Public-private partnerships in canada: Theory and evidence

Canadian Public Administration

Volumn 51, Issue 1, 2008, Pages 9-44

  Vining, Aidan R ^a   Boardman, Anthony E ^b  

^a SIMON FRASER UNIVERSITY   (Canada)

^b UNIVERSITY OF BRITISH COLUMBIA   (Canada)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 48249149904     PISSN: 00084840     EISSN: None     Source Type: Journal    
DOI: 10.1111/j.1754-7121.2008.00003.x     Document Type: Article

References (126)

1. The United Kingdom has produced the most extensive research. A sample of the studies include Jane Broadbent, Jas Gill and Richard Laughlin, "The development of contracting in the context of infrastructure investment in the U.K.: The case of the Private Finance Initiative in the National Health Service," International Public Management Journal 6, no. 2 (2003), pp. 173-97;
2. Paul A. Grout and Margaret Stevens, "The assessment: Financing and managing public services," Oxford Review of Economic Policy 19, no. 2 (Summer 2003), pp. 215-34;
3. Michael Pollitt, "Learning from UK private finance initiative experience," in Graeme Hodge and Carsten Greve, eds., The Challenge of Public-Private Partnerships: Learning from International Experience (Cheltenham, U.K.: Edward Elgar, 2005), pp. 207-30;
4. and Jean Shaoul, "The private finance initiative or the public funding of private profit?" in Hodge and Greve, The Challenge of Public-Private Partnerships, pp. 190-206.
5. See Eoin Reeves, "Public-private partnerships in Ireland: Policy and practice," Public Money and Management 23, no. 3 (July-September 2003), pp. 163-70.
6. Erik-Hans Klijn and Geert Teisman, "Institutional and strategic barriers to public-private partnerships: An analysis of Dutch cases," Public Money and Management 23, no. 3 (July-September 2003), pp. 137-46.
7. Carsten Greve and Niels Ejersbo, "When public-private partnerships fail - the extreme case of the NPM-inspired local government of Farum in Denmark." Paper delivered for Nordisk Kommunalforskningskonference, Odense, Denmark, 29 November-1 December 2003.
8. See Linda M. English, "Using public-private partnerships to deliver social infrastructure: The Australian experience," pp. 290-304,
9. and Graeme A. Hodge, "Public-private partnerships: The Australasian experience with physical infrastructure," pp. 305-31, both in Hodge and Greve, The Challenge of Public-Private Partnerships.
10. On this, see, for example, Herschel Hardin, A Nation Unaware: The Canadian Economic Culture (Vancouver: J.J. Douglas, 1974);
11. and Chandran Mylvaganam and Sandford Borins, If You Build It: Business, Government and Ontario's Electronic Highway (Toronto: University Centre for Public Management, 2004).
12. These rationales are more fully described in Aidan R. Vining, Anthony E. Boardman and Finn Poschmann, "Public-private partnerships in the U.S. and Canada: There are no 'free lunches,'" Journal of Comparative Policy Analysis 7, no. 3 (September 2005), pp. 199-220.
13. See Michael L. Marlow and David Joulfaian, 'The determinants of off-budget activity of state and local governments," Public Choice 63, no. 2 (November 1989), pp. 113-23.
14. For a review, see John Quiggin, "Public-private partnerships: Options for improved risk allocation," The Australian Economic Review 38, no. 4 (December 2005), pp. 445-50.
15. Harry Kitchen, "A state of disrepair: How to fix the financing of municipal infrastructure in Canada," C.D. Howe Commentary 241 (December 2006), available at http://www.cdhowe.org/pdf/commentary_241.pdf.
16. There is not much literature on this topic, but see James Leigland and Rosalind H. Thomas, "Municipal bonds as alternatives to PPPs: Facilitating direct municipal access to private capital," Development Southern Africa 16, no. 4 (October 1999), pp. 197-219.
17. Michael Jensen and William Meckling, 'Theory of the firm: Managerial behaviour, agency costs and ownership structure," Journal of Financial Economics 3, no. 4 (December 1976), pp. 305-60.
18. Giovanni Dosi, "Sources, procedures, and microeconomic effects of innovation," Journal of Economic Literature 26, no. 3 (September 1988), pp. 1120-171.
