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History Table of Contents
1998 Summer Conference
 
Summer Conference 1998
Rethinking Canada for the 21st Century

Canadian Enterprise and Ingenuity: Success stories in institutional innovation: private sector/NGO-not for profit/public sector

Glenna Carr, President, Canadian Council
for Private-Public Partnerships

I’m really here today to talk, not as someone who has straddled [the] public and private sectors, but as someone who became a stepmother at 28 of two sons and a daughter who were teenagers.

As a result I now have five-and-a-half grandchildren; four who are living in Montreal with a son and daughter-in-law and 1.5 in Toronto.

So, I’m really interested in addressing the younger people in the audience: what is it that you can expect in the 21st century?

I believe that people like myself who have been in the public sector owe you some accounting and a bit of a report card on how well we have done in the 20th century.

That’s going to be my perspective.

I’ve been asked to talk about public-private partnerships, what they are, why we have them; give you some examples and how they demonstrate the ingenuity and innovations that I believe they do; how we compare to other countries and what are the skills and jobs that are needed to manage these partnerships in the next century.

Why do we have public-private partnerships now? I Believe we have some really outstanding examples in this country and we’re going to see a lot more. And they are uniquely Canadian. They’re also a necessity, because the role and view of government and the public sector is changing. I believe that as citizens and as consumers of public services, government and those services are too important to be left to elected and appointed officials alone.

We need these public-private partnerships for the next century.

Canadians have been more cautious about pure privatization or commercialization of what was once in the public sector than the United States, the United Kingdom, New Zealand and Australia to name a few.

This caution arises from our heritage, which we heard about from Governor Blanchard yesterday, where governments were expected to play a much stronger role in our country in developing our economic and social fabric in everything from broadcasting to the CBC to transportation in Air Canada and our national railway.

But the times have changed and so have we. And with some exceptions we are embracing the much greater involvement of the private sector in the delivering and financing of the development of our infrastructure, and also delivering services to the public.

Part of this is a change in the role of government and the devolution of responsibilities from federal to provincial and provincial to municipal and to other non-government entities.

We’re still more comfortable in Canada with retaining the notion of some role for government, be it policy setting, monitoring, oversight, evaluation, or sharing financial risks.

We’re still somewhat risk-averse compared to our neighbours south of the border. As a result, you will hear Canadian public officials use what I call weasel words, like alternative service delivery, or partnering with the private sector and public-private partnerships more often than pure privatization.

This applies particularly to financing , where risks are we need to stretch our tax dollars; we need to improve and achieve operational efficiency in delivering public services and we need to improve the quality of service. often shared or guarantees are provided by government covenant, at least in the early stages of the project until a track record of usage and acceptance has been established.

We have avoided in doing this, in using this caution, some of the excesses we have seen both in the U.S. and U.K. and other countries in terms of the swing of the pendulum to pure privatization or commercialization.

I’ve just come back from a couple of weeks in the U.K. I was at Oxford talking on this subject with senior treasury officials and people from a variety of countries.

It’s interesting to see what is happening under the Tony Blair government. They are, in fact, dismantling some of the aspect of private financing initiatives and moving under the umbrella of public-private partnerships. They’re quite fascinated by what we’re doing in Canada.

The reason for this is they’re now moving into those sensitive areas of financing and public policy, which is how this can be done in education, the justice arena and health care.

So, they can’t just keep on tracking the way they’ve been tracking.

What are public-private partnerships?

The following definition has been adopted by the Canadian Council of which I’m currently the President: it’s a co-operative venture between the public and the private sectors built on the expertise of each partner that best meets clearly defined public needs through the appropriate allocation of risk, rewards and responsibilities.

We didn’t use to have responsibilities in there, but increasingly as we work these things through the issue of accountability and who’s going to be responsible for what, especially in a partnership that must have durability over time, becomes much more important.

Let me cover a few examples primarily public and private sector which demonstrate the particular Canadian brand of enterprise and innovation and also demonstrate an evolution along a continuum of sharing risk, reward and responsibility.

The examples are: Navigation Canada, toll highways, the Electronic Child Health Network and the Teranet Land Information Services

Let me just set the stage by describing Canada’s drive for change here.

