ANOTHER NEOLIBERAL FAILURE
Alberta no longer using P3 approach as preferred way to build schools

Mon, December 26, 2022 

Infrastructure Minister Nathan Neudorf says the province is taking a step back from aggressively pursuing public-private partnership arrangements when building and replacing Alberta schools. (Nathan Neudorf/Facebook - image credit)

A 2019 UCP government promise to be aggressive in pursuing public-private partnerships (P3s) for building public facilities has fizzled in the education sector, with just five of 48 projects having used the model so far.

Infrastructure Minister Nathan Neudorf says P3s will no longer be the preferred method for major construction projects on Alberta schools. The model sees government agencies and private-sector companies collaborate on major infrastructure projects.

"Money, though very important, is not the only consideration," Neudorf told CBC News in an interview earlier this month. "There are other considerations that we want to adopt into this process and give value to."

Neudorf, who was appointed infrastructure minister and deputy premier in October, said he has nixed a plan to build six new school construction projects as a P3 bundle.

Alberta school capital projects status 2019-22

Government bundles, then unbundles, school projects

P3s make economic sense when a project costs more than $100 million, Neudorf said.

Since building a school can cost anywhere from $10 million to $90 million, depending on the size and complexity, governments often enter into P3 contracts to build "bundles" of the buildings, which usually use similar designs and materials, to save money.

In late 2019, former infrastructure minister Prasad Panda announced the United Conservative Party government intended to build five schools as P3s, including public and Catholic K-9 schools in Edmonton's Keswick area, an early elementary years school in Calgary, a francophone school in Legal and a Catholic K-9 school in Cochrane. Panda said, if they found it would be good value for money, even more of the 24 school projects promised in the 2019 budget could be P3s.

The news came after former premier Jason Kenney said the province would be "very aggressive" in pursuing the P3 approach to building public infrastructure.

The COVID-19 pandemic prompted the government to back away from its first P3 school bundle plan in 2020. Construction projects were financed and managed by the province.

That same year, Panda said five new high schools, including two in Edmonton, would be built using the P3 model. These buildings are now under construction and expected to be complete by 2024.

Of the 10 new school construction projects the province agreed to fund in 2022, Neudorf said the government had planned to bundle six together as a P3.

P3 schools in Alberta under construction

Neudorf, a carpenter who worked for years in commercial construction, said it would be challenging to find contractors who worked as far north as Valleyview and far south as Raymond, which would limit the competition, and potentially elevate the price of any bids.

Communities are also asking to build schools in combination with municipal amenities, such as recreation centres, theatres and libraries, Neudorf said.

Those types of joint projects don't work well for P3s, which usually use a common design between schools.

Edmonton public school board chair Trisha Estabrooks says schools need more flexibility to modify their spaces than most P3 arrangements allow.

"We need to be responsive to the needs of the students we have in our schools," she said in an interview last week.

She points to Dr. Anne Anderson High School, which opened in southwest Edmonton in 2021, and includes a community recreation centre. That kind of partnership wouldn't have been possible if the school was a P3, Estabrooks said.

Submitted by Edmonton Public Schools

Sometimes, a private company's control over the buildings is so restrictive, children have sweated in classrooms while Edmonton school staff had no control over the thermostat.

Some of the 40 P3 schools built by the former Progressive Conservative government were left with muddy fields fenced off and inaccessible for years while school boards were powerless to fix the problem. The private maintenance contracts can be as long as 30 years.

And while some governments sell P3 arrangements as a bargain for taxpayers, not all of the deals lead to long-term cost savings.

Highways, bridges, and hospitals could still be P3s, minister says

Estabrooks was at an Alberta School Boards' Association meeting last month, where Education Minister Adriana LaGrange told hundreds of trustees that P3 projects would no longer be the province's preferred method to build schools.

"She received overwhelming applause," Estabrooks said.

Urban trustees, especially, have raised concerns about P3 projects for years, she said.

In an email, Edmonton Catholic Schools spokesperson Christine Meadows said division leaders were pleased to learn a new Catholic K-9 school in west Edmonton and high school in Castle Downs will not be P3 builds.

