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Ron Parks finds P3 projects have higher costs, bias and secrecy

with 5 comments

CUPE Press Release

VANCOUVER-In a report released today, B.C.’s most respected forensic accountant, Ron Parks, along with his colleague Rosanne Terhart, find that public private partnerships (P3s) are costly for taxpayers.

They also find a consistent pro-privatization bias in the way that the B.C. government (through Partnerships BC) compares costs when assessing major projects. On top of this, the B.C. government is routinely denying access to critical information, which limits the public’s ability to know that its interests are protected on P3 projects.

Parks and Terhart evaluated four P3 projects: the Abbotsford Regional Hospital and Cancer Centre, the Sea-to-Sky Highway Improvement, the Academic Ambulatory Care Centre (Diamond Centre) and the Canada Line. Based on this review, they find that developing the projects as P3s is more expensive than if they were done publicly.

In the case of the Diamond Centre – they report that the actual nominal cost of a P3 was more than double that of a publicly procured project.

Barry O’Neill, president of the B.C. division of the Canadian Union of Public Employees, says that this report is clear evidence that the B.C. Liberals have stacked the deck in favour of privatizing the services people count on. “It’s a taxpayer rip-off, plain and simple. The hundreds of millions of extra dollars we pay in what amounts to ‘privatization premiums’ should be used to improve roads, transit, schools and health care,” says O’Neill.

O’Neill says that P3 problems around the world, including the current problems faced by the Macquarie Group to secure financing for the Port Mann Bridge, underscores the fact that privatization is plagued by no shortage of instability and risk to taxpayers. “Add to this the report’s finding that private projects actually cost more and I ask why we would keep going down this road.”

O’Neill says that this should give pause for major projects, like sewage treatment in Greater Victoria, where the Campbell government is advocating a P3.

Parks’ report was commissioned by CUPE BC. Ron Parks and Rosanne Terhart are with the firm Blair Mackay Mynett Valuations Inc.

The full report and a backgrounder can be found at www.keepitpublic.ca

COPE 491

Written by Stephen Rees

January 29, 2009 at 9:06 pm

Posted in privatisation

5 Responses

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  1. Yeah, but that’s a CUPE press release… isn’t that almost akin to releasing a Fraser Institute press release?

    In any event, the sketchy report is almost two years old and was in response to questions posed by CUPE.

    Independent third parties involving this whole matter would likely provide a much more objective analysis. And yes, Ron Parks is the best of the best when it comes to forensic accounting.

    Scott

    January 30, 2009 at 12:27 am

  2. As I understand it, Campbell’s P-3’s are P-3’s in name only. There are very few true P-3’s around, such as Nottingham’s LRT and Dublin’s LRT, with many so-called P-3’s are a method to hide real costs from the taxpayer.

    Real P-3’s, the consortium winning the contract to build hires ‘banks’ monies and both the consortium and bank assume risk. Certainly the ‘private’ bank involved does due diligence and vets the project for viability.

    Not so in BC, where the provincial government (the taxpayer) becomes the bank, assuming all risk and there is certainly no due diligence on the proposed P-3 project.

    In BC, with our home grown P-3, it is the taxpayer that assumes all risk, with no real vetting of the project and the developer can walk away, anytime, with little or no penalty.

    D. M. Johnston

    January 30, 2009 at 6:33 am

  3. And I have on more than one occasion commented on Fraser Intsitute releases. My views on privatisation are easy to establish – as all you have to do look up posts with that as the tag or category.

    The point CUPE is making is that the process in BC is biased in favour of privatisation. That is a political position – but it is also one that is difficult for anyone to defend, since it is a just a slogan “Private good, public bad”. In reality a P3 may or may not be a good choice – much depends on the contract terms. And that of course is also true of traditional procurement. Risk can be transferred to the bidder if the contract is worded properly. Similarly a “design build operate maintain” contract does not necessarily reduce public control and accountability. But the way Partnerships BC has operated – and continues to operate – works against the public interest, since there is no attempt to determine if the project could have been done better by the public sector or by conventional tendering.

    Yes CUPE is concerned, because in general private sector jobs are not as secure as public sector jobs and are less likely to be unionised. P3s in BC make money by paying workers less than public sector comparators – and with much less benefits. While right wing ideologues say this is evidence of “efficiency” that is taking a very narrow view. Since what that does in reality is transfer costs back to the public. For example, the privatisation of BC Rail has imposed huge costs on society and the environment, much of which are not being recovered from CN. But worse than that is the many P3s are being pursued on the “there is no alternative” approach imposed by government policy which are being shown to cost far more than conventional public sector procurement – or are being done under a veil of secrecy in the name of “commercial confidentiality” even though it is public funds that are being dispersed. Which is why we need a forensic accountant.

    Stephen Rees

    January 30, 2009 at 8:38 am

  4. First of all, Scott, the report was published this month, not two years ago. It just took two years to get the information on which the report is based. Most of the information on the P3s was withheld by the government, in some cases claiming the financial information was a cabinet secret. Which leaves the question, if P3s are such a good idea, why must facts about them be kept secret from the public?

    Keith

    February 1, 2009 at 10:20 am

  5. […] year, a damning report was released that confirmed the legitimate concerns surrounding the P3 model preferred and endorsed by […]


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