In a survey that will be released in September by the Canadian Council for Public-Private Partnerships — we just call it P3 — so I’m going to shorten it to that.

There is support for these things for three reasons: we need to stretch our tax dollars; we need to improve and achieve operational efficiency in delivering public services, and we need to improve the quality of service.

Anyone who has tried to get into an emergency room in a Toronto hospital lately will know what I’m talking about.

The net result is that the ability of government to build and operate infrastructure continues to be constrained, while demand grows both due to immigration and demographic changes.

Despite our fiscal pressures, Canadians still like the idea of a government role particularly [in] ensuring fair, accessible and cost effective services to citizens.

Research on public opinion and surveys of decision makers indicate strong and growing support for P3s.

Two years ago the Canadian Council did a survey and found 200 of these across the country at local, provincial and federal levels.

We’ve just finished a survey and there are more [than] 450 now and there were areas like infrastructure, bridges, roads, highways and recreation facilities, convention centres, that sort of thing.

Now, they’re moving much more aggressively into information technology, education, health care and some of the so-called "soft service" areas.

So, they’re on the rise and the level of public support, both by elected and appointed officials who are making some of the decisions around these, has risen from 78 to 85 per cent in two years.

I think that’s due to familiarity and some successes.

Clearly, there is some momentum underway and an increasing number of success stories in the public domain.

But in the area of private financing, we still have some ambivalence. This was identified several years ago in a survey by Angus Reid, which flagged a lot of support for these partnerships but a split [of] almost 50-50 [among] Canadians in terms of private financing.

Two years ago I chaired a task force with people from the public and private financing community across the country and I found this ambivalence as well.

There’s still a sense that Canadian governments at various levels can raise money, either on the tax roll or through a lower coupon cost, than can be done in the private sector.

If they can, they should.

What this doesn’t take into account is [that] you only have so much tax room and then you are putting off, or deferring projects and initiatives, that you could otherwise undertake if you had shared financial investment.

So, why private financing? Tax room, investment and, particularly in areas where there is some case to be made for user pay or some form of a revenue stream; so toll roads, yes, it probably makes sense [and] the use of convention centres, airport facilities. There are a host of things that are now being looked at from that particular perspective and I think we’ll see a lot more of it in the future.

But we need to have more clarity around where it makes sense, as opposed to doing it on a holus bolus basis.

Let me begin with the classic example of public-private partnerships, Teranet Land Information Services Inc.

Its predecessor was the Ontario Land Registration Division of the Ministry of Consumer and Commercial Relations.

I’m going to use this example because I was deputy minister of that portfolio and brought it forward to the government of Ontario and struck a strategic alliance with a private sector consortium.

We had one of the oldest pieces of legislation in the country, 1796, the Land Titles Act, which defined your property if you lived in Ontario by the thorn bush on the northeast corner that, of course, was no longer there.

We needed to automate and convert lands titles and property descriptions to something that was at least in the 20th century.

And that could only be done with an infusion of talent, expertise and capital from the private sector. It would simply take too long to do and we would die the death of a thousand tiny cuts in terms of the provincial ministry being able to sustain that and do it over time.

So, I can attest to the value of a good business case derived through a transition in government, from the Liberal government to the NDP government in Ontario, because the business case for Teranet won the day even though the political philosophy of the government changed the business case was so strong it sustained the political swings and roundabouts.

So, a private corporation was formed in 1992 with a joint board composed of appointees from both government and the private sector consortium.

The private consortium includes EDS Canada, Intergraph, KPMG and SHL Systemhouse, with Teramira Holdings Inc. as the equity partner.

It’s a 50-50 partnership; $300 million. Their mandate is to computerize and automate Ontario’s land registration records under a new system and to make that available to the public and to users of the system; to enhance the services and products and access [and] to provide a land information utility and market those software solutions and services to other jurisdictions.

And that’s the piece that couldn’t have been done if was left in government alone.

How has it worked since 1991-92?

The system is being implemented eight years ahead of schedule. It would have taken more than 15 years if it had been left in government. It’s been done in eight years and it will be completed by the year 2000.

The total project cost for automation will be $300 million shared 50-50 by the provincial government and the private partners and new products and services have been developed without any provincial cost, including Teraview, a remote access service and registration system currently being beta tested on a number of sites.

