BURNABY BC - Regional and municipal politicians should think twice about using public-private partnerships (P3s) for infrastructure projects. That’s an important lesson from this week’s downgrading of the Municipal Finance Authority’s credit rating by Standard & Poors, according to the Canadian Union of Public Employees (CUPE).
Barry O’Neill, president of CUPE BC, said that the downgrading is directly linked to increased debt for expensive public-private partnerships (P3s) such as the RAV line and the Golden Ears Bridge.
O’Neill said that P3 projects result in much higher costs and less accountability for taxpayers. “Early in the planning process regional politicians were told P3s would hide debt, but accounting rules don’t allow this. P3 projects like the Golden Ears Bridge and the RAV line were sold to GVRD politicians as a way to hide debt. Now that debt is on the books for projects that are as much as 25 percent over budget projections and we see our credit rating downgraded.”
“The lower credit rating means increased interest rates on regional projects. This could mean higher taxes or a reduction of services in the GVRD,” said O’Neill. “This is really typical of what we see with P3s and privatization of services – big promises, a lot of disappointment, and taxpayers left on the hook.”
On February 21, Standard & Poor’s Ratings Services announced it had lowered its long-term issuer credit and senior unsecured debt ratings on the Municipal Finance Authority of British Columbia (MFABC). The lower credit rating (to ‘AA+’ from ‘AAA’) is because of the Greater Vancouver Regional District’s (GVRD) increasing debt - a projected $5.5 billion debt for the GVRD by 2009.