, termed a ďprivate finance initiative conceptĒ, which
gained favour in the
I have to admit, Mr. Speaker,
that I donít have an economic background; I donít have an accounting
background, but I see more than four letters in the word ďprofitĒ. Itís not a
four-letter word. The challenge is to do more with less. That is
Governments everywhere are looking for ways to deliver more services with less money. Governments, businesses, anybody ó every homemaker is looking for ways to get more with less money by finding innovative means of creating greater value for money. This is not an obscure concept.
Public/private partnerships have been proven a successful alternative service delivery method in procurement practices when practised with due diligence. If we do it right, it will be a vast improvement over giving out 12 sole-source contracts, having someone without the authority to sign them, and then going to Florida while it is being built. It is a much better technique.
The P3 concept and its application in the
Yukon was explored in a November 2001 background paper entitled ďBackground
paper for a Yukon policy framework for public/private partnershipsĒ ó you have
to love some of these titles. At that time, some systemic realities that exist
In the spring of 2004, a major
international management consulting firm was hired to put on a workshop for
Research by my department indicates
case-by-case cumulative best practices as the best policy. We have to look at
the best practices and use that as our policy framework. We entered a
memorandum of understanding with Partnerships B.C. because of their cumulative
experience and pre-existing body of knowledge to support us in evolving a P3
policy through the
This is obviously an ongoing project. P3
updates, which we had in interdepartmental meetings Thursdays at ó and I believe theyíre still going. Partners for
Economic Progress, or PEP, has looked at this, and this is a fairly high
level advising group that weíve employed. The members include both chambers of commerce, the Chamber of Mines, Association
of Yukon Communities, Tourism Industry Association Yukon, Yukon Contractors
Association, Yukon Council on the Economy and the Environment, Yukon Federation
Weíve used a number of different ways to
get the best possible information. I believe we have already had the meeting
with Association of Yukon Communities. We are continuing to have meetings with
labour unions, contractors, media, First Nations. Weíve brought B.C. reps up to
explain what this is really all about, and it has really been quite a task and
quite enjoyable trying to educate people on what these P3s really are all
about. If you look at the Partnerships B.C. Web site on the net, itís a company
responsible for bringing together ministries, agencies and private sector to
develop projects through public/private partnerships. Registered under the Company Act, Partnerships B.C. is wholly
owned by the
Going back to the discussion that Iíve had on the Mayo-Dawson transmission line and how that clearly is not even close to a P3, letís look at what a P3 really is, because thatís really what weíre talking about today. P3s evolved over 15 years ó over the last 15 years mostly ó as a viable method for governments to acquire and maintain assets. The public sectors faced increasing demands for new infrastructure while operating in an environment of shrinking budgets.
I will wait for somebody to take a shot on
that one, because of course weíve not tabled the
largest budget in the history of the
The traditional procurement ó government purchasing and operating capital assets and infrastructure with taxpayersí money ó is not always the most efficient option available. You donít buy a house by going out with a suitcase full of money and counting the money, and yet Iíve heard members opposite ask why we donít just write a cheque. Why donít we pay for it? Whatís going to be the effect on the budget right now? I think every Yukoner knows what I say when I talk about a mortgage, a car loan. You own the house, you own the car, but you own a mortgage on it. You donít have to put out the whole sum of money in one shot. Consequently, governments are developing innovative practices to facilitate the design, construction, operation, maintenance and financing of new capital assets on all different levels.
Public/private partnerships are utilized in
the larger jurisdictions throughout
Again, Mr. Speaker, I may not be that good at it, but I see more than four letters in the word ďprofitĒ.
Risk sharing and innovation, competition and efficiency brought by the private partners are the key features that work toward making P3s viable and very beneficial. If we looked at those four types of partnerships, the one that I really want to concentrate on is the substantive partnerships. But, to briefly touch on the others, there are also community development partnerships, contributory partnerships and consultative agreements or arrangements. All of these work in different ways. We bring together public and private sector partners; we work together toward shared goals; each partner contributes time, money, expertise and the decision-making and management responsibilities are shared among the partners. That is a community development partnership. It has a lot of applications.
We have had very good success with our community development fund, as an example. You bring people together ó both public and private ó and work together toward your shared goals, and simply contribute the time, money and expertise. You have a contributory partnership and management doesnít really come into that as much. Or you can bring people together and work together and have a consultative arrangement, but really, itís not a partnership.
When you get to the substantive partnerships, you still bring the public and private sectors together. We go through this all the time in looking at government programs. Why buy a pickup truck when there is one for rent down the street, if the rental from the private sector is going to be more equitable than simply going out and buying the truck and letting it sit there where it may fall apart ó very much so with a snowplow that you need for the Dempster and you canít go down to Eagle Plains and rent two.
In general, there are ways to bring the public and private sector partners together. You work together toward the shared goals and objectives. This only makes sense. That is very much the way things would normally be working. Each partner contributes time, money, expertise and/or other resources and the decision-making and management responsibilities are shared among the partners. Those are all very reasonable things and sort of fit with the others.
What makes the P3 that much different? Well, the P3 becomes quite a bit different when the partnerships share the risk and rewards. Yes, there can be more expense up front. Yes, there is a profit element. And yes, if you tie it down and set it up the right way, you know what your costs are going to be, and theyíre not going to double. Your $22-million transmission line isnít going to turn into a $40-million disaster.
Taxpayers receive greater value for the money, and thatís really what this is all about. This can be done in a variety of different ways. You can share risk on design and construction. That can be a big part of it. You can commission, operate and share those risks, respecting availability, operating costs, performance and maintenance costs. These are all things that can also be added into it ó regulatory risks, including changes in taxation ó everything that can be negotiated into that contract can be negotiated into the agreement before anything happens.
Risks resulting from obsolescence or changes in technology ó I worked for awhile and had the great opportunity to work within a medical school and do a lot of consulting to community colleges. At one community college we went into to talk about and look at their program for training technicians for electron microscopes. Someone had come along and purchased four electron microscopes for training purposes. They got a good deal on them. They were cheap and small, they fit in the lab really well, they were easy enough to run, after being taught the concepts, and all of them were completely out of date by the time the students graduated. They had produced a class of students who knew how to use what was rapidly turning into antique equipment and only one example of that. They had no concept of how to operate any other kind of machinery. The program was a disaster.
If they had involved the private sector, if they had involved end users, if they had involved the people who would benefit, and train and employ these people, involve both public and private sector, it would probably cost a little more for equipment. There would be ways to share that risk and share the rewards at the end of the day. You can share financing risks and risks related to governance and sustainable political support. All these things can be set up, and they deliver the same level of service for a lower cost or an enhanced level of service for the same cost or service delivered sooner. And there is a big difference.
So P3s really involve a number of different
things. They typically involve the construction of new assets. It could be a
Performance is measured and can be legally enforced through the provisions of a P3 contract ó an enforceable contract, what a novel concept. You set up a regime, and you set up a structure, and you donít want to do it without thinking about it. You want to do it with good advice from good world-class organizations. You set up a structure where you might have to pay a little bit more, but you know that what youíve negotiated at the end of the day is binding, and thatís what youíre going to have. Youíre not going to turn a project into twice the value.
They follow a number of different characteristics. Public and private partners are brought together with a clearly defined contractual agreement, and that contract is key to a P3 structure. This isnít going out and simply hiring somebody locally who wants to do it. This is ensuring that they have the qualifications and that they have the qualifications before they even spend the time bidding, that they are more than capable of doing it, that they have a proven track record, that theyíve done it in the past, preferably, or at least have a high probability of doing it in the future, and you define and set out that contractual agreement. You donít sole source contracts ó 12 contracts over $50,000 with no competition on the manager, no control over the manager. That has nothing to do with a P3.
Partners work together to develop incentives so the private partners share similar goals and objectives. One of the things that was an interesting twist when we worked with our Chinese friends in Beijing last year was that the one saying we heard at every meeting was, ďWe will only win if we both win.Ē If only one side wins, it is going to go sideways. We both have to win at this, and that is what the idea of a P3 is.
Partners contribute expertise, financing and other sources for utmost efficiency. It doesnít rule out that there couldnít be a government contribution myself in there. It doesnít rule out independent financing. It doesnít rule out the individual group financing itself. There are a number of different ways to make a deal and to accomplish things. The request for qualifications shows that the companies involved, the bidders, have the capability, the creativity and the ability to do the project and do it right. From that point, you sit back and say, ďOkay, now that you are qualified, how you finance it may be creative. How you may do a number of things might be creative.Ē But within this contract ó the bridge is an example in this case ó it must be roughly this design, it must be roughly these materials, unless you can show differently, it must be done with historic content, it must be done on a certain grade to preserve world heritage status. It can be done on a number of different things, and thatís what you want to look at at that point.
