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Even as Auditor General Sheila Fraser attacks the federal Liberals for handing over $100 million to their corporate friends, one of Prime Minister Paul Martins newest parliamentary secretaries is already pushing more sweetheart deals between business and government.

John McKay, the parliamentary secretary for public-private partnerships, bragged to a reporter last week that the federal Liberals are scrambling to privatize everything from hospitals to water systems. Treasury Board President Reg Alcock was forced to reassure civil servants their jobs wont be sold to the highest bidder. But he confirmed the new $3 billion infrastructure fund is up for grabs.

Paul Martins corporate friends must be salivating. In her report on the federal sponsorship scandal, the auditor general attacked the governments public-private partnerships with wealthy ad agencies, accusing the businesses of keeping over a third of the money for themselves. Fraser had to follow a trail of mysterious transactions, shredded documents and false invoices and she still doesnt know the whole truth. She said that private contracts make it impossible for her to ensure accountability in how tax dollars are spent. Even the man who was finance minister at the time, Paul Martin, says the whole scandal was able to unfold right under his nose. I had no idea what was going on here, he said the other day.

If the Liberals friends can figure out how to take $100 million from a $250 million fund and keep it secret for years, imagine what they could do with $3 billion.

Despite this, the parliamentary secretary for P3s (who reports directly to the finance minister) says public-private partnerships are the way to go. He says theyre the buzz item, the big ticket. He says the federal government has no choice but to cut deals with the private sector, because the public purse is empty.

And why is that? The answer is simple. For nine years as finance minister, Paul Martin whipped up the perfect storm. He gutted federal social programs and transfer payments to the provinces, while slashing corporate taxes. Now, theres a huge infrastructure deficit and little public money to pay for it. But Paul Martins corporate friends are all richer, and theyre willing to swoop in and save the day.

The problem for taxpayers is that Martins friends have to make a profit, and that profit comes straight from taxpayers pockets. P3 deals may sound cheaper because business finances and operates the service. But in return, governments are locked into multi-decade contracts and leasing arrangements. In the long run, its businesses that reap the financial rewards and taxpayers get taken to the cleaners.

The auditor general hit on another major P3 weakness when she talked about accountability. Simply put, governments are accountable to the public, and corporations are not. They dont have to open their books for anyone, including the auditor general. Once the Liberals hand over the money, its their corporate friends who decide how to use it. And as many auditors general federal and provincial have found, theres a scandalous contempt of value for money in most of these schemes.

In his wide-ranging interview on P3s, McKay mused about privatizing everything from hospitals to water systems. And his teachers are perfectly suited to sell the P3 side. Of the three deputy ministers working with McKay, two are from the private sector one from SNC-Lavalin via the World Bank, and one from CIBC. No doubt theyve avoided telling him all about the disastrous cost overruns at P3 hospitals in Great Britain and the bungled private water deal in Atlanta, Georgia. There, local politicians had no choice but to reverse the shady deal, and citizens took a half-billion dollar bath.

Why does the government have to run a sewage system? McKay asked. Why does a public entity have to own the hospital? he wondered aloud. The answer is clear public safety and the example is obvious SARS. The health crisis was already bad enough thanks to years of Tory cuts in Ontario. Imagine how much worse it might have been if there had been no public accountability and no enforcement of safety rules. For the government, public safety is always the top priority. As Enron demonstrated, for business, it is always about profit.

And the public knows it. Nation-wide polls show that Canadians support public delivery of public services. Thats because it isnt hard for Canadians to figure out who profits from P3 deals like the kind McKay is proposing. The prime minister owes $10 million worth of favours from his leadership campaign, and the IOUs are adding up.

So the next time you read how great P3s are, be sure to think about the auditor generals report and then ask yourself this question: Who benefits most from the governments contracts with big business? The taxpayer or the corporations?


Paul Moist is National President of the Canadian Union of Public Employees, Canadas largest union representing a half million public service workers.