"Our Division is not looking for changes to the P3 model, but rather to move away from it entirely," Meadows wrote.

Edmonton Catholic wants to have the freedom to manage all of its own school construction projects rather than rely on the province, she said.

NDP infrastructure critic Rod Loyola said, should his party form government after the 2023 provincial election, it would avoid P3 school builds.

"Even contemplating P3s has just led to loss of time," he said.

Loyola said the UCP government isn't building schools quickly enough for growing suburban neighbourhoods — a concern Estabrooks echoed.

The NDP committed in September to funding a $78-million Grade 7-12 school in Glenridding, and a public K-9 school in Edgemont, both in southwest Edmonton, where classroom space is sparse.

Although the P3 model may be out of vogue for schools for now, Neudorf doesn't rule out using the arrangements for building and financing other major public projects, such as hospitals, highways, overpasses and bridges.

His press secretary said in an email there hasn't been a deviation from the 2019 philosophy, saying each project is reviewed for the best value for Albertans.

Loyola didn't rule out a potential NDP government using the method for other builds, either.

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.




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Neo-Cons Have No New Ideas

The neo-con federal government of Harper and Flaherty have no new ideas, just the same old ideology. After lambasing Harper for his flip flop on the deficit, and his denial that Canada is in a recession, Don Martin in his column today says;

"Be it campaign deception or denial, having tens of thousands suddenly face the loss of jobs, savings and perhaps their homes has twisted Harper's old beliefs into policy pretzels. For this Conservative government, the age of ideology is over -- technically and realistically."

Unfortunately Don the Conservative Government has not given up on its neo-con ideology as we witness in this announcement by Jim Flaherty.

Flaherty aims to boost economy with P3 projects
Ottawa wants to build billions of dollars of bridges, hospitals and other infrastructure as a way to lessen the blow from the financial crisis, finance minister Jim Flaherty said Monday.
Speaking at a conference in Toronto, Mr. Flaherty said investments in infrastructure will be "a key part" of the government's strategy to stimulate the economy.
But some observers say there's a problem with the plan. The government wants to deliver the projects through so-called public private partnerships (P3) where projects are built and financed by the private sector but according the government's requirements. But while the P3 model has gained acceptance in much of the world, there is rising concern that the credit crunch has made it almost impossible to finance new P3s.
Because of the financial crisis, finding willing lenders has become a lot more difficult and when they can be found the cost of capital for even triple-A borrowers is much higher than even a few months ago, said Alban de La Selle, a senior executive at Dexia Credit Local SA, a leading European bank.
"Lenders [on infrastructure projects] have become significantly more cautious," according to a recent report by PricewaterhouseCoopers. "... infrastructure finance raising is likely to be challenging for some time to come and the business risk of these transactions is certainly higher."
But the financial turmoil may have thrown a monkey wrench into the mechanics of P3s by making the financing so much more difficult.
Mr. de La Selle said one way to overcome the problem would be for the government to provide the financing itself. Since governments are among the few players that can get the benefit of lower borrowing costs, that advantage could be brought into play in doing P3s, he said. For their part, the private sector partners would guarantee to repay the debt.

So instead of the government funding infrastructure projects, the Harpocrites want to fund the private sector to do it for them. Ironically currently P3's in Canada are funded by public pension money, there are very few private P3's.

The Harpocrites had an opportunity to build a P3 project; the National Porttrait Gallery but they canceled it last week.

Earth to Flaherty,hello we are in a recession if not a depression and companies are hoarding capital not spending it. So instead of expanding the public sector the government will be choosing winners and losers in the private sector to build infrastructure. And these companies will promise to repay the debt, which will only happen if they survive this depression. Throwing good money after bad.

And he made his announcement at a conference on P3's sponsored by the right wing business lobby the Fraser Institiute.

So much for the Harpocrites abandoning their neo-con ideology, even in this recession they scramble to keep faith with the right wing ideology that got us in this mess in the first place.