†Private partners assume limited decision-making and management responsibilities while the government sets project objectives. Itís the request for proposal that determines whatís going to happen and how itís going to happen. You donít go out there and say, ďWe want a transmission line, and weíll see how it develops.Ē You set all of that out. Is it a little bit more expensive? Probably. Because thereís a profit margin in it, do they have a reasonable expectation of making a profit? Yes, they sure do. But at the end of the day, at the end of the project, itís going to work and itís going to come in on budget. Weíre going to go into it with knowledge of what weíre dealing with, what the numbers are and how weíre going to deal with it.
Public and private partners will share risks and rewards. Each partner assumes risks that theyíre best able to manage ó makes sense. There are going to be risks on both sides, and again thatís all part of the contract. And taxpayers receive greater value for money than with traditional procurement because of the introduction of competition, life-cycle costing, risk transfer and innovations. Weíre not simply putting a bid out to see who can give us, you know, 430 cords of firewood stacked in that corner. Thatís not a public/private partnership. Thatís a simple contract. And it has great value in its own right. There are different ways of doing things, but itís not a P3.
There are a number of different big differences on that: different objectives, different accountabilities, different operating practices, life-cycle costing. In the case of the bridge, weíve got a ferry that has a limited life cycle. It always struck me funny ó and I think it was the Member for Southern Lakes who made the comment about the bridge to nowhere replacing the ferry to nowhere. I think thatís one of the sillier things Iíve ever heard.
And too, when you look back at some of the
infrastructure projects over the years in the
Weíre putting out roughly $1.4 million per year toward the maintenance of the ferry and all the infrastructure there. If you start looking at that kind of money going out, what sort of a debt could you pay off with that amount? It would appear that that sort of debt will quite nicely build a bridge that has a lot longer life cycle than a new ferry. It will stimulate the economy, it will allow crossings during the hip seasons, it will give better medical support to residents across the way, it will allow development across the way, it will allow somebody to play a few rounds of golf and come back at lunchtime.
It allows a huge range of things that the
ferry would have difficulty with, yet it does it without expending any more
money. That argument has been lost in this particular scenario. Weíre not
talking about spending money for no purpose. Weíre
talking about spending money, one way or the other. One way or the other, Mr.
Speaker, that money is going out the door. Why donít we do it in a reasonable
way that gives the maximum benefit to the people of
Thatís what Iím alluding to. Prior to the implementation of the P3 option or position, a detailed business case is prepared to analyze the projectís life-cycle costs. Thatís a simple process. You look at what weíre putting out anyway, regardless of anything less. And everyone can argue whether this is going to happen or thatís going to happen. Frankly, it doesnít matter if any of that is going to happen. The money is going out anyway.
Why not put it out in a proper way? Weíre not going to write a cheque for $30 million to cover it. I didnít write a cheque when I bought my house; I doubt that you did. I doubt the members opposite did. The concept of a mortgage and the concept of where it goes and the concept at the end of the day is that we own it.
One of the things that P3s have been used
for is hospitals. You know, frankly, I have no idea who owns
The shared risk is the big part of that again when we go back to that shared-risk concept: inflation, taxation, permitting in some sorts of things; catastrophic events. Thatís something that any government has to constantly be aware of. What happens if a building burns down? What happens if a fleet vehicle goes off the road and toasts? I donít care whether itís the government or a private company. You know, what happens when a piece of equipment drops in the river? You have to have contingency plans for catastrophic events, and they can be built into these things as well in a shared way.
Traditional procurement will show less competition, less innovation. Put out a quick bid to drop 450 cords of firewood in a campground. But under a P3 itís much more involved. Itís all that private sector involvement. With traditional procurement, the government bears the risk ó period. With P3 procurement, risk is shared with the private sector. It sort of brings me to another thing that really bothers me sometimes. I constantly hear people say, ďWell, itís a government problem. Yes, itís a government problem,Ē or ďI think the government should pay me for thisĒ or ďI think the government should write a cheque for that.Ē The government is all of us and thatís, frankly, what all of us in this room do; we are the board of directors ó whichever side of the House weíre on ó to ensure that the public trust is met, whether we do that with a shared risk in a process like this or just making reasonable, sound decisions. You canít just say, ďWell, the governmentís going to write a cheque for it.Ē It doesnít work that way.
In traditional procurement, the public borrows for new assets. Maybe going to a bank, maybe going into a particular fund, there are all sorts of different things, but in a P3 procurement, private capital can get involved. Again, I have some difficulties on some levels if we borrow money from a bank and pay their interest rates versus allow it through a P3 to be financed to whatever level by a private corporation, and they make the profit. Is that a problem? Whatís the difference whether the bank makes it or the other group makes it? What makes the difference is that things are set up by contractual arrangement, and we know where weíre going and what weíre doing before we get there. Itís a business.
A business may involve social programs, the provision of social programs, it may involve the provision of health care, foster care or daycare, it may involve protection of the environment, stimulating the economy, providing jobs. All these things are products of our business, but this House is business.
Taxpayers purchase assets ó a building, a car or whatever, or 450 cords of firewood or whatever. That is simple procurement. In a P3 procurement, we purchase bundles of services. It may be a building; it may be a building and other factors. The member mentioned the possibility of what happens to Property Management under a P3. Well, thatís part of the negotiation. Thatís part of the contract. There are a number of different ways that you can structure that.
I will give you a couple examples: the so-called design/build/finance and design/build/operate. I donít necessarily see why we would go to an operate concept on a bridge ó that is the problem of Department of Highways and Public Works ó so we donít put that in a contract. If we build a building and we want Property Management to look after it while it is in use and we want to keep that going, then we build it in the contract. We maintain it. Maybe they only maintain it, you know, if the roof caves in. What are they going to do on that? They are probably going to hire the same local contractor that we would be dealing with. On the other hand, it shares the risk between the two groups.
What are our costs and benefits against that? On a P3, there are costs for financing. Yes, there are. Is there profit to be made ó yes, there is, absolutely. Are there costs to do the bid ó the transactional costs, the legal costs and all the things attendant to that to do it right, and consulting and everything else. Yes, there is. Those costs are there.
But the benefits are better competition, risk transfer, innovation, asset maintenance and rehabilitation ó pre-defined before construction. The old line from the movie, ďBuild it and they will comeĒ ó weíd kind of like to know whoís going to come before we bother to build it. Itís a unique concept. Weíd like to know what itís being used for. And thatís part of what the P3 proposal is all about ó best practices; business case, in terms of how itís going to operate; what itís going to cost; and then proceed with the innovative and cost-effective solutions.
When bidding for a P3 project, the private sector is required to show value for money in comparison to traditional procurement costs. An advantage of P3s comes through building new alliances with experienced companies and developing new markets. Government is accountable to the general public, operating within the principles of fairness and transparency throughout the life of the P3 agreement ó notice I say ďagreementĒ ó and also within the life of the asset, whatever that happens to be.
Private sector accountabilities lie with shareholders, and the private partner must recognize the public sectorís requirements to disclose information. There needs to be a balance between the need to be transparent and the desire to protect proprietary information. We understand that, but this is all part of the process of dealing with these projects.
Most of what I have been talking about now
has certainly been the bridge at
I had an incident awhile back that I thought was actually pretty funny. I had a friend watch me put a package of aspartame in my coffee. He was livid and thought this was horrible ó ďIt causes cancer. What are you doing this for? There is good data to show that itís horrible.Ē No, there isnít.
A service has been available for many, many years and now itís available on the Internet. If anybody wants to contact me, Iíll give you the address. Itís called Medline. If you go on to Medline and do your basic search, it gives you world medical literature ó medical, veterinary, dental, everything ó since 1977 in all languages.
You can do a search on a particular drug or particular condition, and you can get everything. So I did a search on research on aspartame since 1977, and I got a couple hits. It causes a rash. If you make it into a powder, Mr. Speaker, and rub it on the back of your hand, it will give you a rash. Donít do that down in the cafeteria. The rash goes away, but other than that there was nothing, absolutely nothing, about these horrors that this friend of mine was telling me about.