19. See Greg Hundley, "Public- and private-sector occupational pay structures," Industrial Relations 30, no. 3 (Fall 1991), pp. 417-34;
20. and Robert G. Gregory and Jeff Borland, "Recent developments in public sector labor markets," in Orley Ashenfelter and David Card, eds., Handbook of Labor Economics, Vol. 3C (Amsterdam: North-Holland, 1999), pp. 3573-630.
21. See, for example, Bent Flyvbjerg, Mette Skamris Holm and Soren Buhl, "Underestimating costs in public works projects: Error or lie?," Journal of the American Planning Association 68, no. 3 (Summer 2002), pp. 279-93;
22. Alan A. Altshuler and David E. Luberoff, Mega-Projects: The Changing Politics of Urban Public Investment (Washington, D.C: Brookings Institution Press, 2003);
23. U.S. Government Accounting Office, "Federal-aid highways: Cost and oversight of major highway and bridge projects - issues and options," GAO-03-764T, Testimony before the Subcommittee on Transportation, Treasury and Independent Agencies, Committee on Appropriations, House of Representatives; Statement for the Record by JayEtta Z. Hecker, Director, Physical Infrastructure Issues (Washington, D.C., 2003);
24. and the United Kingdom, National Audit Office, "PFI: construction performance," Report by the Comptroller and Auditor General (London: National Audit Office, 2003).
25. Andre F. Perold, "The capital asset pricing model," Journal of Economic Perspectives 18, no. 3 (Summer 2004), pp. 3-24.
26. See United Kingdom, National Audit Office, Examining the Value for Money of Deals under the Private Finance Initiative (London: National Audit Office, 1999);
27. and United Kingdom, Her Majesty's Treasury, Public Private Partnerships - The Government's Approach (London: HMSO, 2000).
28. Oliver E. Williamson, Markets and Hierarchies: Analysis and Antitrust Implications (New York: The Free Press, 1975).
29. Steven Globerman and Aidan R. Vining, "A framework for evaluating the government contracting-out decision with an application to information technology," Public Administration Review 56, no. 6 (November/December 1996), pp. 40-6.
30. See Leroy P. Jones, Pankaj Tandon and Ingo Vogelsang, Selling Public Enterprises: A Cost-Benefit Methodology (Cambridge, Mass.: MIT Press, 1990).
31. Anthony E. Boardman and Erica Susan Hewitt, "Problems with contracting out government services: Lessons from orderly services at SCGH," Industrial and Corporate Change 13, no. 6 (December 2004), pp. 917-29.
32. Jean-Etienne de Bettignies and Thomas Ross, "The economics of public-private partnerships," Canadian Public Policy 30, no. 2 (June 2004), pp. 135-54. Governments cannot borrow extensively without affecting their credit rating: Raising funds for a P3 may raise the cost of borrowing for subsequent projects and should be included in the "full" cost of the P3.
33. Dirk-Jan Kraan, Budgetary Decisions: A Public Choice Approach (Cambridge: Cambridge University Press, 1996), p. 2.
34. Joseph Cordes, "Reconciling normative and positive theories of government," The American Economic Review 87, no. 2 (May 1997), p. 169.
35. See Geert R. Teisman and Erik-Hans Klijn, "Partnership arrangements: Governmental rhetoric or governance scheme," Public Administration Review 62, no. 2 (March/April 2002), pp. 197-205;
36. and Jeff W. Trailer, Paula Rechner and Robert C. Hill, "A compound agency problem: An empirical examination of public-private partnerships," Journal of American Academy of Business, Cambridge 5, nos. 1/2 (September 2004), pp. 308-15.
37. There is an extensive literature. See, for example, Anthony E. Boardman and Aidan R. Vining, "Ownership and performance in competitive environments: A comparison of the performance of private, mixed and state owned enterprises," Journal of Law and Economics 32, no. 1 (April 1989), pp. 1-34;
38. and Toshiyuki Sueyoshi, "Privatization of Nippon Telegraph and Telephone: Was it a good policy decision?," European Journal of Operational Research 107, no. 1 (16 May 1998), pp. 45-61.
39. Trevor Brown and Matthew Potoski, "Managing contract performance: A transaction cost approach," Journal of Policy Analysis and Management 22, no. 2 (Spring 2003), pp. 275-97.
40. For evidence, see J. Michael Geringer and Louis Herbert, "Measuring performance of international joint ventures," Journal of International Business Studies 22, no. 2 (Fall 1991), pp. 249-63;
41. and Andrew Inkpen and Paul W. Beamish, "Knowledge, bargaining power and international joint venture instability," Academy of Management Review 22, no. 1 (January 1997), pp. 177-202.
