Federal Government’s Role in Promoting Innovative Financing

Northern Border Finance Workshop - May 16, 2007

2

Overview• Canadian Transportation Context• Federal Government’s Past Experience with Innovative Financing • New Infrastructure Funding • Federal P3 Office

3

Context• Road System

– Total network exceeds 1.4 million kilometers (2-lane equivalent)

– Most of the network is composed of municipal and rural roads

– Only wholly publicly-funded mode - very few toll roads in Canada

• Road Jurisdiction– Primarily P/T and municipal jurisdiction– Federal responsibility limited to National Parks, National

Capital Commission, First Nation reserves, Alaska Highway and some bridges

– Federal oversight of major airports, ports, railways

4

Government of Canada’s Experience with Innovative Transportation FinancingFederally Owned Infrastructure• Confederation Bridge• Local Airport Authorities• Canada Port Authorities• New Windsor-Detroit Crossing

Federally Funded Infrastructure• Canada Line• Trans-Canada Highway in New Brunswick and British Columbia• Ring Roads n Edmonton and Montreal• Kicking Horse Canyon

5

A New Detroit River International Crossing• Windsor-Detroit Gateway is facing capacity challenges and a new

crossing is needed– Ambassador Bridge and its access road are expected to reach

capacity in next 10-15 years.– Only major border crossing without direct highway access in

Canada (current route is through City of Windsor)

• Canada-U.S. Bi-National Transportation Partnership coordinating planning for a new Detroit River International Crossing (DRIC), composed of:

– Transport Canada– U.S. Federal Highway Administration (FHWA)– Ontario Ministry of Transportation (MTO)– Michigan Department of Transportation (MDOT)

6

A New Detroit River International Crossing• Governance and Procurement options under development with

partners.– Maintaining the government’s role in ensuring effective public

oversight.– Minister Cannon announced November 2006, options being

explored for public-private partnership• Environmental Assessment (EA) process to identify the location

and preliminary design for access roads, customs inspection plazas and the crossing – to be completed in 2007 with approvals in 2008

• The target date for having the new bridge open remains the end of 2013.

Canadian Inspection Plaza: Site that is 30 to 40 hectares (80-100 acres) in size and close to the border.

International Bridge Crossing:

The new crossing will accommodate six lanes over Detroit River

U.S. Inspection Plaza: Site that is 30 to 40 hectares (80-100 acres) in size and close to the border.

6

A New Detroit River International Crossing

Highway Connection toHighway 401:

6-lane freeway/controlledaccess facility

Highway Connection toInterstate 75:

6-lane freeway/controlledaccess facility

• In 2013, Canada and the U.S. will open a new bridge crossing at the Windsor-Detroit Gateway with direct connection from Highway 401 to Interstate 75

8

Provincial Experience with P3s

British Columbia• Currently has more than $4.7 billion in approved P3s under construction.• Formed provincial P3 agency, Partnerships BC, in 2002 with a mandate

to facilitate, and in some cases manage, partnerships for public sector agencies. Partnerships BC is also the centre of expertise for establishing policies and best practices for successful partnerships in the province.

Alberta• An advocate of using alternative financing to fund capital spending and

have embarked on P3s for transportation projects.• $264 million in alternative financing is planned for the Edmonton

Anthony Henday Southeast Ring Road. The project is Alberta’s first P3 that includes design, build, financing and maintenance.

9

Provincial Experience with P3s (cont.)

Ontario• Infrastructure Ontario, an agency of the Ministry of Public

Infrastructure Renewal, is responsible for delivering all alternative finance and procurement projects under the province’s infrastructure financing and procurement framework.

• Infrastructure Ontario has been assigned to deliver over 40 major infrastructure projects projects primarily in the health sector.

Québec• P3 framework policy reflects the government’s intention to

increasingly use P3s to procure infrastructure.• Established the Agence des Partenariats Public-Privé du Québec

for this purpose.

10

Provincial Experience with P3s (cont.)

New Brunswick• Have undertaken a number of P3s including:

– the $585 million Fredericton-Moncton Highway DBFO project– The twinning of 275 km of the Trans-Canada Highway

(Design Build)

11

New Federal Funding Programs

• As part of the Government’s long-term infrastructure plan, the Minister of Finance, Jim Flaherty announced in the 2007 Budget, $33 billion of infrastructure investment over the next seven years including:– Municipal Base funding (Gas Tax and GST Rebate) ($17.6B)– Building Canada Fund ($8.8B)– Borders and Gateways Fund ($2.1B)– P3 Fund ($1.3B)– Asia-Pacific Gateway Corridor Initiative ($1.0B)– Equal per jurisdiction funding ($2.3B)

12

Building Canada Fund

• The $8.8 billing fund will be allocated to provinces and territories on a per capita basis to support investments in the core national highway system, large-scale projects such as public transit and sewage treatment infrastructure and small-scale municipal projects such as cultural and recreational facilities.

13

National Fund for Gateways and Border Crossings• $2.1 billion over seven years has been allocated for a national

fund for gateways and border crossings.

• Funding will be awarded to projects on a merit basis. Similar to the Asia-Pacific Gateway Initiative, investment decisions will be guided by a new national gateway and trade corridor policy framework that is currently under development.

14

Public Private Partnerships Fund

• The Government of Canada is establishing a $1.26 billion national fund for public-private partnerships.

• Projects under this fund will be selected on a merit basis and the fund will contribute up to 25 per cent of the cost of innovative public-private partnership projects.

15

P3 Screen

• In addition to the national fund for public-private partnerships, large projects seeking funding from the Building Canada Fund and the national fund for gateways and border crossings will also be required to demonstrate that the option of undertaking the project as a public-private partnership has been fully considered.

16

Federal P3 Office• As announced in the 2007 Budget, the Government of Canada is

establishing a Federal P3 Office.

• The office’s mandate will have two main objectives:– Identifying opportunities and executing public-private

partnerships at the federal level.– Overseeing the assessment of public-private partnership

options for projects seeking funding from federal infrastructure initiatives.

17

Federal P3 Office (cont.)• Through consultations, the federal government sought input from

provinces and territories on the role and mandate of a federal P3 office to ensure that a federal P3 office would not duplicate efforts of existing provincial P3 offices.

• The Minister of Finance and the Minister of Transport, Infrastructure and Communities are working in collaboration to set up and manage the office.

• Budget 2007 announced $25 million over the next five years for the P3 Office.

18

Next Steps

• As per the federal process, the Infrastructure Plan including program design must go Cabinet and Treasury Board for approval. This process is currently underway.

• Federal Government to go to Provinces for another round of

consultation on detailed design of infrastructure programs.

• Continue to explore P3 for the new Detroit River International Crossing.

19

Additional Information

• TC Web Site: http://www.tc.gc.ca/SHIP/menu.htm• Infrastructure Canada Web Site:

http://www.infrastructure.gc.ca/funding/index_e.shtml

Isabelle Trépanier

Director, Highway and Border Policy

613-991-5981

trepani@tc.gc.ca

THANK YOU !