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That being said, this approach is not without both political and practical challenges.

While the Liberals have shown a willingness to rely on the private sector to finance infrastructure, it is unclear whether they are willing to support innovative ways of funding it. For example, during the campaign, they promised to reverse the previous government’s decision to charge tolls to drivers using the new Champlain Bridge in Montreal. While tolls are not the same as concessions, this demonstrates a willingness to place greater importance on local political considerations than market-based solutions that reduce the budgetary impact of building infrastructure.

From a practical standpoint, concessions are not a cure-all, since differences in the ability to commercialize surrounding areas mean that some assets (e.g., public transit) are inherently better-suited for such arrangements than others (e.g., green energy). The extent of the savings to be had also varies by project and creates a need to structure programs in a way that incentivizes municipal governments — which have the power to grant development permits — to pursue such arrangements.

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Despite this, there is hope for such market-based solutions to be adopted, as fiscal realities can lead to decisions one would not ordinarily expect from governments of a particular political stripe — take left-leaning Ontario Premier Kathleen Wynne’s decision to privatize Hydro One to pay down debt and fund infrastructure, for one.

In short, the current economic climate suggests public finances will be tight, meaning it will be difficult for the Liberals to implement their infrastructure plan while ultimately delivering a balanced budget. Making greater use of concessions won’t completely close the funding gap, but it’d be a good start.

National Post

Geoff Malyk is a former policy advisor to Canada’s minister of finance, during which time he worked on issues related to infrastructure and P3s.