(Chapter 10—Advance Funding—P3 Canada Fund—Spring 2013 Report of the Auditor General)
Ottawa, 30 April 2013—The government did not calculate the financing costs related to providing PPP Canada with funding for the P3 Canada Fund years ahead of its disbursement needs, says the Auditor General of Canada, Michael Ferguson, in his Spring report tabled today in Parliament. PPP Canada, a Crown Corporation established in 2008, administers the P3 Canada Fund, which provides funding to infrastructure projects procured by other levels of governments through public-private partnerships (P3). A Treasury Board directive prevents Crown corporations from receiving advance funding in order to minimize impacts on government resources and borrowing levels. PPP Canada receives a yearly exemption from this directive.
“The Treasury Board Secretariat, Finance Canada and PPP Canada discussed various options to provide the Corporation with access to funding,” said Mr. Ferguson. “However, they did not calculate the cost of providing funding to PPP Canada years before it is disbursed for infrastructure projects.”
The audit found that as of 30 September 2012, PPP Canada had received $683 million in approved funding for the P3 Fund. The Corporation is expected to receive the balance of the approved $1.2 billion in P3 funding by the end of 2013–14, with only $83 million of those funds likely to be disbursed by that time. PPP has invested its advance funding in short term investments. In addition, in Budget 2013, the government announced that it will provide PPP Canada with an additional $1.25 billion for the P3 Canada Fund over five years.
Auditors estimated that advance payments to PPP Canada for the P3 Canada Fund resulted in $1.6 million in avoidable financing costs to government between 2009–10 and 2011–12. Until the current P3 funding arrangement is reviewed, the government remains exposed to changes in interest rates.
“In our view, there are approaches that would minimize the government’s exposure to financing risks,” said Mr. Ferguson. “The cost of financing should be considered whenever a Crown corporation seeks to receive funding ahead of its disbursement needs.”
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