42. Christine Brown, "Financing transport infrastructure: for whom the road tolls," The Australian Economic Review 38, no. 4 (December 2005), pp. 431-38.
43. Martin Roll and Alain Verbeke, "Financing of the trans-European high-speed rail networks: New forms of public-private partnerships," European Management Journal 16, no. 6 (December 1998), pp. 706-13.
44. R. Preston McAfee and John McMillan, Incentives in Government Contracting (Toronto: University of Toronto Press, 1988).
45. Ken Coghill and Dennis Woodward, "Political issues of private-private partnerships," in Hodge and Greve, eds., The Challenge of Public-Private Partnerships, pp. 81-94.
46. For discussions of public choice in a Canadian context, see Douglas E. Hartle, The Expenditure Budget Process of the Government of Canada: A Public Choice-Rent-Seeking Perspective (Toronto: Canadian Tax Foundation, 1988);
47. and Mark Sproule-Jones, "Institutions and constitutions: Public choices in Canada," in Laurent Dobuzinskis, Michael Howlett and David Laycock, eds., Policy Studies in Canada: The State of the Art (Toronto: University of Toronto Press, 1996), pp. 149-69.
48. See Williamson, Markets and Hierarchies; Globerman and Vining, 'The government contracting out decision," Public Administration Review;
49. and Broadbent, Gill and Laughlin, "The development of contracting in the context of infrastructure investment in the U.K.," International Public Management Journal.
50. See Boardman and Hewitt, "Problems with contracting out government services," Industrial and Corporate Change.
51. See Anthony E. Boardman, Finn Poschmann and Aidan R. Vining, "North American infrastructure P3s: Examples and lessons learned," in Hodge and Greve, The Challenge of Public-Private Partnerships, pp. 162-89;
52. and Vining, Boardman and Poschmann, "Public-private partnerships in the U.S. and Canada," Journal of Comparative Policy Analysis.
53. Richard Sherbaniuk, "The price of protection," Alberta Views (Summer 1998), p. 26.
54. Ibid., p. 30.
55. See Jack Mintz, "An evaluation of the joint venture agreement establishing the Alberta Special Waste Management System" (Toronto: University of Toronto, Faculty of Management, 1995).
56. Sherbaniuk, "The price of protection," Alberta Views, p. 32.
57. BOVAR Inc., Annual Report 2000. Available at http://www.orbus.ca/ reports/l.pdf.
58. Mintz, "An evaluation of the joint venture agreement establishing the Alberta Special Waste Management System" [unpublished paper].
59. Salim J. Loxley, "An analysis of a public private sector partnership: The Confederation Bridge." A report prepared for the Canadian Union of Public Employees, 1999.
60. See Receiver General for Canada, Public Accounts of Canada, 1995. Volume 1 (Ottawa: Canadian Government Publishing, 1995).
61. Mylvaganam and Borins, If You Build It: Business, Government and Ontario's Electronic Highway.
62. S.G. Hambros, Public-Private Partnerships for Highways: Experience, Structure, Financing, Applicability and Comparative Assessment. Objective One: Final Report. Report to the Council of Deputy Ministers Responsible for Transportation and Highway Safety (Ottawa: Transport Canada, 1999).
63. Eugenio Mendoza, Parmar Gold, Jodie Mitchell and Peter Carter, "The sale of highway 407 express toll route: A case study," Journal of Project Finance 5, no. 3 (Fall 1999), pp. 5-14.
64. Roy Hrab, "Privatization: Experience and prospects." Panel on the Role of Government in Ontario, University of Toronto, June 2003. Research Paper # 22, available at www.law-lib. utoronto/investing/about.htm.
65. R. Mackie, "McGinty shrugs off highway toll spat," Globe and Mail (12 August 2004), p. A4..
66. Steve Erwin, "Ontario settles with operators of highway 407 over toll rate controversy," Canadian Business Online (2006).
67. Ibid.
68. Hambros, Public-Private Partnerships for Highways.
69. Mylvaganam and Borins, If You Build It: Business, Government and Ontario's Electronic Highway.
70. Julia Kuzeljevich, "Too heavy a toll," Motor Truck 71, no. 5 (September/October 2002), p. 18.
71. Joan Price Boase, "Beyond government: The appeal of public-private partnerships," CANADIAN PUBLIC ADMINISTRATION 43, no. 1 (Spring 2000), pp. 75-92.
