Ontario’s auditor general may not be a fan of public-private partnerships, but they’re the right model for Waterloo Region’s light rail transit system, regional chair Ken Seiling says.
Auditor general Bonnie Lysyk took aim at the partnerships, also known as P3s, in her annual report delivered Monday.
She found that projects delivered under P3s cost significantly more than the same projects would have if managed properly by the public sector and contracted out – in large part because the province can borrow money at a lower interest rate than a private company.
A public-private partnership is the funding model being used for the Ion rapid transit system.
It means the borrowing costs for the project will be about $48 million more than they would be if the region financed the project directly.
Seiling says Infrastructure Ontario and a third party reviewed the project and determined that a public-private partnership would be the best way to move ahead with it.
“It’s like an insurance policy – about a million dollars a year which says that the private-sector company assumes the risks during construction,” he tells CTV News.
“During operations, if there are huge issues … they just don’t get paid.”
The Grandlinq consortium will be paid $1.9 billion over 30 years to design, finance, build, operate and maintain the rapid transit system.