And lawyers, as far as is possible with lawyers, are ecstatic.

Two very important points: more than 2,000 person years new jobs have been created, adding impetus to Ontario’s geomatics industry and more than 1,000 people in the last year alone have been trained in new technology that they wouldn’t have otherwise.

Lastly, Teranet is now exporting this this model to other countries. They have a deal with the Czech Republic, Puerto Rico, Shanghai and Lebanon, which are creating new sources of revenue.

The World Bank is a financial partner in some of those with the host countries.

So, what is wrong with this picture? Nothing that I can see. The government retained the ownership to the information. It’s made available to the public. The fees by which it’s made available are regulated by the government. There’s a 10-year licencing agreement to the consortium. New jobs have been created. New skills have been transmitted and it’s now become a point of international expertise to be marketed and exported.

I can’t see any flaw in this. But, having been there at the time and appeared before Public Accounts and the media I know it’s very difficult to make these kind of changes within the system.

We could not have done it without innovative and willing partners in the private sector.

The second example is that of NavCanada.

It’s the first in the world.

NavCanada acquired the Canadian civil air navigation system from the Canadian Government for a purchase price of $1.5 billion. With the support of the users, the airlines and so on, the employees and the government, NavCanada became the world’s first civil air navigation system provider without majority government ownership or control.

In many countries this would have been divested to a Crown corporation, but this is a public-private partnership. Private financing played a significant role in this. I think probably the jury is still out over how well this is going to succeed over the long term in terms of the labour force adjustment that is needed and managing that culture change and how well the users are going to absorb the cost through user fees of making that system work.

You’ll see the same thing in Canadian ports and the same thing in the development of airports across the country.

That model is in place and I think it will evaluated over time.

I’d like to just briefly mention a different kind of partnership, the Electronic Child Health Network, which is a partnership between the Hospital for Sick Children in Toronto and IBM, along with Sheridan College’s computer animation centre, a number of other hospitals, pediatricians and home health care associations.

The purpose of that network is to provide a common standard of service for children, no matter where the services are delivered by allowing the members of that network to exchange clinical information and data and to co-ordinate and collaborate.

IBM’s Health Data Network provides the means for integration across the network of patient data and records and patients’ clinical profile and demographics.

Sheridan College, through their animation centre, is making information available to parents and children using animation techniques to overcome boundaries and barriers in terms of language, literacy, age and culture.

So, a young patient will know when he or she goes into the hospital what to expect, how to care for themselves after their surgery or medical intervention and so on. It’s got enormous potential. It’s in its early days, but it combines the best strength of the private sector, in this case IBM, with a need in the public sector.

Public-private partnerships are not a panacea for all, but are simply one of the springboards to provide future infrastructure and services.

In conclusion, I believe that success does breed success.

Canadians have demonstrated their innovation and enterprise in new areas, which have world-wide application.

This provides us with a whole new set of skills in the area of enterprise management; the appropriate selection of partners, negotiating skills, the development of standards, dispute resolution and so on; new methods of sharing risk and a successful track record in diverse projects ranging from hard infrastructure to soft services.

That’s something for the next century and it’s something that we can export to other countries.

Canadian expertise and innovation in these areas will be important. There are a lot of countries that do not have the kind of private sector we have in North America. So, when you’re looking at transformation of public services in those countries you need this combination of public and private to make it happen.

So, in China, in South America, in Eastern Europe, Canada will have an advantage, I believe, in having that skill set and that track record.

We’re a lot less intimidating as partners than our American cousins and not all of these countries necessarily want to invite the U.S. in as a partner, although they do want their investments.

In terms of the future of the country, I think the restructuring of Ontario Hydro and the whole electricity sector will provide partnering opportunities for the next decade and investment that will be needed in technology for delivering health care, education, justice and social services will be the next frontier.

In closing, let me say [that] synergy is a term that has been overworked, but I think what we have is a new kind of fusion that is going to stimulate government, make it less risk-averse, manage the risks more effectively and bring the expertise and efficiencies and investment of the private sector to the benefit of Canadians.

It will make us strong, more nimble and give us something else to export in the knowledge industry game.

So, my question to you would be: why wouldn’t we use these in the areas where we most need change, education, health care and the justice arena.