There are many reasons why Canadians oppose “public private partnerships.” First and foremost are concerns about quality, access and safety.
But most often PPPs are not only bad for citizens, workers and consumers. They’re bad for taxpayers too, raising costs over the short and long term.
The biggest boondoggle of them all may be in New Brunswick where CUPE researcher Raymond Leger sifted through 3,000 pages of documents detailing the deal between the province and the Maritime Road Development Corporation to build and operate a portion of the Trans-Canada highway between Moncton and Fredericton.
The taxpayers of New Brunswick will pay MRDC more than $2 billion dollars for a highway that will cost $580 million to build. The cost to maintain the highway with a private crew will be much greater than with CUPE members working for the Department of Transportation. And then you add the tolls they’ll pay each time they use the highway!
No risk, huge profits
Under this deal, the province pays for the construction of the highway ($580 million over four years), the maintenance of the highway ($300 million over 30 years), the operation of the toll system ($140 million over 30 years) and the GST for 30 years. The province also waives provincial sales taxes. As well, the province pays $10 million for inspection work that would normally be done by CUPE highway workers.
Having paid for everything, the province still leases the highway for 26 years, paying $1.5 billion plus the cost of the interest on the debt to build it.
The return to the province? $600 million in toll revenues and $2 million in concessions. The net cost to the province? $1.9 billion. The net profit of the contractors? $1.4 billion!
In house maintenance would save millions
A comparison of the maintenance costs is most interesting. The province is obliged to pay MRDC $7.6 million a year for regular maintenance. This works out to about $19,500 per kilometre (two lanes). The current cost of maintenance by CUPE crews in New Brunswick averages $5,000 per kilometre (two lanes).
That means that the province will pay almost $5 million more to MRDC than it would spend to maintain the roads with its own crews. Even if the new highway would require a higher level of maintenance than current standards, there is considerable room to save money by doing the work ‘in house”
Yet again, PPPs provide the means for multinationals to gouge profits while taxpayers pay the price and good jobs are placed in jeopardy.
Note
In the last issue of Organize, we told you about the efficiency of the mechanics in Local 46 in Medicine Hat. We quoted the maintenance cost per kilometre but a decimal was misplaced in the process. The cost of the municipal garage was 4.78 cents per kilometre; the private firm 6.48 cents – a third more expensive!