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Letter: No evidence P3s are cost effective


Provincial government Ministers Steve Crocker and Dr. John Haggie have taken exception to the alarm bells CUPE is ringing about the higher costs of P3 deals.

In a letter to the editor of Aug. 26, the ministers claimed two recent P3s were proof of successful P3 projects: Swift Current Long Term Care Centre in Saskatchewan and Interior Heart Surgical Centre in British Columbia.

Coincidentally, Plenary Health, in the running to build the Corner Brook Long Term Care P3, was involved in the Saskatchewan and British Columbia P3 projects.

Saskatchewan’s Auditor General reviewed the Swift Current Long Term Care Centre and three other P3 deals in 2015 concluding that the value for money assessments were rigged by consultants to favour the P3 model. There was no hard evidence to prove P3s were more cost effective than the public-sector option.

British Columbia’s Auditor General raised major concerns about the high cost of debt through P3 projects in 2014. She examined 16 different P3 projects in the province and reported that interest rates on the province’s $2.3 billion of P3 debt ranged from 4.42 per cent to 14.79 per cent.  The BC government can borrow money at around 3.1%.  Her review concluded that P3 projects created higher levels of debt than if the government had financed the projects itself.

CUPE’s Senior Economist reviewed the numbers for the Interior Heart Surgical Centre in British Columbia and estimates that the project would have cost $37.5 million more than claimed if an appropriate discount rate had been used.  This would have made the P3 more expensive than the public-sector comparator.

Most of the cost-savings boasted about by P3 advocates are based on value for money calculations and when these calculations are scrutinized by impartial experts, like a provincial auditor, they are proven to just not be credible.

I would urge ministers Crocker and Haggie to put away the glossy consultant flyers and read the Auditor General reports on P3s.

 

Wayne Lucas

President, CUPE NL

 

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