Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

“Bad News for P3 Loving BC Liberals”

with one comment

The Tyee opinion piece is based in a report that went to the government just before Christmas. This blog has long been a critic, not just of P3s in principle, but also the way that Partnerships BC is supposed to work.

“There is a concern that Partnerships B.C. is potentially biased towards certain procurement methodologies because it is mandated to be both a self-sustaining organization and an advisor to government. This creates the perception that Partnerships B.C.’s advice may be biased towards revenue generating opportunities for the organization.”

You can read the press release which carries its own naturally laudatory title “Crown review finds Partnerships BC fulfilling its mandate” or the Partnerships BC Crown Review Report:

http://www.fin.gov.bc.ca/ocg/ias/pdf_docs/Review%20of%20PBC.pdf

and the Steering Committee Recommendations Letter:
http://www.fin.gov.bc.ca/ocg/ias/pdf_docs/PBC%20Steering%20Committee%20Recommendations.pdf

But actually I think just reading the Tyee is more likely to steer you right: for instance

While the report specifically says it did not examine the methodology that justifies the use of P3s, some of its findings touch on this methodology. For example, Partnerships B.C. says it bases its decision on whether or not to use a P3 by comparing the cost of a P3 with a public sector comparator. However, PBC frequently uses what it considers to be the most expensive possible method of public procurement (Design/Bid/Build), ignoring less expensive methods of public procurement such as Design/Build, which even the Canadian Council for Public-Private Partnerships (C2P3) considers public procurement.

In a final irony, the report itself may be a conflict of interest. Partnerships B.C. is a private company owned by the Ministry of Finance, thus the Ministry of Finance is reviewing its own agency which raises its own conflict of interest issues.

Written by Stephen Rees

January 8, 2015 at 2:45 pm

One Response

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  1. In my experience even the design / build process has its issues, mostly involving giving project management and financing control over to a private consortium. Contractors work for themselves first and foremost and have more power in D/B than in a typically separated consultant proposal and construction tendering process. A lot of cost-cutting measures are taken and standards are sometimes compromised when diminished public oversight becomes apparent.

    It irks me to no end that P3s and D/B are promoted as more economical and efficient than management by the public sector. Governments that use this meme usually want to avoid the work load (perhaps as the result of department cutbacks) and farm it out to their pet private firms who may have made key donations to the party. What is ignored in their speechifying and glorification of the “free” market is that governments can borrow at absurdly low preferred rates, or in the case of some wealthy cities, can borrow from and even insure themselves, with repayment (including interest) through provisional 5-year department budgeting.

    Senior governments can also raise huge amounts of money by issuing bonds with low interest payouts. Canada Savings Bonds are just one example, and millions find them to be a convenient vehicle for saving through automated payroll deductions. Bond issues can also be designed for specific infrastructure programs, and I’d sure like to see this occur at the federal level as one of several affordable ways to finance transit and renewable energy at the national level, and invite citizens to invest in building their country by purchasing these bonds. But that’s another story.

    This really is about the bottom line, but the irony really starts to drip when the rhetoric completely disregards the fact that public project management and procurement are a better deal for taxpayers and result in more efficient public budgeting than handing it over to the private sector. A balance with the private sector is still achieved with planning, design, vendor procurement and construction, but ownership of the project management and especially the financing process should remain in public hands in the vast majority of cases.

    MB

    January 14, 2015 at 10:02 am


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