Speaking to a Fraser Institute dinner, the finance minister committed to increased spending by Ottawa, if it is needed. Flaherty stressed at the luncheon the importance of infrastructure spending by the federal government, notably in partnership with the private sector. He announced $1.25 billion in startup funding for P3 Canada Inc., an entity that will work on public-private projects.
Thank goodness for this opportune recession, even if it is still "technical," as Finance Minister Jim Flaherty insisted at a downtown conference yesterday. If it weren't for whatever it is, nothing would get done.
The legacy of good times lasting more than a decade is a mountain of unfunded priorities for public spending. It took recession, or perhaps only the vivid perception of it, to focus government attention on what it should have undertaken years ago.
Focus is too soft a word to describe the sudden conversion of our former fiscal conservatives to counter-cyclical spending. Yesterday, a previously dismissive Mr. Flaherty let the world know he was jumping into the pothole business with both feet.
Infrastructure spending "will be a key component of our future success," he told a conference on public-private partnerships, and a "key component" of his government's planned economic stimulus. Although ideological conservatives may worry about burdening future generations with unsustainable debt, real Conservatives are now committed to spending their way out of recession.
And nobody is cheering louder than the crowd that brought us collateralized debt obligations and credit default swaps. With the market for such innovative products seized up worse than a rusty Ford, government has become the only source of cheap credit for anything. Ergo, everybody loves infrastructure. Well-dressed converts flocked to Mr. Flaherty's speech yesterday like contrite sinners to a revival meeting.
Instead, governments should activate construction projects that are already on the drawing-boards, and have been waiting for funding. Canada's infrastructure suffered much depreciation during the fiscal restraint of the 1990s, and did not catch up in the balanced-budget period. The wear and tear are showing.

SEE:
Your Pension Plan At Work
A Critique of P3's From The Right

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P3= Public Pension Partnerships

In Canada the biggest players in the P3 racket are public pension funds. Public sector workers pensions in fact. Both the Ontario Teachers Pension fund and OMERS are funds that are wanting to invest in privatization of public infrastructure. So perhaps we should call these P3's Public Pension Partnerships.

Is there a problem with this? Well yes there is because these funds are not controled by the workers who pay into them but by professional investment managers. In Canada private sector union pension funds also look to invest in infrastructure. This would not be problematic if the workers whose pensions make up these funds actually had control of the funds, hired the managers and set the mandate for investments. But they don't. Unions need to put pension fund reform on their agenda's

With direct control of these pension funds and their investments public sector workers could use it as leverage for for social equity, environmental stewardship, job security, living wages, etc. etc.

The myth of private sector partnerships with the state is just that a myth. What this is really is public sector funding of the state. And the irony is that the whole P3 racket was supposed to be about the private sector taking a risk with it's investments. It was part of the neo-con myth that the private sector is more efficient than the public. It was an attempt by them to reduce the public sector, to contract out public sector jobs. Now that same public sector with its pension funds and public sector workers that are being used to fund government infrastructure.

So is every Canadian. When CPP was privatized, to allow an arms length investment arm to be created we now have our federal pension plan engaging in P3's as well as other questionable investments such as in the Arms Industry and Wal-Mart.

Like union pension funds, Canadians need reform of the CPP to have citizen representatives including labour, women, environmental and consumer groups, on the board with ethical guidelines for investing.

The Harper Conservative Government push for P3's is not about free market economics (ain't no such a creature in capitalism) it is just good old fashioned conservative state capitalism.


P3 or not P3? Big pension funds hope for new infrastructure opportunities

TORONTO (CP) - Canada's major pension funds, after investing billions of dollars abroad in assets ranging from British waterworks to New Zealand timberland, are hopeful that a logjam holding back their flow of money into infrastructure within Canada is giving way.

The Ontario Teachers' Pension Plan is acquiring its first piece of Canadian infrastructure - the dominant freight container terminal operation on Canada's Pacific Coast - as part of a US$2.4-billion deal announced Thursday.

The announcement coincided with indications the federal government will smooth the road for pension fund investment in public infrastructure such as highways, transport hubs and utilities.

The Advantage Canada plan outlined by Finance Minister Jim Flaherty on Thursday included a pledge to give maximum impact to government spending through public-private partnerships.

