Wednesday, August 08, 2007

Dumb and Dumber

P3's don't save taxpayers money.

This was a costly dumb idea under the Mulroney Conservatives and the Harper Conservatives are going to repeat the same mistake.

The government has reportedly received advice that Edmonton's Canada Place is the most valuable of the nine buildings being considered for sale. It is worth $265 million if sold under a 25-year lease-back deal.

Canada Place was valued at $152 million when the Treasury Board approved its construction in 1984. But in 1988 Kenneth Dye, then the federal auditor general, reported that the new Edmonton home of 3,200 federal civil servants would end up costing taxpayers $100 million too much.

Part of the extra cost was the result of a decision to have Canada Place built privately under a lease-purchase deal instead of having the government build it.

And the irony in this is that it will be public sector workers pensions that will probably ending up owning it.

But Dawson wasn't sure how a benefit for business can work for the government.

"They're not in business and they're not necessarily going to re-employ that money at any kind of a return."

As for possible buyers for Canada Place, Dawson said large pension funds may be interested.

The Canadian Pension Plan Investment Board (CPPIB) now invests 45% of its assets outside Canada, up from 36% in 2005. Ontario Teachers' Pension Fund increased the percentage of non-Canadian assets in its equities portfolio from 56% in 2005 to 66% in 2006. OMERS has increased its foreign assets from 29% in 2000 to 39% in 2006.

With almost $500-billion in combined assets, the five top Canadian pension funds are getting a bigger piece of the global play book.

Not surprisingly, Canadian pension funds are now viewed as virtual private equity groups, says David Mongeau, of U.K.-based Avington International, a global mergers and acquisitions advisory firm that stickhandled a number of recent deals including the Legacy REIT sale with Caisse de depot, and the BCIMG purchase of the Canadian Hotel Income Properties Real Estate Investment Trust.


Minister of P3

Mr. P3

Super P3

Public Pensions Fund Private Partnerships

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