Wow, it’s already February; time flies!  Interesting time here in Calgary as the city comes to terms with how quickly its economic fortunes have changed.  Today, it was reported in the Herald that residential MLS sales have dropped 50% since January 2008.  Another condo project downtown has been halted.   From the perspective of the City, there is a lot of uncertainty about what impact the credit crunch and recession will have on the budgets and, even worse, on senior government funding for infrastructure.  The contentious federal budget has provided more infrastructure funding, but no one seems to know how this money will be tapped.  Relevant to my work, the potential market for governments to engage in public-private partnerships (P3s) has been impacted by the inability of the private sector to borrow at reasonable rates.  The BC government recently announced an agreement in principle for the P3 project to twin the Port Mann Bridge, however, the agreement required that the BC government itself lend the money for one-third of the capital cost. 

With regard to the opportunities that this crisis could present governments, my tendency is to agree with Rahm Emmanuel, Obama’s Chief of Staff to the effect that “a good crisis shouldn’t go to waste”.  If governments are to pour money into infrastructure, there should be some sort of strategic framework in terms of how we want to better position ourselves to comeout of this recession.  An excellent article spoke in detail to this potential in the New York Times Magazine.  I wish Stephen Harper and Jim Flaherty had read it while preparing their “pizza” budget!
More to come…

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