When the Katz’s away, the people will pay

DYLAN FERGUSON STAFF

The biggest capital budget in Winnipeg’s history was approved by city council last Thursday. Mayor Sam Katz plans to drop $425 million in 2007, a tidy sum made possible, in part, due to an influx of infrastructure dollars from the federal and provincial governments to the tune of $209 million. Almost the entire capital budget is being committed to repairing roads and bridges throughout Winnipeg.

Winnipeg does have a crumbling infrastructure, and mending it may seem like a smart use of this impressive chunk of cash. But the way the mayor is going about it is irresponsible, and will probably have our city paying for his mistakes well into the future.

The method Katz has chosen to fund much of these repairs is through public-private partnerships, or P3s, as they are so cutely termed. A P3, as the city of Winnipeg uses them, is basically when a private contractor is hired to build or repair something, then the city loans or buys out the project at a later date. As reported by the Winnipeg Free Press, $107 million worth of P3 deals are now in the works, including $91 million for rebuilding the Disraeli Overpass alone, and three new police stations.

At first glance, it seems admirable that Katz is using 2007 to tackle infrastructure problems, and it’s understandable why he does not want to wait. Construction costs are skyrocketing in Canada: they increased by 30 per cent in 2006 alone, mostly due to the industry boom in Alberta.

P3s allow the city to undertake more and bigger projects without necessarily having the cash up front. But it’s not responsible. A P3 basically amounts to using the private sector as a credit card.

Sam Katz, like his predecessor Glen Murray, has never taken out a loan to fix a city problem. Citizens don’t like loans, and for very good reason — it’s not kosher to make future mayors pay to look good today. But a P3, in practice, is really not significantly different from a loan. It just has a snappier, more press-friendly moniker. In fact, the City of Winnipeg is considered a privileged borrower, which means it can take out a loan more inexpensively than a private corporation can. So why would the city use private corporations at all?

The justification is the assumption that private companies work better and more efficiently than their city-run counterparts. But this assumption can prove to be a costly one.

One only has to look to Australia, where the city of Sydney tried to revitalize its infrastructure with blockbuster P3 deals in the ’90s. Many of them, including the Airport Link railway and the Cross-City Tunnel (which is now a billion-dollar fiasco) were disastrous. Sydney is still paying for these mistakes, and most Australian economists agree they would have been far better off had the city managed the projects itself.

Katz claims that Winnipeg’s last P3 venture, the Charleswood Bridge, was a success, but the details of that deal have never been made public, so there’s no way of confirming that. If the mayor does not want to take out loans, he should not be resorting to a relatively new business practice with a spotty track record that may prove more dangerous to Winnipeg’s wallet.

So how should the mayor go about rebuilding our infrastructure? Well, I don’t think he has too, at least not on the grand scale the new budget proposes. Yes, the Disraeli Overpass must be fixed, and there are certain problems that have to be attended to, but the infrastructure-obsessed budget also includes over $30 million for lane-extensions on Inkster Boulevard, McGillivray Boulevard and St. Anne’s Road. Is all this attention being paid to drivers really necessary?

In addition to being financially irresponsible, the capital budget also shamefully ignores the fact that Winnipeg must one day follow other Canadian cities into the environment-friendly future. There is a $1.5 million allowance for bike paths, but that will do little to alter our image as one of Canada’s least bike-friendly cities. Apart from $3 million set aside for the Marconi line, promised long before the budget, there is little that is new to address the need for better mass transit or more “green” initiatives.

In the years to come, Winnipeg will be forced to acknowledge the changing political climate — and just the changing climate — and become less driver-centric and more greenfriendly. Too bad we’ll still be trying to pay off all the P3s initiated to please motorists.

Construction workers toiling away on roads and bridges will be a pleasing sight to passing drivers and that, along with the fact that the word “loan” never popped into the papers, will lead people to believe that Sam Katz is doing a good job. He’s not.

Winnipeg’s biggest capital budget ever is also its biggest wasted opportunity, a shortsighted gesture that will only set us back in the long run. Katz will be long since out of office once we realize P3s are BS and start cursing his name.