So, being a bit of a purist at the best of times and having a little fun with this, I asked her to produce why she was so upset, and she brought in an article the next day and it was just this horrible study that had been done on animals and on and on and on and how this causes cancer and you should avoid aspartame like the plague. It had a name on it, a doctor something-or-other from the University of North Carolina Medical School. I called her. It took me awhile to get through to her, and I started asking her about the study. After a couple minutes of my talking, she finally cut me off and said, ďYou know, I havenít got a clue what youíre talking about.Ē I said, ďWell, have you done such a study?Ē ďNo,Ē she says, ďIím not a physician, Iím a Ph.D. in library science. I run the library here.Ē She didnít have any idea how her name got on the Internet and how all of these myths going around on the horrors of aspartame were attributed to her. She thought it was pretty funny when she calmed down. Deal with fact.
Another one, as a little aside, was someone else who said one day when I put a little bit of clear film over something to put it in the microwave to cook, ďOh, it causes cancer.Ē Horror ó dioxin leaks out and causes everything. Well, that happens to be something thatís very well researched because of the number of women who use that same wrap in microwaves for baby formula. Itís well-researched. The standard to test it is olive oil, and if you take one of the most powerful microwaves on the market, put olive oil in it and microwave it for an hour and a half to two hours, you get a very tiny trace of a couple chemicals that might be considered harmless but havenít been tested. There is no dioxin. There are no toxins in it ó complete and total fallacy.
You know, deal with facts. What are the facts? The UMA preliminary design report estimated the cost of the bridge at $26.1 million at current prices. Now this is before anyone has come back on a P3 request for proposal. So we donít know where itís going to come in. Talk to us in a couple of months. It could be less; it could be more. We donít know. However, in anticipation of a very busy construction environment, UMA suggests a projected bridge construction budget of about $32.4 million. Thereís the discrepancy that members opposite love to harp on. Itís very important to note, however, that UMA has added a higher than usual 20-percent contingency fee to account for current construction market conditions, including unpredictable steel costs, fewer companies bidding due to booming economic conditions worldwide and particularly, of course, Alberta, and large infrastructure investments currently being planned in British Columbia, Northwest Territories, Alberta and now the Yukon. So thereís your spread: the actual estimate and a two-time normal contingency thrown on it. Whereís the reality? We donít know. Weíll see when the request for proposal comes in, and then weíll know what that cost is going to be. Maybe it will be too much and doesnít make the case. Maybe it will be a great deal; I donít know, but going on about hypothetical answers makes no sense here.
How much a P3 partner will bring to the project in potential cost savings will be determined then. Weíll have a more solid and complete picture of the financial situation once the request for proposals are submitted and final details known. The projected savings right now are just that ó projections, guesses. Itís not dealing with facts. We wonít know the final financial details until we have detailed submissions from interested companies and that final agreement.
The request for qualifications and the announced cooperative arrangements with Partnerships B.C. has triggered a lot of focus on financial figures around there. The information that I have is that the Department of Highways and Public Works has always estimated the bridge costs to be in the $25-million to $30-million range ó at least recently. The leader of the Liberal Party in 1996 estimated it to be substantially lower than that, but I am suspicious that if you actually adjusted it into todayís dollars, he probably was pretty close.
The media reports and opposition statements have taken that figure from $20 million to $25 million to $50 million. I think that last week I heard $60 million, and once last year I heard $80 million. Again, itís nice to play the guessing game, but this doesnít have anything to do with reality. We have to deal with the details and the real numbers are going to be when it comes in.
Government members have also suggested the public/private partnership arrangement may help shave between $1.2 million and $3 million from the overall costs. In other words, using the P3 might actually be cheaper. We wonít know until those things come in. We are projecting. That is a possibility, but that is coming out of the department as a possibility.
In its preliminary design review summary report, the UMA group examined the projected costs of four types of bridges. UMA has recommended a five-span steel girder bridge for $26 million. The company has added a 20-percent contingency fee, as I mentioned, as well as $1 million for construction engineering fees to bring it up to the $32.4 million. Again, until that stuff comes in, we wonít know.
The higher than normal contingency is based on the remote nature of the site, the current construction market conditions ó which have perhaps become a bit worse recently, so that is going to factor into this ó record high steel costs, less competition due to the booming economic conditions in Alberta, and significant upcoming infrastructure investments in B.C., N.W.T. and Alberta, as I mentioned.
There will be questions about the numbers. We know that. We expect that. Something that the opposition is supposed to be doing in our system of government is holding us accountable and questioning the numbers. All we can say is this is the reality, this is what we have right now, and ask us when those requests come in. It will be important to stress the key information behind those numbers and dispel any notion that the bridgeís amount has already climbed. I mean, we have picked a figure of where we think weíre going to be, and until we know where thatís going to be, it is really a silly exercise in frustration to now try to define it as going up or going down.
Weíve had it compared in cost to the
operation of Clinton Creek mine and things that involve a road that ó mineral extraction
that was far beyond in distances from anything that we
could have anticipated. Itís not even a remote comparison. We had it compared
to a bridge in the
There are a number of different things that
have hit on this, and just trying to go back with some of the business case in
Ferries have to have engines replaced. They have to have engines rebuilt. They require a crew, and before we even get into there, our plan is that the existing crews and the jobs will be retained and used in other areas. So weíre not talking about loss of jobs here.
But the crews have to be working 24/7. We donít stop the ferry for an hourís lunch; we pay through lunch, we pay through breaks. Itís a very labour-intensive job. When you look at that life cycle of the ferries and the bridges, the fuel costs, people donít realize the huge sums of money that we require for insurance because of whatís there. We donít factor in the cost of the fuel ó well, we do factor in the cost of the fuel, which is certainly part of it. We donít look at a number of different things that are there. To actually say ó I mean, I had one person saying that environmentally it was a problem. A ferry chugging across 24/7, ripping the heck out of the banks ó is that better than building a bridge thatís just going to be stable? I just have a hard time dealing with that. The environmental studies have all been done. Thereís no problem there at all.
This has been an interesting project and people have always said that, well, we want to see a business plan, we want to do this, we want to do that. Well, letís look at some of the business plans. Letís look at some of the details that come out of that. The George Black ferry last year came out of service on October 22. It goes out of service obviously when ice floes or water levels could prevent the safe launching or removal of a rescue boat.
Itís not the ferryís motion; itís the rescue boat. If somebody falls in, weíd like to have a positive probability of getting them back out. In addition, the ferry must be removed from the river while the water level is high enough that it can be done safely and efficiently, so youíve got the expenses of that and everything else. Actually, I think the one breakdown I saw didnít cover any of the removal or putting it back in.
Until the ice bridge is in, west
Itís interesting that obviously people may go one direction and not the other, but I do remember looking at one study that showed takeoffs and landings. It showed a disparity on that that somehow more planes had taken off than had landed, and yet there were no planes there at the time.
I still wonder about that one.
We are not going to open the Top of the World Highway year-round at all at this point in time ó not a chance. But during the summer of 2004, the Department of Highways and Public Works completed BST surfacing on: 15.3 kilometres of highway between kilometre 90.6 and 105.9, the Canada-U.S. border; highway-based reconstruction at various locations between kilometres 62 and 74 to improve the strength of the highway surface; an additional 14 kilometres of BST surfacing and strengthening of the subgrade at various locations is planned for the 2005 construction season.
Iíve only been about 26 kilometres out on
the Top of the
The Top of the
The road service at the Top of the
But the economic capabilities of this are really quite substantial, and thatís certainly my concern and where Iím coming from.
Mr. Speaker, Iíve certainly gone on a bit at length here, in terms of the differences and why these things benefit so radically in many, many ways ó not every way. I certainly agree with that ó but in many, many ways.
Weíve looked at what public/private partnerships are. They improve service delivery, they improve cost effectiveness, they increase investment in public infrastructure, they reduce public sector risk, they deliver capital projects faster. We can do more things. You can get into a nice house a lot faster. You donít have to come up with the money in the bank account to write the cheque. Itís a better means, in many cases, of financing it. It improves budget certainty because of that transfer of risk to the private sector, and it makes better use of assets. It handles a life-cycle approach to planning and budgeting through the use of long-term contracts.
