Earlier this year, Winnipeg residents were hit with the bombshell that the city's sewer upgrades were millions of dollars over budget. Following the reaction from the usual suspects at city hall to raise property taxes for the cost overruns, Mayor Sam Katz put forth an idea the Canadian Taxpayers Federation (CTF) has been championing for some time now: public-private partnerships (P3s).

Winnipeg is no stranger to the P3 model. One of the city's most successful bridge constructions, the Charleswood Bridge, was on time and under budget thanks to the city partnering with private enterprise. A private company built the bridge and will lease it until 2030 at which time it reverts to the city.

Recently, the city has put out to tender the construction of three new police stations to be developed under a P3 model. The cost would be fixed and if construction goes over budget, the private operator makes up the difference.

As the demand for infrastructure grows and governments have all but squeezed taxpayers dry, the innovation of the private sector has offered a solution. P3s are re-inventing the way government conducts business. Generally speaking, a public-private partnership is a contract between the government and a private partner to provide some good or service. What is unique about a P3 contract is that it has some form of financial and quality assurance to protect taxpayers.

For example, a typical P3 sets out a penalty schedule to ensure that the project is delivered on time, on budget and satisfies specific quality standards. Simply put, P3s are contracts that shield taxpayers from budget blow-outs and never-ending construction delays. The end result is clear: taxpayers get more for their money sooner!

The driving force behind public-private partnerships is to find better ways to more effectively mobilize private sector capital and private sector management capabilities for public infrastructure. There are several different kinds of P3s, but each individual project should be assessed on its merits.

Public-private partnerships are increasingly gaining currency. As international evidence demonstrates their success, private expertise grows, demands for infrastructure investment continues and private capital markets look to diversify. Governments all over Canada are using P3s as a successful alternative to borrowing for capital projects: Fredericton-Moncton Highway in New Brunswick, the William Osler Health Centre in Ontario, and the Calgary Courthouses are just a few. Provincial governments Quebec and New Brunswick have even established clear policies on P3s while British Columbia created Partnerships BC to foster P3 development. To date, Partnerships BC has over 11 major infrastructure projects on the go and has managed the competitive contract process. The most widely recognized project is the Abbotsford Hospital and Cancer Centre. Construction has already begun on this 300 bed hospital and includes cost assurances and an on time delivery schedule for taxpayers. In fact, even if labour costs soar during construction, it is the private partner that absorbs the cost, not taxpayers.

Winnipeggers will not see the benefits of P3s overnight, but establishing this as a long-term policy will go a long way to ensure that core services are paid for without borrowing millions of dollars and adding to the debt. The provincial government has been all but silent on the P3s, but perhaps they can learn from some of the leadership being shown from city hall.