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Ontario Premier Kathleen Wynne on Wednesday responded to an audit that found the province spent nearly $8-billion extra over the past nine years to farm out infrastructure-building to private companies rather than handling the projects on its own.Peter Power/The Globe and Mail

Premier Kathleen Wynne is defending Ontario's use of public-private partnerships, saying the government "does not have the capacity" to build new schools, bridges and light-rail lines itself.

Ms. Wynne on Wednesday responded to an audit that found the province spent nearly $8-billion extra over the past nine years to farm out infrastructure-building to private companies rather than handling the projects on its own. Auditor-General Bonnie Lysyk evaluated 74 projects, from hospitals to court houses, that Crown corporation Infrastructure Ontario has built since 2005 using a private partnership program called Alternative Financing and Procurement.

Ms. Lysyk found the private companies paid 14 times what government would have for financing, and taxpayers also paid them a premium for taking on the projects.

But Ms. Wynne argued these extra costs are more than cancelled out by the risks of budget overruns if the government handled the projects itself. She contended that private companies are better at managing these costs through AFPs.

"Government does not have the capacity, the project management capacity, to deliver on all the projects that are necessary," the Premier told reporters at an unrelated news conference at Toronto Pearson International Airport. "There is a risk that has been demonstrated over decades in terms of government building projects on their own."

Ms. Lysyk's audit found the government has "no empirical data" to back up this assumption. Instead, she wrote, the two consulting firms Infrastructure Ontario uses to evaluate private partnerships pointed to anecdotal examples of government-run projects going awry and compared them with successful AFPs. She said the province's model is tilted in favour of handing projects to private companies.