For example, a company that agrees to
operate and maintain a building for 50 years will have to ensure that the asset
remains in a certain condition and therefore must include maintenance costs in
its budget for the life of the agreement. By contrast, public sector planning
is based on three-year life cycles ó at least, in
One of the best examples Iíve seen of
things going wrong ó the Mayo-Dawson line is certainly a good, classic example
of everything that can go wrong. But another one was visiting Mayo a couple of
years ago, and we had the good fortune to have the mayor and council take us
through their new public school. Itís a beautiful facility. A couple of people
were with us, and when we got down to the ramp thatís down at the one end
We waited for that person to move on until we let ourselves start laughing, because it wasnít a wheelchair ramp. That end of the building had sunk substantially. The width of a Pepsi machine, a two-by-four on end, so 3 Ĺ inches and the width of that machine ó so in the width of that, there was a drop of 3 Ĺ inches. It was sinking, and these people thought that it was a wheelchair ramp. It would appear that given the level of expertise and the level of experience that we have in building things in the north that we would probably at least be able to anticipate some of those things. Buildings sinking into the ground are not uncommon. Our entire highway system sank into the ground in the mid-1940s, because nobody thought about permafrost. We havenít learned a few things on that.
Some of the things in British Columbia that
theyíve been working on, on P3 infrastructure projects, the academic ambulatory
care unit to be built at Vancouver General ó and weíve already been discussing
some of the implications of hospitals and such. Theyíre controlled by the
government; theyíre built to specifications, and thereís a gradual asset
turnover. This is not private health care. It has nothing to do with it, nor
In other jurisdictions, P3s have been used
in transportation infrastructures: roads, rails, transit, seaports, airports. For example, the
In fact, all the new hospital projects in
Some large projects completed in
The P3 is going to best fit, itís going to have its best probability of fitting, when thereís significant opportunity for private sector innovation in design, construction, service delivery or use of an asset.
Very definable and measurable output specifications can be established, suitable for payment on a services-delivered basis ó all part of the contract and how you structure it. Risks can be transferred, as I keep mentioning. Projects of a similar nature have been successfully developed using similar methods. And the private sector has sufficient P3 capacity, expertise and availability to successfully deliver project objectives.
Well, out of this, whatís the bottom line?
What are we really talking about here? P3s are relatively new to
Government can reduce the costs and risks ó risks borne by taxpayers. The private sector can generate business opportunities, and the public can receive better or more accessible services. There is a lot of information and, like most things on the Web, if you look hard enough you can find almost anything. You can find pros, cons, good things, bad things, but after the time we have spent looking at all these possibilities from all the different benefits, then surely this is something we have to look at.
Itís clear that P3s are more expensive than if built and operated by government, making a profit more important than the level of service and safety. Iíve seen that one. Again, I donít think ďprofitĒ is a four-letter word. And if we share the risk, the financing and everything else, if done properly, we know exactly what the cost and procedure is going to be. No surprises.
It has claimed that for-profit companies are less accountable to the public government. Again, thatís part of the negotiation, thatís part of the deals, thatís part of the legal documents, and they can be held every bit as accountable.
Public sector jobs are lost ó also untrue. You can build that into any point. You donít have to build it in that the private company involved in building that school or that shed would take over the maintenance and there would be public jobs lost. You negotiate that in.
It has been claimed that there might be the
creation of private sector monopolies ó not true. Again, thatís all part of the
decision-making process, and what youíre going to get out of that process
depends on what you put into that process. It can cause corporate instability
due to for-profit companies being bought and sold. Yes, you do have to be
careful about things like that. But again, some projects work very well, some
donít work very well, and you have to make that determination. Public assets,
some claim, are being paid for by public but are being turned over to private
companies. The ownership is something that is negotiated and settled in the
request for a proposal. At the end of the day, Yukoners
will own that bridge in
It is also claimed that taxpayers pay higher taxes because corporate taxes are lower. I have no idea where that one is coming from.† Again, that makes no sense.
It is claimed that money leaves the community as profits and goes to shareholders in other areas and other countries. Again, it depends on how it is structured, and the fact of the matter is, again, profit is not a four-letter word. If it is structured in such a way that the people gain the certainty, they gain everything they need, knowing that it is going to be built sooner, faster, better, and itís going to be sitting there, itís not going to sink into the ground, then at the end of the day the overall cost is going to be less.
Some claim that P3 projects may be built where the profit potential is greatest, rather than where they are most needed. Well, that one is really stupid. What is going to happen here, of course, is no government is going to set up ó gee, we are going to make more money if we put a bridge down at that end rather than this end, so letís put a bridge down there. I mean, that one isnít even worth responding to.
It is frequently claimed that P3 projects have no escape clauses, which cause communities to pay for projects for decades. The very definition of a P3 is that contract, it is that document that you set up and the agreement that you come to. It is not like the transmission line ó letís build it and see if it doubles in cost, and letís not see what is going to happen with it; letís move away and hope that itís there when we get back. Again, that is just a stupid, stupid argument.
The service delivery is better. It allows governments to better set policy and serve the public where the private sector takes on non-core functions such as operating and maintaining buildings.
One of the thoughts with the
These projects will improve cost effectiveness. They do that by using private sector innovation, experience and flexibility, and they often deliver services more cost effective than traditional methods ó in fact, usually more than traditional methods. The money can be saved for other initiatives.
Public approach, the government approach, government handling of many things ó over many, many years, we have an expertise that is second to none. We have employees and people working in these areas who are second to none.
But thatís not to say these people are the best in every single solitary situation. You need to bring in other ways of looking at it and other ways of handling it. It increases investment in public infrastructure, and traditionally funded infrastructure can add to overall levels of provincial debt or territorial debt. P3s allow for the provision of needed infrastructure with less territorial capital outlay ó good fiscal management. Look at both sides of a balance sheet. Donít try to do superficial analysis. Donít curl up with Economics for Dummies. Donít, you know, try to give it a superficial look. Look at it critically. It just makes sense to do it that way.
We reduce the public service sector risk. If a company is willing to guarantee the stability of that project, the stability of the building, the fact that if it, you know, sinks into the ground ó well, gosh, gee, didnít mean to, sorry. If theyíre taking the risk, if it sinks in, itís their loss every bit as much as the governmentís loss and I tend to think that probably theyíre going to build it with a little bit more care and a little bit more expertise and a little bit more caution. Could that cost a little bit more? Yes, it could, but at the end of the day itís not going to double the cost like the Mayo-Dawson transmission line.
We can deliver those capital projects faster by using flexibility. Oftentimes one of the problems we have in government is that we have resources committed for long periods of time. We canít really just say, ďWell, weíre going to go in this direction and weíre going to free up four people to work on it.Ē But within the private sector you can go out and you can do those sorts of things and it gives you much more flexibility to get things done much more cleanly, much more quickly and everything else.
So having gone through all the reasons on that bridge, I hope now that people have a bit better idea of what P3s are, what they do, how they operate and, more importantly, what they are not, and clearly they are not a lot of things that people claim. They are not anything to do with the Mayo-Dawson transmission line, which stands to be one of the more humorous exercises in futility.
They are not something that you have to or
should rule out completely. As I look back to
Thank you, Mr. Speaker.
Cardiff: I thank the minister for his remarks, and it would appear that he
is practising for answering questions when we get to departmental debate in the
budget ó practising those 20-minute answers to short questions. It also appears
that he may have even had the notes of the Member for
Letís look at the motion. The motion urges
But as the previous speaker indicated, letís deal with the facts. The facts are that he decided that we needed to talk about the Mayo-Dawson line. Yes, there were problems with the Mayo-Dawson line. One of the problems was that it appears that all the information wasnít communicated or wasnít clearly understood by the people who made the decision about what would happen and how that project would go forward.
The recommendation was that it not be a design/build project, that there were problems with that. Thatís a fact. BC Hydro International recommended not to do a design/build project, yet thatís what they did.
Hereís another fact. The Department of
Highways and Public Works recommended to the minister that the
I think what concerns me is that if you read the Premierís budget speech, we donít know whether itís a P3 project or not. There was a request for qualifications. Unfortunately, one local contractor with partners that have experience in P3s and bridge construction was eliminated.
What did that lead to? That led to less competition, and the previous speaker admitted that less competition means the price goes up. What does that mean? The price goes up, it costs us more, and because itís not a design/build/finance/operate project or a project where we donít own the bridge at the end of the day, that means that the mortgage will be higher, therefore the payments will be higher, and ultimately it is the taxpayers who will be spending more.
