P3s: Risky, expensive, inefficient and undemocratic
Are public-private partnerships a new revenue stream for corporate interests?
September 12, 2008 — Across Canada, our cities and towns are in an impossible position. Local infrastructure is falling apart, and our schools, hospitals, bridges, roads and water systems are in desperate need of an upgrade.
With cuts to federal and provincial infrastructure funding, Canadian municipalities are left with few options. But instead of increasing federal funding, the Harper government has seized the opportunity to push its privatization agenda.
This fall, Canadians can vote to stop the Harper agenda.
In the 2007 federal budget, the Conservatives took major steps to advance public private partnerships (P3s). A P3 is when a public institution (like a hospital or a school) agrees to pay a private company to fund, operate and deliver services that would normally be provided by the public sector.
In the budget, the government placed most of its infrastructure funding into a $8.8 billion "Building Canada Fund". Now, municipalities can apply for infrastructure funding, but with clear strings attached: local governments embarking on large projects are forced to "fully consider" P3s.
As further incentive, the Harper government earmarked a $1.25 billion fund to provide subsidies to "innovative P3 projects".
But the Building Canada Fund was never created to serve the public. Rather, it is a direct response to business lobby groups and large banks who want a piece of the lucrative public sector economy.
CUPE and its allies have conducted extensive research on P3s over the last decade and the conclusions, illustrated by scores of dramatic failures, are clear:
P3s are inefficient
Alberta's plan to build P3 schools in Calgary and Edmonton comes with a hefty price tag: for every two schools financed as P3s, three could be built as public projects.
They don't transfer risk
P3 proponents will tell you that P3s transfer risk away from the public sector and over to private companies. But if the private partner enters financial problems, they can declare bankruptcy, leaving the bill to taxpayers.
In 2007, the British firm Metronet entered a $33 billion (CAD) P3 contract to modernize the London Underground. It ran out of money after overspending by $4 billion, much of which taxpayers are now on the hook for. Metronet had only completed 40% of the project.
They're unaccountable and undemocratic
"I had to fight tooth and nail for even basic information," said Carl Dubé, former CUPE representative on the board of the Centre Hospitalier Universitaire de Québec (CHUQ). "The contracts hadn't been signed and already the workers' representative was being cut out of the loop, even though I was a board member."
Construction costs for the new P3 hospital in Brampton almost doubled from $350 to $650 million, and the hospital has just three-quarters of the promised beds.
Also, police are probing a public-private real estate development that has driven the Université du Québec à Montréal to the brink of bankruptcy. Three years into the contract, costs have risen from $333 million to $529 million.
Privatization can be like dominos. Knock over one public service and they all start to fall. A vote for Stephen Harper is a vote for P3s. But it doesn't have to be that way. This fall, vote to keep public infrastructure in public hands.
Privatization vs. Public Values Frame
Inventive, progressive financing / Private companies profiting from public property
Proprietary knowledge part of business culture / No public accountability or information
Links and sources
"Building Canada" or tearing it down?, CUPE.ca, September 12, 2008
Posted: September 14, 2008
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Public Values (PublicValues.ca) is a project of the Golden Lake Institute and the online publication StraightGoods.ca