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November 6, 2012

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Wave of ‘P3 promotion’ misses the point

Did we miss the proclamation of “P3 Week” in British Columbia? Earlier this week, the Sun ran three op-ed pieces in two days, all lauding the supposed virtues of “public private partnerships (P3s).”

The three op-eds had a couple of things in common. First, they were written by people with a bias in favour of P3s. Two were written by law firms that make big money from P3s. The last was written by the head of a health authority which has had P3s foisted on it by the provincial government.

The second thing the articles have in common is a complete lack of facts. Instead, they are loaded with unsupported assertions.

There is a good reason why lobbyists might want to stay away from the facts when they are talking about P3s. Where they have been subjected to independent analysis, P3s fail the public.

Ron Parks, BC’s most prominent forensic accountant, looked at four of the projects. Parks found the P3 projects were more expensive than if they had been publicly procured. And not moderately more expensive–in the case of the Vancouver General Hospital Diamond Centre, Parks found that the P3 model was 130 per cent more expensive. Parks also concluded that the methodology used by the provincial government to decide how projects were done was biased in favour of P3s.

Simon Fraser University Economist Marvin Shaffer looked at the Sea-to-Sky Highway P3. He found that P3 will cost taxpayers an extra $220 million over the next 25 years as a P3 than if the government had used its traditional financing and procurement processes.

Their findings have been backed up by public auditors in Ontario, Quebec, New Brunswick and Nova Scotia. In England, the birth place of P3s, P3 hospitals have needed financial bail outs as the bills for the projects come due.

Here in BC the government has stopped releasing the information that would permit costs to be compared between P3s and traditional procurement. The government has declared this information a “Cabinet secret” in response to repeated Freedom of Information requests.

Ask yourself this question. If the government is afraid to let the public have the information, do you think there might be a problem?

Over the years we’ve been told that P3s are cheaper than public procurement models for building hospitals and bridges; now we’re being told that “each option has its merits.”  No matter how lobbyists pitch it, the fact is that P3s cost the taxpayer more, provide less accountability and limit the ability of local governments – and, more importantly, local citizens – to any input on what gets built, how it’s built, and how it’s paid for.

It’s time for the provincial and federal governments to stop stacking the decks in favour of big multinational corporations and banks when it comes to building and operating public infrastructure. The evidence is clear: when P3s and “traditional” methods are compared apples-to-apples, P3s come out on the losing end every time. Rigging the process to favour P3s has resulted in benefits to a very few, and less accountability and higher costs for the rest of us.

None of this is to say there is no role for the private sector—traditional procurement has helped build our communities, our province and our country, and it relies on the private sector to design and build our community infrastructure. But when there’s no net financial benefit to taxpayers, no improvement in services, and a reduction in accountability, why would we hand over control of our own assets?

Finally, excluding for a moment all the facts and evidence that the previous writers chose to ignore, if we’re going to keep on with P3s, let’s be honest about it. If we’re going to sign 30-year agreements to outsource core community infrastructure like hospitals, bridges, recreation and community centres, water treatment facilities and schools, let’s stop telling our kids that they are the futures of our communities. Our kids are getting rightly skeptical of our commitment to future generations when they see us give up their ability to manage their community infrastructure from the day they start their careers until the day they retire.

This was originally published as an op-ed in The Vancouver Sun, November 6, 2012.

Barry O’Neill is President of the Canadian Union of Public Employees, BC Division