Letter to David Dodge re Infrastructure and P3sRelease Date: 06/25/2015 Staff Reference: Stephen Frank
July 9, 2015
Mr. David A. Dodge
Suite 1900, World Exchange Plaza
45 O'Connor Street
Ottawa, ON K1P 1A4
First off, congratulations on being asked to advise Premiere Rachel Notley on developing a plan for building infrastructure in Alberta. This is a very important issue for Albertans and indeed all Canadians.
Here at CLHIA we have been doing a lot of work in this area. It is important for our members because they have a strong appetite to finance infrastructure, including through P3 projects. The nature of the life and health insurance industry's business results in liabilities that can last up to 50 years. As a result, the industry has a stable and large appetite for long-term assets with which to match these ultra-long liabilities.
As you know, greater investment in infrastructure is critically important for Canada. And with long-term interest rates at historically low levels, there is a real opportunity to leverage the private sector in financing this work. P3s have proven to be an attractive funding mechanism for long-term infrastructure projects such as hospitals, airports, roads, bridges and government facilities. The evidence is clear that P3s deliver projects on time and on budget. Alberta Infrastructure notes that Alberta’s successful P3 model has saved taxpayers an estimated $2.2 billion over the cost of delivering public infrastructure projects through more traditional methods. In addition, P3s are an attractive funding option for governments because they limit the upfront investment required by governments to build public infrastructure. I know that the means of financing is not in your mandate, but the Premiere in her statements has opened the door to have your views on the matter. We strongly recommend you consider doing so.
In order to provide some background on our work, I am enclosing a CLHIA paper, released in June 2014, entitled “Get it Built: Fostering Economic Growth and Prosperity through Enhancements to Canada’s Long-Term Investment Market”. The paper proposes a number of key recommendations with a view to fostering a strong long-term investment market in Canada while also ensuring that Canadian life and health insurers can continue to provide the long-term products that Canadians need. I would highlight the industry's recommendation that Alberta build on the success of Alberta Infrastructure and expand the use of P3s to fund long-term infrastructure projects.
Thank you for your consideration of this issue and again congratulations on this important assignment. I would be pleased to discuss any of the industry's recommendations or to provide further information, if you would find it helpful.
Original Signed by