72. Mylvaganam and Borins, If You Build It: Business, Government and Ontario's Electronic Highway.
73. See Cobequid Pass Toll Highway: The BEST Example of how a Public/Private PARTNERSHIP should Work [web site] (Halifax: Highway 104 Western Alignment Corporation, 2004), available at www.highway104.ns.ca/index. htm.
74. Canada, Canadian Rural Partnership: Rural Development, Public-Private Partnerships in Rural and Northern Canada Study, Final Report. Report prepared for the Rural Secretariat Agriculture and Agri-Food Canada (Ottawa: Public Works and Government Services Canada, 2004), available at http://www.rural.gc.ca/ruralreports/partnerships_c_e. phtml.
75. Nova Scotia, Department of Transportation and Public Works, "No toll increase for the Cobequid Pass," New Release, 7 December 2005 (Halifax: Queen's Printer, 2005), available at htrp://www.gov.ns.ca/news/ details.asp?id=20051207004.
76. Nova Scotia, Office of the Auditor General, "Highway 104 western alignment project," Report of the Auditor General: 1996 Highlights (Halifax: Office of the Auditor General, 1997), p. 127.
77. n.a., "New premier wants to get rid of tolls on Nova Scotia highway [Highway 104]," Daily Commercial News and Construction Record 72, no. 155 (13 August, 1999), p. A1.
78. Matthew Sylvain, "Nova Scotia boosts tolls on Cobequid," Truck News 21, no. 1 (2001), p. 1.
79. Nova Scotia, Department of Transportation and Public Works, "No toll increase for the Cobequid Pass," New Release.
80. For details, see New Brunswick, Office of the Auditor General, Special Report for the Public Accounts Committee: Evergreen and Wackenhut Leases (Fredericton: Office of the Auditor General of New Brunswick, 1998);
81. and New Brunswick, Office of the Auditor General, Annual Report, 1998 (Fredericton: Office of the Auditor General of New Brunswick, 1998).
82. Salim J. Loxley, "An analysis of a public-private sector partnership: The Evergreen Park School, Moncton, N.B." Unpublished report prepared for the Canadian Union of Public Employees, 1999, p. 9.
83. Ibid.
84. Sylvia Fuller, ed., Assessing the Record of Public-Private Partnerships. Proceedings of a CCPA - BC Public Forum (Vancouver: Canadian Centre for Policy Alternatives, 2003).
85. New Brunswick, Office of the Auditor General, Annual Report, 1998.
86. Ibid., p. 187.
87. Ibid., p. 189.
88. Ibid.
89. Michael Trottier and Jeffrey Maguire, "Case studies," Public Policy Report No. 4 (Saskatoon: Saskatchewan Institute of Public Policy, 2001), available at www.uregina.ca/sipp/documents/pdf/casestudies.pdf.
90. Ibid., p. 51.
91. Ibid., p. 52.
92. Canadian Council for Public-Private Partnerships, 100 Projects: Selected Public-Private Partnerships across Canada - 2000 Edition (Toronto: Canadian Council for Public-Private Partnerships, 2001).
93. Nova Scotia, Office of the Auditor General, Auditor General - O'Connell Drive Elementary School Lease. Press Release. 23 July 1998 (Halifax: Office of the Auditor General of Nova Scotia, 1998).
94. Trottier and Maguire, "Case studies," Public Policy Report No. 4.
95. Nova Scotia, Office of the Auditor General, Auditor General - O'Connell Drive Elementary School Lease. Press Release.
96. Heather-Jane Robertson, "Why P3 schools are D4 schools or how private-public-partnerships lead to disillusionment, dirty dealings and debt," in Fuller, Assessing the Record of Public-Private Partnerships, pp. 8-13.
97. Heather-Jane Robertson, "Incent this!," Phi Delta Kappan 84, no. 9 (May, 2003), pp. 713-14.
98. Nova Scotia, Office of the Auditor General, Auditor General - O'Connell Drive Elementary School Lease. Press Release.
99. Ibid.
100. See EPCOR, "Britannia Mine Water Treatment Plant," Epcor [web site] ([Edmonton]: Epcor Utilities Inc., [2007]), available at www.epcor.com/communities/BCPNW/Operations/WaterandWastewater/britanniamine.
