Thank you, Mr. Chairman. The GNWT guidelines proposed that a cost benefit analysis and risk assessment will be conducted for each proposed initiative. This is a crucial step in the process and careful attention must be made to the determination and allocation of risk. The methods used must be clear, open and consistently applied. It is also imperative that we address, up front, the fact that P3 have long-term operating budget implications. Operating and capital budget implications must be considered over the full life of a project. The government must ensure that any economic benefits of a P3 are reflected in its value for money over the life time of the project not in the immediate impact on expenditures.
There are still some more issues that we can expect that will arise that have not yet been adequately addressed. The GNWT guidelines do not deal with the issue of environmental concerns and the need to ensure that these are not minimized by private sector partners or the issue of long-term environmental liabilities. As well the transaction cost of bidding, negotiating and contract may be high for more complex proposals and the government may need to develop a policy on reimbursement. For example the contractor selected to construct a North Cumberland Strait bridge, a very complex project, spent more than $30 million in developing its proposal and negotiating the contract. The federal government reimbursed $5 million. The other two finalists also each spent an estimated $10 to $13 million on their unsuccessful bids.
We must ensure that any P3 project results in user charges and that the charges are not excessive. The Metropolitan Council of Toronto has adopted principles relating to this issue: that the return on investment to the private sector participant is in direct relation to the degree of the participation and risk that the public sector expects the private sector to take; that the return is fair and publicly defendable and that the benefits that would accrue either directly or indirectly to the participating private sector members be evaluated on an individual and collective basis.
Finally, Mr. Chairman, we know from the experience of other jurisdictions that it is crucial to the success of the P3 initiative that the government proceeds only with projects that are high quality. Projects should go to completion only if they have clear objectives carefully specified by requirements and are backed by a solid business plan. If lower quality projects, projects with vague and uncertain criteria or projects with inadequate risk analyses are pursued, the private sector will quickly lose faith in the initiative. The government will then be forced to pay a premium for any projects that do go ahead. Mr. Chairman, there are risks with the P3 initiative and the government has a lot of work yet ahead of it. I am confident though that if the initiative is implemented with careful planning and in the context of comprehensive detailed strategy, it can be very successful and bring great benefits to all people in the Northwest Territories. I look forward to meaningful discussions and resolution of these issues here, today, in committee of the whole. Thank you.
--Applause