Monday, 20 February 2017

Let's Talk About P3's

Let's Talk About P3's

By: Ryan Young

Dwight Ball and his Liberal government recently made two announcements regarding the construction of new healthcare facilities in western Newfoundland, to be built and operated through public-private-partnerships (P3’s). While many are happy with the announcements, and the prospect of brand new facilities, others are not so sure, and have cast skepticism on both P3’s, and Ball’s ability to get the deals done in a way that benefits the province and not the private business owners.

At the heart of the matter are a new 164 bed, acute care hospital and 120 bed long-term care facility in Corner Brook. Both facilities will be built at the same location and will offer a much-needed upgrade from the current 217 bed Western Memorial Regional Hospital. Having lived in Corner Brook, I can personally vouch for the poor condition of the existing hospital, and it is no secret that we need more long-term care beds to serve an aging population. The infrastructure is badly needed, but the question must be asked: is the P3 model right for Newfoundland and Labrador?

There has been much discussion from several different sides on the merits of P3’s. Proponents claim that it is a great option to save the government money and provide essential services without all of the up-front capital costs. The labour movement claims that P3’s will take away good paying public-sector jobs, decrease the quality of service, and cost the government more money in the long run. And then there are the people who depend on the facilities who just want to see the new hospital and long-term care center built, no matter what model the government decides to use.

In the most recent announcement regarding the new Corner Brook Hospital, Premier Ball claimed that the province would save 7% on the cost of the project using a P3 model. No specifics were given on the estimated cost of the contract, nor were any details given on where the 7% figure came from. How can you claim to be saving 7% when you don’t even yet know the cost of the contract? Unless, of course, the deal is already done, and pushing through the public eye is just an unfortunate hurdle that needs to be cleared. As has become the norm, the government has failed to properly communicate the details of their plan, and people are once again left scratching their heads and wondering what it all means.

When I started digging a little deeper into P3’s in Canada, things began to get murky. Organizations like the PPP Council, P3 Canada, and our own NL Employers Council claim that with aging populations, higher debt loads, and less federal funding for provincial governments, P3’s offer a sensible alternative that can enable the construction and operation of facilities and services that might not otherwise be able to fit in the budget constraints of governments. The major selling points are that governments do not pay for the assets until they are fully operational, contracts are paid out long-term and include provisions for proper maintenance and quality of service, and that the lifetime costs of the assets are known in advance, ensuring that the taxpayers are not left on the hook for surprise overruns.

Flipping the other side of the coin, it is easy to find evidence where the claims above have not exactly panned out. One of the terms that keeps coming up in various studies and reports was “value for money.” Policy documents supporting P3’s often showcase them as the best value for money for governments. That claim has been disputed by evidence from reports from across the country. In 2014 the Auditor General of Ontario that showed that 74 P3’s in Ontario will cost the government over $8 Billion more than the traditional procurement route. In British Columbia in 2014, their Auditor General also concluded that the province will pay a higher cost on P3 projects than if they had been procured through the public sector. Auditor Generals in Quebec, Nova Scotia, New Brunswick, and Saskatchewan have issued reports regarding higher costs to governments when using the P3 model.

In Nova Scotia, in particular, the Auditor General reported that no credible evidence was provided that P3 schemes would save money, so they had no choice but to conclude that the decision to use P3’s was an attempt to hide debt. They also noted that no resources were allocated to monitor the construction and operation of P3 schools in the province.

So where does that all leave us? While there are many examples of where P3’s cost more money and were plagued with delays and problems, many others have been completed on time and on budget and have been providing acceptable levels of quality service. While the long-term costs of these more successful projects will take time to become known, they suggest that it is possible to use the model in a positive way that can be a benefit instead of an extra burden.

That brings me to the concerns people have about this government being able to do a good deal for us and not just sweeten the pot for their business friends. Everyone knows the Liberals are desperate to get these deals done and hopefully raise their profile a bit before the next election, but will their desperation and haste lead to another bad deal for the province? It is certainly hard to make a judgement on that as we don’t really have any facts at all about the project and what any of the potential costs might be. As much as Ball and the Liberals promised to deliver openness and transparency, they are once again making plans in secret, with the public not privy to any of the numbers.

I personally think that there is a place for P3’s in this province based on our current fiscal situation and the advances in technology and the internet, but I’m not entirely convinced that they should be utilized for essential services such as health care. The evidence that we currently have before us does not support the case that they will save money or improve services. Maybe government has information that shows exactly that, but they sure are not sharing it with us.

Maybe the simple fact of the matter is that this in the ONLY way that these facilities will be able to be built right now. If that is the case, the premier should just be honest with the people and level with us on how it has to be. Instead of selling us on imaginary 7% savings and giving assurances that this is the best way to go, just tell us that the province is broke and if we want shiny new facilities, this is the only choice we have. People may not like it, but I guarantee that many more would respect the decision if they were told the truth. More rhetoric and political spin around this issue wont help anything. What we really need is for Dwight Ball to open his mouth and be honest with the people on why this is the route we are choosing to go. 

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