101. British Columbia, Partnerships BC and Ministry of Sustainable Resource Management, Project Report: Achieving Value for Money - Britannia Mine Water Treatment Plant (Victoria: Queen's Printer, 2005), available at http://www.partnershipsbc.ca/pdf/Britannia_Value_for_ Money_Report_March_05_FINAL.pdf.
102. Ibid.
103. See EPCOR, "Britannia Mine Water Treatment Plant," Epcor [web site].
104. British Columbia, Partnerships BC and Ministry of Sustainable Resource Management, Project Report: Achieving Value for Money - Britannia Mine Water Treatment Plant.
105. Ibid.
106. Elizabeth Brubaker, "Public Goals, Private Means: Why the Private Sector is Uniquely Capable of Providing Water and Wastewater Services to Ontario's Municipalities." Paper presented at Public Goals, Private Means Research Colloquium, University of Toronto, Faculty of Law, October, 2003, p. 3.
107. Elizabeth Brubaker, "Lessons from Walkerton," Eraser Forum (April 2002), pp. 12-15.
108. Canadian Union of Public Employees, CUPE Locals 34, 1948, 2268 and 3730, "Public Risk, Private Profit: Why Lease Back Schools are Bad for K-12 Education." Brief to the Saskatoon Catholic and Public School Board (Ottawa: CUPE, 2001), available at http://cupe.ca/www/SchoolBaords/4291.
109. City of Moncton, City Hall, Moncton/Riverview/Dieppe. 2002 Annual Water Quality Report. Moncton Water Treatment Plant (Moncton: City of Moncton, 2002), available at http://www.moncton.org/search/english/CITYHALL/ water/2002%20Annual%20Water%20Quality%20 Report.pdf.
110. After winning the contract, USF offered to manage the entire water distribution system. The union raised strong opposition to the deal, and provincial officials argued the project violated the Public Purchasing Act, which requires municipalities to issue RFPs for major infrastructure projects. In March 2002, city council rejected the offer.
111. Canada, Canadian Rural Partnership: Rural Development, Public-Private Partnerships in Rural and Northern Canada Study, Final Report.
112. Canadian Union of Public Employees, In the Public Interest: Keeping Water in Public Hands. Presentation to the North Battleford City Council by Canadian Union of Public Employees Local 287 (Ottawa: CUPE, 2002), available at http://www.cupe.ca/privatization/nbattlefordwaterp3.
113. Canada, Canadian Rural Partnership: Rural Development, Public-Private Partnerships in Rural and Northern Canada Study, Final Report.
114. Canadian Union of Public Employees, In the Public Interest: Keeping Water in Public Hands.
115. Canada, Canadian Rural Partnership: Rural Development, Public-Private Partnerships in Rural and Northern Canada Study, Final Report.
116. Canadian Union of Public Employees, In the Public Interest: Keeping Water in Public Hands.
117. Barry Clouter, "1999 rears its head: Our failed public private adventure," Cranbrook Daily Townsman (2004), p. 4.
118. Conestoga-Rovers & Associates, Handbook for the Preparation of Landfill Gas to Energy Projects in Latin America and the Caribbean. Prepared for World Bank Energy Sector Management Assistance Program (ESMAP) (Waterloo, Ont.: Conestoga-Rovers & Associates, 2004), Box 4, pp. 70-71, available at http://www.bvsde.paho.org/bvsacd/cd51/preparation/part2.pdf.
119. Conestoga-Rovers & Associates, "Case Study: Region of Waterloo LFGTE Project" Unpublished report, 2003.
120. Ibid.
121. Ibid.
122. See Vining, Boardman and Poschmann, "Public-private partnerships in the U.S. and Canada," Journal of Comparative Policy Analysis.
123. D. Asenova and M. Beck, "The U.K. financial sector and risk management in PFI projects: A survey," Public Money and Management 23, no. 3 (July 2003), pp. 195-203;
124. Pamela Edwards and Jean Shaoul, "Partnerships: For better or worse," Accounting, Auditing and Accountability Journal 16, no. 3 (March 2003), pp. 397-421.
125. Linda M. English and James Guthrie, "Driving privately financed projects in Australia: What makes them tick?," Accounting, Auditing and Accountability Journal 16, no. 3 (March 2003), pp. 493-511.
126. B. Li, "Risk management of public/private partnership projects" (Ph.D. diss., School of the Built and Natural Environment, Glasgow Caledonian University, 2003).