But do we really know what kind of a project is happening? If you read the Premierís budget speech, it clarifies now that it is a design/build/finance approach. It also says that work in this fiscal year is going to focus on quarry development, with possible approach road construction, and it may even involve work on in-stream piers. Well, where is the project? There is a request for qualifications, but where is the actual project? Where is the design and where are the contracts and how is that work going to be accomplished this year? The government doesnít even know what it is getting in this particular instance. It is left up to the private contractor to tell us what kind of bridge we are going to get.
If you go the other route where the government has the project design, at least you know what youíre getting. You can have it designed to meet your specifications, and everybody who bids on it bids on the same project. When you do the design/build project, you have, in this case, two different contractors or partners ó it could have been three or four, so you could have four different designs. So we donít really know what the governmentís intentions are in that matter.
The one thing the leader of the third party did mention was the Premierís earlier commitment to develop a policy first. And if you look at the election platform of the Yukon Party, right on the front page, it says: ďA new inclusive style of governing will be based on consensus building, consultation, collaboration, compromise and not on confrontation and unilateral action.Ē Now, thatís not what weíve seen from this government. Where was the public consultation? Where did they go out to the public and discuss whether or not this was an appropriate approach to take to public infrastructure? And what are the limits that this government needs to adhere to when involving itself in P3 projects?
There are lots of examples of P3 projects out
there. If you look across
There are examples of P3 projects for, as
was mentioned, bridges, highways and toll highways in
Some of the other areas that have been
privatized are areas like highway maintenance. Have we talked to the public
about that here in the
Those are the facts. I finally got an
answer to the question that I tried to ask during the last sitting ó which was,
will the business incentive policy apply? ó and then I
found out that it will. I hope that thatís the case. I hope as well that the
workers that work on that project are protected by the laws of the
I think the various examples of projects that could be used for P3s need to be discussed. They need to be discussed in the public. We went door to door and we knocked on doors, talked to people, and we need to know what those people think about P3 projects, especially given that there are a number of different models, especially when you get into areas like the operation of public infrastructure. That has happened. It has happened around the world. It has happened here in this country, so we could look at some examples of that, I suppose.
We look at what has happened in this country. An example that was provided to me was with regard to water distribution and sewage collection systems, and it included the management of those systems, the operation and the maintenance, so weíre talking the whole water system, including fire hydrants, water treatments, storage facilities. In this case it even went so far ó in this particular community ó as to take over the town harbour, and that is just in one community. There are lots of examples in other communities.
Letís look at what has happened around the world with privatization of public water and how devastating that is. That is where P3s lead, especially when the ownership is retained by the private partner, who maintains a monopoly over the infrastructure, the product and the service, and they actually end up with overall control of it. That is a concern because once you go there ó it is kind of like the thin edge of the wedge ó it is really hard to turn back.
That discussion hasnít happened here in the
So, what happens in those cases? You have instances where other international agreements actually intercede.
I knew my time was short, but I didnít realize it was that short.
What happens when the international
agreements take over is that a lot of times you canít turn back. Because of
agreements like the North American Free Trade Agreement or the free trade
agreement of the
Letís look at one more
quick example because I know my timeís limited. In
I think we need to look at those examples.
Itís fine for the Minister of Economic Development to go on and on and on about
all the examples he wants to talk about, but letís look around the country and
the world and see which examples ó look at both sides of the equation, I guess.
Letís look at the facts on both sides of the equation and make sure that the people
Now, the bridge P3 may not be the worst thing, but what is it going to lead to? The government has already indicated that they may get into a P3 on the jail. What other projects would this government possibly look at as a P3? Would they look at highway maintenance? Would they look at schools? Would they look at the fleet vehicle agency? Maybe theyíd do away with that. And what protection is there for the public and what protection is there for the working people?
We didnít even hear the Minister of Economic Development talk about the workers on the ferry and what economic benefit there is when those people lose their jobs.
Iíve got enough notes here that I could talk almost as long as the previous speaker, but I know my time is done, and I look forward to hearing from the other side.
Mr. Hart: I
rise today to debate this motion. My colleague and the speakers before have
provided several options of good and bad with respect to P3s. I think the
Minister of Economic Development provided a very detailed account of P3s, as
well as examples and facts concerning P3 options, with regard to things taking
place in the
The government, in partnership with
Partnerships B.C., is looking at both the bridge and the MDMRS replacement system
as potential P3 models. Both of these infrastructure pieces are important to
We are working to develop a
made-in-the-Yukon policy that is sensitive to the
Another option is to adopt a policy from another jurisdiction. Such an approach allows for one jurisdiction to learn from the lessons learned by another, as the member opposite had indicated earlier, which can result in considerable cost savings to that jurisdiction. However, as pointed out by both previous speakers, each jurisdiction has its own unique governmental, legislative and business contexts.
The approach we have adopted is to work with Partnerships B.C. in developing a made-in-the-Yukon solution. This model gives us the benefit of Partnerships B.C.ís experience. All three previous speakers have talked about the experience of Partnerships B.C. and I think are in agreement that they have the expertise in this particular venue, while at the same time giving the Yukon the flexibility to accommodate issues unique to our territory, including our intergovernmental relationships, geography, remoteness and limited population.
Further, by developing a framework while working on a pilot project, we are able to identify issues and explore potential solutions. That is to say that our framework reflects and responds to reality. We feel that it gives the vitality needed to guide us as we move forward on future projects. In this sense, I see progress occurring, not as a sudden jump, but rather a series of incremental steps that we develop as we move through the process.†
With regard to the
All those are in the RFQ and must be negotiated, as I said, with first right of refusal to that First Nation.
I have more to say on many of the aspects. Iíd like to talk a few more minutes about the benefits of a P3. By way of background, I would like to note that the public/private partnership is a legally binding contract between government and business for the provision of assets and the delivery of services that allocates responsibilities and business risks among the various partners. Partners in a project each have strengths and weaknesses. A P3 is one vehicle that may be used to build a project that maximizes the strengths and minimizes the weakness of the partners involved. As mentioned earlier, project management of a P3 is a key element for the success of a P3 project. Just like it is on many other smaller-type projects, project management is needed to ensure that the appropriate people are taking the appropriate action at the appropriate time to ensure that the project is completed on time and on schedule.
One of the benefits to the government is the ability of a P3 to minimize the risk of cost overrun. Yesterday the leader of the opposition tossed about some numbers regarding the price of the bridge on the Yukon River for Dawson City and, as stated previously by the Minister of Economic Development, weíve heard many stories on the value of this bridge itself, but we anticipate, depending upon what RFP comes in to us, that will determine what the costs are going to be for the bridge itself.
Using a P3 model, the government may be able to negotiate an arrangement by which the maximum cost of the bridge is capped.
The private sector would carry the risk of bringing the bridge in on budget. Itís just another form of trying to work with the P3 and getting it in on time and on budget. Some organizations are better suited to carry the certain risks than other parties to the agreement, but this is not a new concept. Every day, Yukoners pay others a premium to carry risk. For example, families purchase life and medical insurance in the event that something bad should occur. Insurance companies rather than individuals carry the risk. Likewise, Yukoners purchase home and automobile insurance. Indeed, such a risk transfer is felt to be so important that the government compels people to do it. Yukoners cannot drive on our highways and roads without automobile insurance. Banks demand that buyers purchase home insurance before advancing a mortgage. Clearly some organizations are better suited to carry certain types of risk. By appropriately distributing these risks among the partners, the overall costs may be less.
Traditional procurement models are not necessarily being abandoned. We have not excluded that option. By allowing the P3s to be considered, we are giving ourselves as a government more options, and that is the responsible and reasonable course of action.
The next issue Iíd like to address is one
that concerns not only this government but other governments across
The Canadian Council for Public-Private Partnerships
reports that more than 80 percent of the foreign multinational executives
surveyed indicated that the poor state of business infrastructure adversely
The Canadian Institute of Chartered Accountants, in their paper, 20 Questions About Government Financial Reporting: Federal, Provincial and Territorial Governments, note that the existing modified accrual or expenditure model was felt by some in the government community to be creating a bias against the spending on capital assets ó a bias that was contributing to the infrastructure deficit in Canada.
Governments needing to balance their
budgets found that putting off capital spending was an easy way to meet this objective.
