Future citizens pay for P3 mistakes

By Angela Giles
The Chronicle Herald
December 1, 2007

It was a great disappointment to read of the Nova Scotia government’s decision to go back to the P3 model – not just because of the failures in the past with the P3 schools, but for the continued failures of P3s across the country and internationally.

Supporters claim the initial financial output of a P3 (public-private partnership) is lower than other options. While this might be the case, it is certainly not "a given" – the local P3 schools and the Joe Howe building are shining examples of just how bad these deals can be. But even when a P3 project is on time and on budget, these are not the only considerations in judging its merits. All too often, savings are achieved by lowering wages and lowering standards of performance. This may look good to Rodney MacDonald’s bottom line, but it does nothing to improve the economic health of the community.

Then there is the issue of timeliness. Our local example of the Halifax Harbour Solutions Project (which, in the end, was built under public control) was completed on time and saved the municipality millions, according to the mayor.

There are other reasons to be skeptical of the efficacy of P3s. Private companies face a higher rate of interest on borrowed funds than governments. This is, I assume, why the Nova Scotia government decided to take student loans back from the financial institutions: The government can offer students a needed cut in the interest they pay for secondary education. And private firms are in operation to turn a profit (often held accountable by shareholders), which becomes an added cost.
Public-private partnerships can have a time-consuming bidding process, and can become more expensive to taxpayers if there are contract disputes (as with Scotia Leaning Centres, which built many of our schools in the 1990s). Successful bidders are often multinational corporations with budgets that dwarf those of most municipalities and even provincial governments, and thus they can afford to litigate local governments to death, no matter what the contract says.

Finally, there is the problem of transparency: Private corporations are always concerned about proprietary business information, making it often impossible for the public to find out just how any given P3 is being operated.

Governments like the P3 option because it means they don’t need to put the total cost on the books, since it is spread over many years like leasing a vehicle. The public perceives "surpluses" instead of "deficits," thus increasing their chances of getting re-elected.

P3s were a debacle in the past and, if implemented, will be disastrous in the future. Unfortunately, it won’t be Rodney MacDonald’s government that will pay for the fiasco; it will be us, the citizens (and taxpayers) of Nova Scotia.

Angela Giles, Council of Canadians, Atlantic region