Saskatoon: The Saskatchewan government needs to rethink using public private partnerships (P3s) for large-scale infrastructure projects as there is mounting evidence to show these controversial schemes are “a horrendous waste of money.”
Seen as the latest way to privatize public assets like hospitals, schools and bridges, P3s have been embraced by both the Harper and Wall governments – at a time when the credit crisis is causing already shaky P3 deals to collapse.
“The Saskatchewan public has good reason to worry about the Wall government’s support for P3 projects,” says Tom Graham. “It appears to be a case where ideology has trumped common sense because with P3s you pay more and get less.”
In January, the SaskParty government established a “P3 Secretariat” to explore the possibility for P3 projects in the province. Schools, a university student residence, and a hanger facility for the air ambulance program are some of the P3 projects under consideration.
A Saskatchewan government briefing note (dated October 15, 2008) obtained by Saskatoon blogger Joe Kuchta through an access to information request confirms the SaskParty is looking at all options: “Any and all areas of traditional P3s (design, build, finance, own and operate) will be considered for projects over $25 million with a term of at least 20 years that do not fit well within the traditional procurement approach.”
Although the Wall government claims P3s “accelerate construction, provide on-time and on-budget delivery and shift risk to the private sector,” these assertions are not supported by the facts, says CUPE researcher Guy Marsden.
Research released today by CUPE paints a disturbing picture of P3 projects – projects characterized by much higher costs and much less public accountability. A few examples:
• In December 2008, Ontario’s auditor general released a damning report on the Brampton Civic Hospital P3 project. Among other things, the auditor general found the Brampton P3 hospital costs ballooned from an initial projection of $357 million to a final construction cost of $614 million, even though the building was significantly smaller than projected with fewer beds.
• Economist Hugh Mackenzie’s recent analysis of Alberta’s plan to establish 18 P3 cookie-cutter schools found that for every two schools financed using the P3 model, three could be built using conventional public sector financing.
On the lack of public accountability:
• In January 2009, forensic chartered accountant Ron Parks and chartered accountant Rosanne Terhart evaluated four P3 projects in BC, including the Abbotsford Hospital. They found the nominal dollar cost of the Abbotsford P3 Hospital exceeded the public sector comparator by $328 million. They also criticized Partnerships BC – the crown corporation pushing P3s – for denying critical information in response to freedom of information requests. “In our view this suggests a general lack of transparency and public accountability.”
Although P3s do not make economic sense in the best of times, the financial meltdown has further eroded their viability, says CUPE researcher Guy Marsden. Private financing for the P3 Port Mann Bridge in B.C., for example, collapsed earlier this month forcing the government to bail it out – and then take it over.
A global review by Price Waterhouse Coopers in December 2008 concluded, “The outlook for the near term remains grim. Few [P3] deals will close. Many have already been put on ice.”
Although the SaskParty continues to support P3s for large-scale infrastructure projects, a recent poll suggests the majority of Saskatchewan residents don’t.
The Viewpoints Research poll, commissioned by CUPE Saskatchewan in November, found 50 per cent of respondents flatly rejected using P3s for schools, hospitals and bridges, while 35.7 per cent supported it.
CUPE says the Wall government must reconsider its support of P3s in light of the facts, not ideology.
The union launched a TV ad campaign this week to encourage residents to learn more about P3s.
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To reach Tom Graham call: 229-8171. Get the facts on P3s, go to: cupe.sk.ca