The phrase ďinfrastructure deficitĒ describes the fact that the infrastructure,
such as highways, bridges and canal systems that support
Likewise, Captain Gordon Houston, president and CEO of the Vancouver Port Authority, has spoken of the need for a national transportation strategy that addresses road, rail, air and marine modes of transportation. He argues that the consequences of not addressing this growing capacity deficit are far-reaching: ďIf we allow our transportation corridors to become less competitive, we also undermine the ability of the import and export industries we serve to grow.Ē
This motion calls for us to cease and desist in the use of P3 projects until the policy is developed. While we are honoured in her confidence in us to get it right the first time, I would suggest that we have to take a more pragmatic approach by walking through some pilot projects. I cannot support this motion because it asks government to develop policy without the benefit of a Yukon-specific real world experience. This motion calls for us to cease and desist the use of P3s without recognizing that they present an option for the government and other partners to distribute the risk in a more efficient and productive manner.
I cannot support this motion because, at its heart, it does not offer any constructive criticism. It simply asks the government to limit the choices that it can make. In this sense, it is a negative motion.
We are committed to finding the best value for Yukoners. P3s are one method that may lead to more cost-effective or more practical ways of delivering infrastructure to and for Yukoners.
Mr. Speaker, let me note some of the
infrastructure that this government is committed to delivering for Yukoners. In
We have set aside $57 million in
transportation, including the following projects: $24 million for the Shakwak projects; we are upgrading bridges on the
We are making airport improvements in Old
Crow and in
This government is committed to moving
ahead with a delivery of programs and infrastructure that this territory needs.
We recognize that a well funded modern transportation and communication network
is required to improve
With regard to working on the
I thank you for the time.
Hon. Mr. Lang: Iíd like to put a few comments on the floor here in response to the motion that we see before us today.
The motion is an interesting motion on the P3 concept. There certainly are a lot of different comments around the floor here on the pros and cons of a P3 and the process and how best it could fit into Yukonís economy, Yukonís infrastructure and other issues that P3s could address.
We went all the way from if we are going to
build schools, there are issues out there about roads ó there are all sorts of
uses around the world of a P3 program. But I think what we have to do is look
at our past and see how we are going to go forward, understanding that through
devolution we got a lot of responsibilities that we didnít have before. So for
us not to delve into a P3 process would be folly. This is being used very
successfully around the country and, of course, in other countries. I think the
P3 actually originated in
I find it interesting that the member opposite from the third party, who brought this forward and who wants to put a dead stop to any economic development in the Yukon ó but certainly to P3s and the Dawson bridge ó as chief executive officer of this territory ó and thatís what the individual was ó she oversaw probably one of the most mismanaged projects in the Yukon history. The Mayo-Dawson line is 100-percent over-projection. That CEO went against the recommendations of B.C. Hydro that that CEO contracted for $290,000 to give their overview of that project.
I find it interesting that in the
In turn, we look at the Thomson Centre, which is another amazing story of mismanagement. When we took over office and the Thomson Centre was on the verge of being condemned, I found out that it didnít even have an occupancy permit.
If you built a home in the City of
So, moving on and not looking backward but looking forward, and not questioning the motives of the members opposite on why we shouldnít have a P3 or what happened in the past, the figures speak for themselves. The past is the past, but we have to move forward.
For Yukoners, we
have to be very diligent in our investments and the P3 proposal that the
Government of Yukon is just looking at. I donít think thereís a commitment here
to do the P3. I think weíre doing our homework at this point. Weíre delving
into the pros and cons of building a bridge in
The opportunity for us today is to do with
the merits of building a bridge in
I think the transportation minister has
Continuing the ferry is another option we
have. Now, the ferry is expensive. The ferry ó does it do a job? It certainly
does do a job. The window of opportunity for that job is very slim and it
depends on seasons. So the ferry goes in in the
spring, and we give a ballpark figure, and it comes out in the fall. So that is
the process. Now, Iíve been in the
Now, we talk about tourism and how are we
going to encourage people to reinvent
As far as our government is concerned, we work on many, many issues, and I know the Minister of Economic Development went through the P3 process with us from the start to the finish. I think he did a fairly extensive overview of the process and how it works and at the end of the day what we would get, if in fact the decision is made to go forward with this bridge. Of course, working with the minister of transport, who is going to be responsible for, I guess, the management of the bridge and probably down the road the maintenance of the bridge, I think the attitude of the members opposite talking about people who are working on the ferry ó they certainly will be addressed, because we as a government have made a commitment to those employees that they will be looked at probably for full-time jobs on the highways with the department of transportation, which will give them the benefit of a full-time job instead of a seasonal job.
I think we look at it as a positive thing.
You know, the capital budget and the money weíre spending around the
Moving along, weíve made commitments to expand and work with Mayo, to make sure that the member oppositeís constituency is taken care of, because that community sincerely needs a new complex to service the community as it is today. About the community of Mayo ó I will say that going to their complex and walking through it and seeing all those very, very diligent people who work there on a full-time, voluntary basis ó they do a fabulous job of maintaining a very old structure. They should be commended because, at the end of the road, I can look at putting a complex in there, and if they maintain it as well as they do the old one, that building will be there for a very, very long time.
So as we move through the Yukon and look at the money thatís being spent ó in Old Crow, weíre spending $300,000, in partnership with the First Nation, to make sure that the riverbank is secure so that the village is in a safe position, so that they in turn can spend some economic development money there and have a good investment.
Now, as far as the bridge in
They say donít go forward with that
proposal because something happened somewhere, but as we address all the
questions that the general public have, I think itís going to be a positive
thing for the Yukon. We certainly do not want to repeat the Mayo-Dawson line,
because Iím not quite sure the
Now the member opposite will jump up and
defend it and say that at any cost it was worth it. That is a weak defence.
When you got from $27 million to over $40 million ó and theyíre saving us
money? Thatís the logic of the defence. Only in the
It will have a 12-month season of
opportunity rather than a seven-month opportunity. I think, on the other hand,
there is the argument about if we are doing enough for the
By looking at our infrastructure and taking
a look at the bridge in Dawson ó and, of course, as we flesh out the budget
that you see before us as we move along here ó there is going to be $72 million
in Department of Highways and Public Works for capital projects. We are putting
people to work all through the
We are doing all this work within a budget by managing the resources in the territory. At the end of the day, we are going to have a $29-million reserve. By using our management skills, we are capable of handling different things, different crises, different challenges that we see on a 12-month basis. So we have that cushion of opportunity.
We are going to have $5 million to replace
the mobile radio system. We are meeting those commitments. We are meeting the
obligations we have with the RCMP. We are meeting the cellphone
question ó our constituents are saying that in a modern age we have to have cellphone use not only in
I understand that 25,000 people live in
Itís important to have cellphones
in Old Crow,
There is $1 million for the
Now, itís not a lot of money. You canít
Thereís $300,000 for the
As far as the P3 is concerned and whether
we can afford a bridge in Dawson, and all this pie in the sky about figures,
give us some time to work and flesh out the P3s. Give us some time for the two
ministers to come up with a rational, viable situation for the bridge in
Dawson, and then a decision will be made by this government if it is a
sensible, economic alternative for the bridge. The decision will be made by the
government of the day to make sure that it minimizes any repercussions on the
taxpayers of the
We are an open government. It is all
public. Our decision-making is here in the House. The opposition has access to
things. Certainly, I appreciate the humour from the third party. With her track
record, Iím sure that sheíll have a lot to offer on construction concepts and
everything. At the end of the day, we will come up with a solution here for the
The bridge in
Mr. Fairclough: Iíll try to be brief in my response to the motion that has been put before us. Iím quite surprised, though, at the previous speaker and his remarks. Time will tell if, in fact, the facts that the member opposite has put forward are true or not.
Mr. Speaker, I believe that the member of
the third party has put this motion forward for good reasons. We have seen this
government make decisions here in the
Some Hon. Member: Point of order, Mr. Speaker.
Point of order
Speaker: The Hon. Member for
Mr. Cathers: Mr. Speaker, the Member for Mayo-Tatchun just used the phrase ďpull the wool over their eyesĒ in reference to members of this government. I believe that is in contravention of Standing Order 19(g), imputing false or unavowed motives to another member in suggesting that there was motive to create an impression in the public that was not accurate on the part of members of this government.
Speaker: On the point of order.
Mr. Fairclough: Mr. Speaker, I believe that in debating motions on Wednesdays, you have given us a certain amount of latitude and movement in what we say. I believe the member who called a point of order could have called many points of order on the previous speaker and did not. So, I believe that there is no real point of order here and that it is just a dispute between members.
Speaker: From the Chairís perspective, the concept of allowing a bit more latitude during Wednesdayís debate is a fact. When I review the Blues, I often contemplate how much I missed, so I would suggest that there is no point of order. However, with all due respect to the Member for Mayo-Tatchun, perhaps different phraseology would be appropriate.
