A Canadian Centre for Policy Alternatives report has found that the Sea-to-Sky highway project in British Columbia will cost taxpayers an extra $220 million over the next 25 years as a P3 than if the government had used its traditional financing and procurement processes.
Economist Marvin Shaffer examined Partnership BC’s “Value for Money” report that estimated the costs of going with a P3 versus the traditional public process for the highway upgrade and maintenance project. The Partnerships BC report concluded that the P3 option would cost $46 million more. Shaffer’s analysis shows the price difference is actually much larger.
“Partnerships BC’s report exaggerated the cost to taxpayers under the public option and double-counted the benefits of the risks that the P3 will assume,” Shaffer’s report states.
His analysis details how the “Value for Money” report inflated the cost of government borrowing, incorrectly assuming the cost of government borrowing is the same as the P3s cost of capital. The report also applied an inappropriately high discount rate to the future payments that will be made to the P3, dismissing the tax burden British Columbians will carry in the future
“Is this P3 worth a $220 million premium to taxpayers? Absolutely not. There may be some benefits to the P3, but there is no evidence that they total anywhere near that amount. It was an ideological, not economic decision to go with the P3,” the CCPA report says.
Shaffer says the provincial government should develop more accurate, transparent methods for estimating and reporting the costs and benefits of P3s versus traditional public financing and procurement.
“The ‘Value for Money’ report simply did not provide accurate information about what the real costs to taxpayers will be,” he concludes.
The Real Cost of the Sea-to-Sky P3: A Critical Review of Partnerships BC’s Value for Money Assessment is available at