By Paul Moist
Since his election, Stephen Harper has been plagued by a creeping accountability gap. Dropped balls and broken promises on Senate reform, clean air, women’s equality and open and transparent government – to mention but a few – have widened the gap between Conservative pledges and practices. That gap is about to get blown wide open, as Harper’s Conservatives drop a privatization bomb on Canadian infrastructure.
In November, Transport, Infrastructure and Communities minister Lawrence Cannon launched a new federal push for P3 roads, bridges and other community infrastructure, including a highway linking Windsor and Detroit. Embracing P3s is a dangerous move for Harper in light of Canadian and international experiences that raise significant accountability concerns.
A government as focused on efficiency as Harper’s should be concerned that P3s cost more than publicly financed projects. It is as simple as the private sector not being able to borrow as cheaply as governments.
Finance Minister Jim Flaherty has called P3s “fascinating financial arrangements.” This fascination doesn’t come cheap. PEI’s Confederation Bridge, cited as a successful P3, cost $45 million more because it was financed privately. Private financing of Winnipeg’s Charleswood Bridge added an extra $1.4 million in present value costs to the project’s $11.6 million cost. Multiply that level of added cost by the number of bridges and highways needing repair or waiting to be built and the result is a staggering misuse of tax dollars.
Harper and the Conservatives should look to their British counterparts, who are up in arms about the high price of privately-financed hospitals. The hospital scheme, first introduced by the Conservatives, will cost Britons an extra £45 billion over the next three decades. According to the Tories, private contractors will make a 540 per cent return on investment on hospitals worth £8 billion.
P3 proponents have tried to shift the goalposts, admitting the schemes cost more but arguing they deliver better service. Again, experiences from Australia, Britain and Canada tell another story – from the number of beds lost in British P3 hospitals to Hamilton, Ontario’s failed sewage treatment P3.
Beyond their financial pitfalls, P3s run counter to the Harper government’s pledge to increase openness, transparency and oversight in government. Far from being open to public scrutiny, P3s are shrouded in secrecy – leaving elected officials and concerned citizens in the dark and out of the loop. The lack of transparency built into P3 procurement makes public scrutiny of these projects – including an independent value for money comparison and effective oversight – impossible.
When elected officials responsible for the final decision on a $2 billion rapid transit line between the Richmond Airport and Vancouver tried to access crucial documents related to the project, including a financial feasibility study and business case analysis, they ran into a P3-imposed wall of secrecy.
In Ontario, health groups have waged a long court battle to get basic financial information about a P3 hospital – information that should have been readily available if it was a public project. And Prime Minister Stephen Harper’s Conservatives as well as the Liberal Party rejected CUPE’s proposals to increase the transparency and accountability of contracts, privatization and P3s deals as part of their proposed Federal Accountability Act.
The Conservatives certainly aren’t alone when they push P3s. They are stepping onto the same shaky ground as provinces like British Columbia, Ontario and Québec. Faced with a growing PR problem about P3s in British Columbia, the Campbell government has adopted a policy forcing BC municipalities, and other public institutions to accept P3s as the price of provincial support for major capital projects.
In Québec, the Charest government forced a law through the National Assembly creating a pro-P3 government agency. Here, as elsewhere, P3s are meeting resistance. Provincial plans to build up to 5,000 long term care spaces as P3s have stalled since the board of a Québec City-area long term care facility rejected a P3. The new centre would have cost $14.4 million more as a P3, while delivering lower quality service.
In Ontario, the McGuinty Liberals are hiding a broken election promise by rebranding P3s as “Alternative Financing and Procurement”. The Liberals also tried to fly under the radar on P3s while in power federally – publicly saying little while quietly attaching P3 strings to infrastructure dollars. Their Conservative successors are taking a much more brazen approach.
Those pushing public-private partnerships for Canadian infrastructure acknowledge Canadians are suspicious about P3s – and chalk it up to a communications problem. They underestimate the Canadian public. When Canadians learn the truth about what P3s entail, they reject these schemes that waste tax dollars and diminish democracy.
Paul Moist is national president of the Canadian Union of Public Employees, representing 550,000 workers providing public services in communities across Canada.