Mr. Fairclough: Often we have to do that, and I thank you for your ruling again. We would like the Yukon Party to keep with their commitment to Yukoners. Weíd like that. I believe this motion is trying to say that to the Yukon Party. You made a platform commitment. What did they say in the platform commitment? Well, itís right there and I donít think we need to repeat it all that often, but I think maybe we do because thatís what they brought to Yukoners before they got elected. It turns out now that it is something different. The Minister of Energy, Mines and Resources said to wait and see. Weíre going to have a wait-and-see attitude. Weíre going to give a contract out and weíre going to wait and see whether or not this is actually beneficial to Yukoners, but what weíve seen from the Yukon Party is that they have rammed projects and things down the throats of Yukoners and asked, ďHow do you like us now?Ē This is not the first project. The bridge is not the first P3 project that the Yukon Party has brought forward.
I can remember when the Yukon Party first got elected. The first thing they looked at, kind of behind closed doors and it wasnít out in the public yet or anything, was Macaulay Lodge. I remember that clearly. If it werenít for the residents there speaking out loud and clear to the minister, who I think was embarrassed to even have to face them, we might have gone down that road already. That would have been unfortunate.
Now the Yukon Party is putting up a number of projects where they can see P3 projects in the territory. The other is the jail. I know that one of the things the Minister of Justice wants to do is put a sweat lodge up there fairly quickly. Whatís happening with the jail now? Are we going to see private ownership of the jail in the territory?
Letís have a look at all the projects that
we have in the territory. Right now the
We are not in a bad position at all. I donít think we are in a position to have to go down the road of having the private sector build things for us, and then we pay it back later. I donít even think that the Yukon Party realizes what that really means: mortgaging the future. It is unfortunate that that information that the Yukon Party had their researchers in the different departments and upstairs on the political staff level do is not given out to the public. It has not been given out to the public yet.
What we have here is a proposal by the
Yukon Party that the bridge across the
We would like to see the Yukon Party go out and do some consultation for a change, because they havenít. On a number of different fronts they have not done that.
If I were to make a change to this motion I would urge the government to go down the road with consultation before developing a policy. Isnít that the commonsense thing to do? Isnít that what they campaigned on? Isnít that not what the Yukon Party is doing now?
It is not what the Yukon Party is doing now, and guess what? I donít think the Yukon Party believes this, but the Yukoners see it, and they know which way this Yukon Party is heading. And I cannot stress enough the importance of basic consultation. They said they would do it.
What about the contracts, for example, that went out on this bridge? Where is that? We havenít even heard anything yet coming back from this government on that whole matter. And I believe that the Yukon Party has no intention of voting on this motion ó none whatsoever. What they would like to do is talk it out, let it disappear ó or hope that it disappears ó but it will not, of course. It wonít. And if the Yukon Party wanted to be constructive in this debate like they promised to in this House many times, they could have made an amendment to the motion. Or maybe they still will at 10 minutes to or something like that, and we really wouldnít have any time to debate it anyway. So, really, what does this mean to the Minister of Energy, Mines and Resources? They can go upstairs at the end of the day, pat themselves on the back for a good job in talking out the motion. Thatís what it is. Well, what theyíre really afraid of, Mr. Speaker, is getting to the next motion. If we had voted on this, we would have gotten to the next motion, conflicts of interest. No debate on that.
Talk about their good fiscal management. What are we? Two and a half years in the mandate right now, and the Yukon Party has not been able to solve the loans problem of their own ministers. That one will never go away and it will be on the doorstep when we campaign in the next election. Even though the Yukon Party takes the position of wanting to delay, delay, delay, that whole issue will not go away.
I know that the Member for
Some Hon. Member: Point of order.
Point of order
Speaker: Member for
Hon. Mr. Jenkins: On a point of order, the member opposite is imputing false or unavowed motives to another member, pursuant to section 19(g) of the Standing Orders, Mr. Speaker.
Mr. Fairclough: On the point of order, Mr. Speaker, I did say, ďI believeĒ. I didnít say he ó
Speaker: It is a fundamental principle of parliamentary procedure that members treat one another as honourable in this Assembly. Comments like the Member for Mayo-Tatchun made are unparliamentary in that they question the honour of the other members. It is Standing Order 19(i) that speaks about being insulting or likely to lead to disorder.
I would ask the member to withdraw that please.
Withdrawal of remark
Mr. Fairclough: Okay, Iíll withdraw that, although the member who called the point of order should have cited that ruling and that section in the Standing Orders.
What else does the Yukon Party have as a P3? I believe that there are others that theyíre looking at. It could be education. The other one thatís very interesting ó I know it has been mentioned here already ó is the highway maintenance. Yes, the members opposite might think that we donít know anything about it, but that is already in the works. Itís already in the works ó highway maintenance. Youíll see. Oh, maybe the Member for Pelly-Nisutlin may end up benefiting from this down the road some time.
Some Hon. Member: (Inaudible)
Mr. Fairclough: Down the road? Iíll withdraw that and try to clean that up a little bit ó but heís smiling. Those comments arenít hurting anybody.
Highway maintenance is something major in
the territory also. I could have a look at some of the equipment that I think
This motion is asking them to go out and consult with the public on a policy, and I think that the Yukon Party owes it to the public to tell them what possibly could be a P3.
Is it part of the
We have, I guess, the resources to stimulate an economy. At this point in time, Mr. Speaker, we are seeing things happen in the territory ó that I believe had nothing at all to do with the government in power ó that are keeping things pretty busy in the territory. Interest rates, for example, and people borrowing money from the bank and building ó that business is booming, Mr. Speaker. And fortunately, I guess, the territory is in that position, because we do not have a diversified economy to rely on. We need to really think a lot about that and not jump right back into a boom-and-bust economy like we have in the past.
I hate to say this, but perhaps even look
at some places with a more diversified economy, like
Why did some of the projects that weíve
tried in the territory in the past get rejected? I donít think we should push
those aside. I think all the efforts of past governments should be looked at in
a bit more serious manner ó to where the
Trade and export, for example, is a good one. I donít think that this government has put a lot of emphasis on that at all. Weíre fortunate because I believe weíre still in a learning stage here in having control of our resources here in the territory. I refer to oil and gas, forestry or timber, and so on, that weíve never had in the past. We need to be able to make plans. Iím hoping that those become successful down the road.
We have a tremendous change here in the territory, and I hope that the Yukon Party doesnít forget that, because others arenít. That is with the major change that has happened in how we govern and make decisions in the territory forever. That is with the finalization of First Nation land claims in the territory.
Unfortunately, some ministers fail to see the importance of even doing basic consultation. It is one issue after another, whether itís boards and committees, the planning of infrastructure in a community ó an example is a school in one small community. It is those types of things that the Yukon Party is doing that are forcing us to say the government needs to not go down that road, but come and consult with us.
Weíre hoping that the Yukon Party will stick to their platform commitments, do the proper consultation that they said they would do on this particular matter ó which I believe is all about mortgaging the future ó that they should really be forthright with information to the public and take this to the people before any major decisions on P3s are made.
Thank you, Mr. Speaker.
Mr. Cathers: It gives me pleasure to rise today on this motion. Iím certainly not speaking in favour of it.
Iíd like to begin by just responding to a
comment made by the Member for Mayo-Tatchun about how he feels that this bridge
I donít think that any member of this House or any Yukoners that could buy a house for the same monthly mortgage payment as they would spend renting an apartment would be inclined to rent the apartment.
Some Hon. Member: (Inaudible)
Mr. Cathers: A comment from one of the members opposite ó yes, it depends on whether they have a down payment. But if somebody is financially capable of buying something for the same monthly cost as it costs them to rent something, I think that anyone could see that itís better to buy something and own it rather than throwing all your money away.
Regarding public/private partnerships, we
have this motion here from the member of the third party urging us to cease and
desist from proceeding with public/private partnerships. I donít think thatís
well-advised. Certainly, there can be problems with public/private
partnerships. There are also bad leases and bad contracts, processes within
standard procurement procedures the
The government has to keep moving forward. You do have to learn as you move forward. Hopefully, mistakes are learned from and expertise is hired. If you donít know how to do something, you hire somebody who does do that. The critical element to whether a public/private partnership is successful, as with any contract, is the wording of the contract itself and how well drafted that is and ensuring that before entering into that contract you know what your risks are if the contract does indeed go sideways. However, under a public/private partnership, if the contract is structured properly, it can actually provide greater control over what the end cost of the project will be than through traditional procurement.
