Quote:
Originally Posted by kylemacmac
I think the writer at the Transport Politic does ignore the fact that the line is doing quite well ridership-wise, yes.
But he brings up some pretty valid points about PPP, which as we all know around here, can be a contentious and politically charged issue. Very valid points about private operators abandoning projects in lean economic times, as they did with HSR in Taiwan, and he makes a decent point that public organizations can borrow at lower interest rates. I think the real issue most of us have, is the quality of the product. Not than much of an issue now, but 20-30 years down the line we may be looking back at PPPs as a very short-sighted move for projects like the Canada Line.
Either way, I'm glad the line was built.
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On the other hand, in the less than 30 year period InTransitBC will still be involved in the project. They won't realize full profit potential until the completion of the contract at that time. If for some reason they cut corners or slack off, the payments stop. And if cracks start showing up in the system in the next 20 years, SNC Lavalin will be losing on their $700 million investment. Being tied to the project for 30 years to realize their profit encourages them to build it right.
Under the normal public funding/bid model, private companies out to make money are still involved. But they are not tied to the long term success of a project. They get all their money up front, and have to put zero into it. What would SNC Lavalin care if Canada Line fell apart 10 years from now if they already made all their profits.
I use the Skybridge as an example. It's only 20 or so years old and cracks are forming in it and pieces have fallen off. It was a project a company bid on, meaning they had to have the lowest bid, and because they are a company, turn a profit. After the bridge was project was finished, they got their cash and walked away.
Another example is home building. We have appartment buildings, which like a P3 is a long term investment by the developer. We have many old apartment buildings that are over 30 and 40 years old, which have had hardly a problem in that time. On the other hand, we have thousands of condos built in the 90s, where they were build and forget, and now they leak. The developer made all their money up front, so who cared if they leaked 10 years down the road. If for example, you got the mortgage straight from the developer for a condo, instead of a bank, that way the developer wouldn't realize max profit until the amortization period was over, imagine how much better they would be built.
If private companies and contractors are going to be involved in building infrastructure, which they always will be at some level (Skytrain uses Bombardier Technology, not the people of BC's Technology), then I'm all for the idea of tying them to the project for a long long time to guarantee it's built right.
In a perfect world we wouldn't need a P3 because contractors would be honorable and build products that last, but alas, this isn't a perfect world. I would prefer it if there wasn't a need for a P3 and the public could realize the full profit potential of this project (and over the long term it will make money), but companies are self centered and concerned about themselves. A P3 puts the contractors interests inline with the publics: a successful, long lasting transit system.
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Especially since it was just announced they'll be having a fare hike!
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