The Ontario Liberals have made quick announcements this fall about the privatization of 12 hospital projects. The speed of the announcements and the hazy details coming out of Queen’s Park are reminiscent of how the former Conservative government pushed through its P3s.
The announcements gush about an influx of health care spending – which is sorely needed, of course – but the Liberals won’t call their projects P3s; they prefer “alternative financing and procurement” or AFP.
It’s interesting to note that most new capital spending announcements in health care are not coming from the Ministry of Health and Long-term Care, but from the Ministry of Public Infrastructure Renewal.
AFPs, used to build and maintain about $5 billion worth of Ontario hospital projects, are much like a mortgage, according to Minister of Public Infrastructure Renewal David Caplan. Apparently, AFPs get the private sector to come up with the money and assume all the financial risks and penalties while the public sector gets to control the assets and pay the private financing off over 25 to 40 years depending on the project.
Unsurprisingly, the minister cannot come up with one P3 success story to build on. A survey of the ministry’s website (http://www.pir.gov.on.ca/) produces no concrete information to substantiate the success of private financing schemes. Caplan has been at a loss to find positive privatization examples during news conferences that tout the new AFPs. He only seems capable of making his vague mortgage analogy.
Caplan should have a look at the Royal Ottawa Hospital P3 project brought in under the Conservatives and finalized by his government. Before any soil was turned, there was a $20 million cost overrun due to lengthy lease negotiations with private developers. That’s $20 million that could have been spent on health care if the project was public.
And how about Brampton’s William Osler Health Center P3? Caplan would have to do very little legwork to see that the cost went from $350 million to $550 million during lease negotiations, however the size of the planned hospital was reduced as is the case with the Royal Ottawa Hospital. Furthermore, the costs of borrowing to build the Osler Centre are $174 million more than if the hospital had been built with public funding.
Caplan should check out CUPE Ontario’s School of the 3Ps.