Our government has announced ó and, of course, itís currently ongoing ó that weíre working with Partnerships B.C., the B.C. Crown corporation that was set up to manage their public/private partnership system.
According to the last figures I had, I believe it was over $3.5 billion worth of public/private partnerships that the British Columbia Liberal government has entered into since they took office a few years ago. This has been managed through this agency.
It does make sense to work with somebody
who has experience in something if you donít know what youíre doing, whether
youíre an employee, a business or a government. If you donít know how to do
something, get someone who does and work with them. Apprenticeship programs
have been very successful for many, many years within
If the member of the third party thinks
that right now, today, we could sit here and write a policy in isolation about
public/private partnerships, I donít believe that would be well-advised. We do
not have the corporate knowledge at this time within the
It is not a case, as was stated by the member opposite, of us doing this project ó weíre not doing this in lieu of developing a policy. It is as part of developing our public/private partnership policy.
Government has a tendency to be risk averse, and government certainly needs to be very cautious about what risks are undertaken. But any endeavour we enter into in life has an element of risk. Government has an inherent tendency to want to study everything to death prior to taking action. However, to be successful in business or almost any endeavour in life, you have to have a sense of when you have enough information to make the decision. If you study it to death and wait to have every single piece of information you could have before moving forward, the opportunity will almost certainly be long past. Conversely, if you make a decision without having enough information, that decision has a very high probability of being the wrong decision.
What I hear coming from the member of the third party is that she seems to be advocating that we do not move forward, that we stall, and that we avoid making a decision. We do have enough information and can work with Partnerships B.C. and proceed forward with a pilot project and then develop a final policy as a result of that. ďFinalĒ is not even the proper word. All policies should be, to some extent, in a state of flux, if there is still more information, more experience that can be learned, and if they can be improved.
At this juncture, it is time to make a decision and move forward rather than waiting forever and twiddling our thumbs.
Some of the benefits of public/private partnerships that have been identified are improvement of service delivery, improvement of cost effectiveness and increased investment by the private sector in public infrastructure. Members of this House and many Yukoners are familiar with the discussion of leveraging federal funds with the expenditure of territorial dollars. Also, a number of non-profit societies are very familiar with investing their own capital to some extent and receiving contributions from territorial or federal funding agencies, based on the money that they have invested.
This allows us to spend some taxpayersí
money at this time and leverage more private sector investment in the
Other benefits to a public/private partnership are that it reduces public sector risk by transferring some of the risk to the private sector. The basic definition of a public/private partnership is that risks and benefits are shared between the public and the private sectors. So rather than increasing the risk to government, a public/private partnership, if done well and entered into sensibly and carefully, will actually reduce the risk to the taxpayer of costs ballooning out of control and will reduce the risks that we incur of having that project not completed at a reasonable rate as was expected when originally tendered.
Another benefit that has been identified is the delivery of capital projects faster by using private partnersí flexibility and access to resources. Public/private partnerships can also improve budget certainty by transferring risk to a private partner. Government costs and overruns from unforeseen circumstances are therefore reduced. Services are provided at predictable costs by contract agreement.
Spending on capital assets will be managed within fiscal limits. Rigorous business case analysis will control management decisions. Costs and risks will be identified, analyzed and managed through an assetís life cycle, and risks will be allocated to those parties best able to manage them at the lowest cost while serving the public interests. Ultimately, the goal that we have here, as any reasonable government does have, I believe, is that we want to make better use of the taxpayersí dollars and have greater value per dollar at the end of the day.
Mr. Speaker, under a public/private partnership, to quote briefly from a booklet that was released by Yukon Economic Development to give an overview to the Yukon public of what the characteristics of a P3 are, ďUnlike privatization, government involvement is maintained in a P3 to oversee the publicís interest for quality, safety and certainty. Performance is measured and can be legally enforced through provisions of the P3 contract. Public and private partners are brought together within a clearly defined contractual agreement. Taxpayers receive greater value for money than within traditional procurement because of the introduction of competition, life-cycle costing, risk transfer and innovation.Ē
It goes on to compare traditional procurement to P3 procurement. Under traditional procurement, government bears most or all of the risk. Under P3 procurement, risk is shared with the private sector. Also, under traditional procurement, again, on this comparison chart, it shows inefficient procurement as being a common problem. P3 procurement tends to result in on-time delivery of assets. Again, this is coming back to the structure of the contract. A poorly structured P3 contract is the same as a poorly structured lease contract, rental contract or standard purchase contract. No matter what the contract is, if it is poorly structured, of course there is potential for a problem. P3s are not something that is perfect no matter how you structure them. They have to be structured well and with due consideration of the contract structure.
The intent is that youíll have appropriate allocation of risk, plus innovation, competition and efficiency, which will equal value for money. One of the requirements under a P3 process is that it is standard when bidding for a P3 project to require the private sector to show value for money in comparison to traditional procurement costs.
Contrary to the position that seems to be
presented by some of the members opposite, this government is not rushing
headlong into building a bridge at Dawson or other public/private partnerships
without full consideration. We have stated that we believe that building a
This is but one example. I could go on at greater length on this topic, but as time is short this afternoon I will thank members for their attention and look forward to hearing comments from other members. Thank you.
Mr. Arntzen: I would like to take a few moments to comment on this motion that was brought forward by the leader of the Liberal Party on P3 projects. I found one definition of P3s that I liked. Itís a cooperative venture between the public and private sectors built on the expertise of each partner that best meets clearly defined public needs to the appropriate allocation of resources, risk and rewards.
So it offers our territorial government, as well as provincial governments, many advantages. For example, as I already stated, it allows the government to use the financial resources of private enterprise partners so government funds can be used for other public interest areas. It also allows governments to share the expertise and management skills of the public as well as the private sector personnel to accomplish projects more efficiently and more effectively. The risk and rewards are shared between the government and the private sector and ultimately the taxpayers get more value for their money. Other benefits for the government and taxpayers ó I believe it improves service delivery, allows government to better set policy and serve the public when the private sector takes non-core funding structure as operating and maintaining buildings. It improves cost effectiveness by using private sector innovation, experience and flexibility; it often delivers services more cost efficiently than traditional approaches. Money saved can be used for other initiatives, as I already stated.
It also increases investment in public infrastructure. Traditionally funded structures can add to overall levels of territorial debt. P3 allows for the provision of needed infrastructure with less provincial or territorial capital outlay, so that is why they use them in other provinces and territories.
It also reduces public sector risk and transfers some risk to the private sector, which is also a good thing. A private partner may have more ó and I believe has more ó flexibility in dealing with the risks associated with changes in labour or service costs or building management and operations. I also believe that delivery of capital projects happens faster by using private partnersí flexibility and access to resources. It also improves budget certainty. By transferring the risk to private partners, government cost overruns from unforeseen circumstances are reduced and services are provided at predictable costs by contract agreements. It also makes better use of assets. Private partners are motivated to make full use of their facilities and make the most of commercial opportunities to maximize returns on their investments. This can and will, I believe, result in higher levels of service, greater accessibility, and reduces occupancy costs to the public sector.
Then there are the benefits for the private sector to be part of such a program. For example, secure, long-term investment opportunities allow the private sector to use the relative certainty and security of government contracts to generate more business opportunities for themselves.
Also, secure long-term revenue stream payments are obtained from a contractorís fees for service ó or, user fee, I guess itís called in some instances.
In the private sector, profit isnít a bad word in my vocabulary. Profit is something Iím interested in, and P3s can generate a profit for the private partner through the use of their good managerial, technical, financial and innovative capabilities, as well as expand the capacity and expertise of the private partner. This allows for their use in expanding business opportunities in other jurisdictions and other P3 programs.
There are many other examples on what the
There are a lot of good things in the British
model that they have outlined here, but Iím not going to go into the details of
it, because there are other projects that Iíd like to mention. In other
jurisdictions throughout the world, P3 projects have been very successful. Itís
interesting to note that, in the
I will go back to
These are all successful projects.
I have personally travelled on roads in
Speaker: Thank you. The time has reached The House now stands adjourned until tomorrow.
Debate on Motion No. 407 accordingly adjourned
The House adjourned at
following Sessional Paper was tabled
The following document was filed
Porcupine Caribou Herd, agreement between the Government of Canada and the Government of the United States of America on the conservation of the Porcupine Caribou Herd† (Peter)