Public Values

Rising borrowing costs could hike cost of Alberta's P3 school projects

Economic consultant: will cost at least 50 percent more to build schools than through public sector.

Consultant Hugh MacKenzieby Richard Gilbert

The cost of building 18 Alberta schools under a public-private partnership (P3) contract could be 50 per cent higher than traditional methods.

An Australian-based investment group was awarded a massive contract by the Alberta government to build schools under a public-private partnership.

Babcock & Brown Public Partnerships Ltd. (BBPP) is an international public infrastructure fund specializing in the development and operations of P3 projects.

The company won a 32-year contract to design, construct, finance and maintain the schools in Calgary and Edmonton with a low bid of $634 million.

The cost of doing the same work through traditional delivery methods was pegged at $752 million.

However, some people disagree with those figures.

An economic consultant hired by the Canadian Union of Public Employees said it will cost at least 50 percent more to build schools through a public-private partnership than through the traditional public sector model.

"The basic underlying reason the cost is greater is because the private operator will pay more to borrow the money to build the project," said Hugh Mackenzie, principal with Toronto-based Hugh Mackenzie and Associates. "The differential between public and private sector borrowing is 200 basis points or two per cent, which translates to a 40 per cent difference in price."

This is considered a conservative estimate . . .

To read further . . .

Privatization vs. Public Values Frame
  Efficiency and competition keep costs down / Cost of financing actually lower for government

Links and sources
  Rising borrowing costs could hike cost of Alberta's P3 school projects, by Richard Gilbert, Daily Commercial News, October 2, 2008

Posted: October 29, 2008

Categories:
  News
  Research
  Politics
  Campaigns
  Public services
  Education
  Front lines
  Voices of privatization

Public Values (PublicValues.ca) is a project of the Golden Lake Institute and the online publication StraightGoods.ca


Public Values
 
HOME
CONTACT US
SEARCH
FREE BULLETIN
FRANÇAIS
Search PublicValues.ca
Donate to PublicValues.ca
News
Research
Politics
Campaigns
Health care
Public services
Natural resources
Energy
Education
Front lines
Voices of privatization
Feedback and dialogue
Visit StraightGoods.ca
About Us
Donations
Newswire/RSS
What is framing?
Friday, October 20, 2017
Updated frequently
To view photo captions, run your mouse over the photo
 
Bookmark and Share

© Golden Lake Institute/PublicValues.ca, 2007-11
PublicValues.ca owns copyright on all staff-written articles.
We encourage others to freely distribute material from this website but, without explicit permission,
Web publishers may only use short excerpts that also include credit to us and a reference to our site for the full article.
This site is managed by the Golden Lake InstituteVisit Golden Lake Institute Website and Straight Goods NewsVisit Straight Goods News Website
For comments or suggestions, please contact the PublicValues.ca Editor
For technical issues, please contact the PublicValues.ca Webmaster