Friday, September 07, 2007

P3 Myth Busting


Dismissing an independent study on P3's the Alberta Government says it has studied P3's and gives them the big thumbs up.


A landmark study of private-public partnerships around the globe concludes they don’t save taxpayers money, undermine democracy and hurt small business – even as Alberta is making P3s a key component of its long-term plans.

But the Alberta government’s public relations department says it’s confident its projects won’t follow that trend and called the study “a nice academic exercise.”

The study, released by the Federation of Canadian Municipalities – the group that represents most communities across Canada – looked at schools, hospitals, road systems, subways systems and waterworks.

It found no cost savings amongst any of the studied projects. Further, when overruns, changes to long-term contracts and shifting public priorities were considered, many cost more money than their publicly funded equivalent.

A key reason was borrowing powers, said researcher Pierre Hamel. All of the projects, whether public or private, were funded with long-term borrowing.

“Promoters of P3s typically answer that by saying that although the borrowing cost is higher, they’re much more efficient. But in fact they simply limit their upfront costs by paying staff less money. And they put that back into their profit margin, not into savings to the public.”

Hamel concluded most P3s end up costing about the same as the public equivalent.

But there are downsides: a lack of political accountability if a project goes awry, because the responsibility has been downloaded to a private company; ironclad contracts that cost a fortune to get out of if public priorities change; and project development plans so complex – and privately guarded by the companies – that future contracts can often only be bid on by the initial P3 operator.

“The biggest company cannot borrow at a cheaper rate than the smallest municipality,” he said.

“Promoters of P3s typically answer that by saying that although the borrowing cost is higher, they’re much more efficient. But in fact they simply limit their upfront costs by paying staff less money. And they put that back into their profit margin, not into savings to the public.”

Hamel concluded most P3s end up costing about the same as the public equivalent.

But there are downsides: a lack of political accountability if a project goes awry, because the responsibility has been downloaded to a private company; ironclad contracts that cost a fortune to get out of if public priorities change; and project development plans so complex – and privately guarded by the companies – that future contracts can often only be bid on by the initial P3 operator.

Alberta has its own research on P3s that supports them, said Jerry Bellikka, with Alberta Infrastructure and Transportation.

“That’s his clear opinion. We’ve been very clear on all of them that when we look at it, we do a complete business case analysis of every project, and in every example where we have gone to P3s we are confident that we are achieving major cost savings for the taxpayer.”


FCM RELEASES NEW REPORT ON PUBLIC-PRIVATE PARTNERSHIPS

OTTAWA, Aug. 31
– Can public-private partnerships (P3s) meet the infrastructure needs of cities and communities?

:: Report

:: Backgrounder

This question has assumed growing importance, with Canada facing a more than $60-billion municipal infrastructure deficit and the federal government increasingly favouring P3s for infrastructure projects.

A new report by Professor Pierre J. Hamel of Montreal’s INRS-Urbanization looks at specific examples of municipal P3s to determine how, and how well, these projects work. The new report, Public-Private Partnerships and Municipalities: Beyond Principles, a Brief Overview of Practices, presents his findings.

Ok let's see the Stelmach government studies. Opp's it appears we can't. It seems it's all anecdotal.

After all the Alberta Tories tried to build a hospital with a P3 back in 2004 and it failed.


In August, the Calgary Regional Health Authority
– normally known for spearheading privatization - cancelled Calgary’s planned P3 hospital and replaced it with plans to build the hospital publicly.
And that is the last time anything was posted on Alberta Infrastructures P3 page.
Because 2004 was when Alberta Infrastructure started issuing P3 projects, like the Calgary Court House . Which like Calgary's hospital was another costly mistake.

The Calgary Courthouse P3 boondoggle in 2004 had cost overruns of 67% caused by private partners.


Since then they have been hell bent on doing P3's for three years. I would love to see their more recent study. But it is not posted on their website.

It appears there is no government study, unlike the one done by the FCM, rather it seems the Minister of Education simply read some briefs through partisan glasses.

March 14, 2007 Alberta Hansard

Private/Public Partnerships

The Speaker: The hon. member.

Mr. Chase: Thank you. Obviously, the minister is dealing with a 25-watt bulb. My last question is to the Minister of Education. Why is the minister suggesting that we saddle Alberta taxpayers with a 30-year debt to not only build P3 schools but maintain and operate them privately when we have the money to build them publicly and transparently now? Debt or no debt, Mr. Minister?

Mr. Liepert: Well, Mr. Speaker, first of all, as we discussed earlier, we need schools where kids live. Despite what this hon. member says, we do not have $7 billion laying around to spend on schools. There have been a number of P3 and alternative financing projects around the world that have been successful, and there have been a few that have been unsuccessful. The research I did was that every time a P3 was unsuccessful, it was commenced by a Liberal or a socialist government.


Aha! Of course! The FCM once had Jack Layton as its President, so of course it's nothing but a socialist, Liberal front.




Find blog posts, photos, events and more off-site about:
,, , , , , , , , , ,

, , , , , , , ,

No comments: