So we asked Jane Bird, the former CEO of Canada Line Rapid Transit Inc., about the private sectors involvement in Vancouvers Canada Line–a 19-kilometre LRT line that was built there in advance of the 2010 Olympics. And if there is one thing that was clear from our discussion, its that public-private partnerships are complicated.

Were there concerns from the public about involving private partners in the Canada Line project?

I think its fair to say there was a pretty healthy debate at the time. Theres always a discussion about big transit projects. But there was a healthy discussion about whether there was a role, not so much on the construction side, because the private sectors been building transit infrastructure since the turn of the century, but whether there was a longer-term role for the private sector to operate the line.

At the end of the day I think most people and the elected officials approved the project because it appeared that there was value to the public sector and the taxpayers by going this way. And I think weve had significant success and its sort of proven itself to be true.

Because the Canada Line is a free-standing line, was it easier to bring in private sector operation?

Absolutely, because its not interlined [with the rest of Vancouvers transit system]. As a result, we could do a proposal to the markets that said, We want this service on this north-south line and it doesnt matter if the technology is common to the other line.

We werent restricted to one technology or one brand, we could have a broad competition between anybody providing technology that would get us the service requirements that we want. So we asked for a system that would be about 19 km, we wanted to get people from downtown Vancouver to Richmond in 24 minutes, we wanted a train every three minutes, we wanted it run from x-hour in the morning to x-hour at night, we wanted 16 stations, we wanted airport service. This is our recipe. And we asked the market for their best response to that requirement.

But you can imagine if you had a lot more restrictions on that, in terms of interlining with other technologies, that there would not have been as broad a procurement as we were able to do.

What can the private sector offer, besides money?

I think theres a real role for the business community in support of how and when were going to do infrastructure renewal, whether its transportation, or roads, or water, or sewer, or ports, anything. Because the business community has a very significant interest, as do we all, in a strong infrastructure to support the economy.

What can the private sector do for public transit that government cant?

In Canada Lines case, structuring the contract as we did enforced a discipline and a rigour of thinking about the project that I dont think government often does as well as they should. That approach to understanding what it is you want to do and what you intend to accomplish is an important conversation that we dont give as much attention in the government as we should.

The second thing is, the private sector can provide a level of innovation through a competitive process that sometimes government cant do. The competitive process involves companies that have worked all over the world, so theyve done rapid transit in Barcelona, or Istanbul, or Berlin. So they bring all the innovation and all the design ideas that theyve gathered working all over the world, so you get the benefit of what everybodys doing rather than what locally or provincially we think is the solution. In the case of Canada Line, there were many instances where we had anticipated solutions to a problem, and SNC-Lavalin came up with solutions that were much better, no doubt as a function of some of the work they were doing elsewhere. Because government doesnt always know the answer, so if you can create a design competition or a way to solve an engineering problem with the benefit of many minds with experience worldwide, that is a good thing.

And generally speaking, I think the private sector does a better job of managing risk than the government does. When the private sector takes a risk, they almost have to do a better job of understanding what that risk is, the likelihood of it occurring, and the cost if it were to occur. Government doesnt do as good a job of that, historically. Because when things go wrong in government, usually the consequences are spread among thousands if not millions of taxpayers. So the consequences of mismanaging a risk for government are smaller than for the private sector, generally speaking.

So when you involve the private sector, you have to figure out what the risks are in a project and then figure out whether the government or the private sector is better able to manage it. In most cases, its better to transfer the risk to the private sector and pay a little to do that. Not all risks. If you look at Canada Line, environmental permitting risks were something that the government ended up keeping. So the consequences of not getting a permit would be on government. The cost of acquiring property for the line was a risk that we kept. But virtually all the rest of the risk, whether it be schedule risk, or ground condition risk, or overall construction or material cost risk, we transferred that to the private sector.

[Private sector involvement] secured more certainty for the project. The fact that the Canada Line was delivered early and under budget was in part due to the fact that the private sector was managing that risk.

Also, in our case, effectively the same company that designed and built the line is the same one that had to maintain and operate it for 30 years. So I think theres a symmetry to that. It creates a commercial incentive to design and build something well if you have to bear the cost of operating and maintaining it over time. I think that is a benefit for government, because its a question of looking at the whole cost of the line for 30 years. If the private sector has to bear the cost of maintaining it, whether its cleaning the tiles or maintaining the trains, theyre more likely to invest up front in a quality product.

Were you generally in favour of public-private partnerships before the Canada Line project?

I think Ive always felt that there is a place for the government and the private sector in most things. Each does certain things well. The art is to figure out where the governments role should be and stop and where the private sectors role should be and stop.

I think some of the confusion that arises, is that its not as easy as one-size-fits-all. What does it mean, public-private partnerships? It could mean anything. But it has the potential to work well if the government owners ask, Is there a role, and what role would best suit the project that were trying to build or the objectives that we have? Rather than start from a preconception that private sectors going to be involved.

Where do you see room for the private sector to get involved in Torontos transit system?

It would certainly be worthwhile to look and see if the transit projects that are currently under discussion would benefit from private sector participation. I think that would be a worthy piece of work to do. And then if one concluded there was a role, then define exactly what that role would be. Is it designing and building the line? Is it just financing the line, and what would that look like? What that role might be and what it might look like for that project, because its a project by project thing, I couldnt comment, because its a pretty detailed piece of work.

Jane Bird shared her experiences with public-private partnership to build Vancouvers Canada Line as part of The Munk Schools Moving Our Region speaker series yesterday afternoon.