The Conservative government’s plan to sell $1.5 billion worth of office buildings and then lease them back through 25-year P3s “is bad public policy and lazy thinking”, according to one economics professor.
University of British Columbia economics professor David Green dismantled the government’s case for a selloff in a letter to the editor. “The stated argument in favour of the plan is that the new owners would foot the bill for renovations,” wrote Green in the Globe and Mail. He went on to label the argument “nonsense.” He argues the private sector will roll the renovation costs into the rent, passing the costs on to the government.
“One might argue that private firms have greater incentives to cut costs than governments – although if that’s true, why not just put the renovations out to tender? But the incentive for the purchasers to cut costs has other implications. Their strongest incentive is to do minimal renovations since their tenant is locked in. This might imply lower costs for the government but would not yield properly renovated buildings.”
Other criticism came from the real estate world. James McKellar, director of the Real Property Program at York University’s Schulich School of Business, told the media the scheme will cost taxpayers more. “On the face of it, it looks good – the government’s going to get $1.5 billion,” he said. “But you don’t make money out of nothing. In the end it’s going to cost them more.”
He went on to say that “it looks like the government’s doing the right thing today, but it’s really short-term gain for long-term pain.” Heritage architects also weighed in, concerned that many buildings on the block are landmarks that help make up of local and national identity.
The Tories are recycling the selloff plans from the Liberals . In 2004, then-public works minister Scott Brison floated a similar scheme.
With files from the Globe and Mail and the Ottawa Citizen