These so-called P3s "will also provide opportunities for Canadian pension funds and other investors to participate in infrastructure projects here in Canada rather than being forced to look abroad, as is often the case now," according to the finance ministry.

Flaherty plans to set up a federal P3 office, and intends to force provinces and municipalities to "consider P3 options" for all large projects that get federal funding.

"It's about time," Michael Nobrega, CEO of the Borealis Infrastructure unit of the Ontario Municipal Employees Retirement System, said Friday.

"We hope he follows through. Pension funds are looking to put money out, so until the follow-through occurs it's not real, but's certainly very, very encouraging."

At the Teachers fund, officials are "quite heartened . . . because Canada has not had a lot of infrastructure opportunity," said Deborah Allan, director of communications for the pension plan, which has $96-billion of assets under management.

Teachers announced Thursday it is paying US$2.4 billion to Orient Overseas of Hong Kong for Deltaport at Roberts Bank south of Vancouver and Vanterm in the Burrard Inlet inner harbour - which operate under long-term leases with the federal Vancouver Port Authority - as well as the New York Container Terminal on Staten Island and the Global Terminal and Container Systems complex in Bayonne, N.J.

The Canadian and U.S. port terminals are of roughly equal value, said Jim Leech, who heads the Teachers fund's private capital portfolio.

In the wider Canadian infrastructure world, "the main complaint that pension funds have had is whether or not the levels of government have the political will to have public assets owned by private enterprise," Leech said.

"You've got some people ideologically opposed, believing that all public infrastructure - highways, airports, et cetera - should be owned 100 per cent by the government, and taxes should just go up to fix them," he said.

"We've been sitting on the sidelines, waiting for the debate to be had and somebody to make a decision."

In the meantime, Teachers' foreign infrastructure investments include Scotia Gas Networks in Scotland and England, 10 power plants internationally, and the Northumberland Water Group in the U.K., along with large timber tracts in New Zealand and the United States.

Other Canadian pension funds have also gone abroad. The Canada Pension Plan Investment Board last month put $1.05 billion into a consortium bid for British water utility AWG PLC, the CPP's largest infrastructure investment to date.

The volume of pension fund money going into infrastructure is increasing globally, observed Andrew Harrison, a pension specialist at law firm Borden Ladner Gervais.

"The principal reason is that these, by their nature, are long-term assets - and that's the key in a pension fund, where you've got people who are accruing benefits today who won't see their last payment out of the fund for 50 or 60 years," he said.

Infrastructure "also tends to provide some inflation protection, in that the payments off the infrastructure tend to rise over time."

The only potential pitfall he sees is that infrastructure assets "tend to be illiquid; if something does happen it's very hard to unload one of these investments."

Rock Lefebvre, vice-president of research at CGA-Canada, observed that defined-benefit pension funds can't depend on safe fixed-income instruments such as bonds to cover their future liabilities.

"They have to risk, so this is a fairly nice risk for all the parties involved."

Domestic infrastructure would have the extra advantage of eliminating currency risk, but fund managers have been complaining for years that Canada's governments have been slow to allow private money into public projects.

"Governments are starting to realize that they can't fund all the infrastructure investment that has to happen," said Harrison, who heads the government relations committee of the Association of Canadian Pension Management.

"You've got these enormous capital pools in Canada to pay benefits to Canadians. There does seem to be a symmetry to using that money to invest in the infrastructure those same Canadians use."

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P3

CPP

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Nova Scotia Imitates Alberta 2

In another example that the old neo-con ideal is not dead yet, Nova Scotia like Alberta is once again looking at P3's as a solution to long term funding of infrastructure. Despite its failure in that province previously. And like Alberta, which has a labour boom while Nova Scotia has a labour deficit, the costs will rise because of scarcity of labour. Those costs will be passed on to taxpayers if not now then over the life of the P3 agreement.

Once hailed as the new vision of the right, privatization, P3's and contracting out have proven to be a billion dollar boon-doogle and not a solution to rising costs. They are in fact simply taxpayers paying private companies to provide services that make them profit, by cutting wages and providing poorer quality, and they end up costing us more in the long run. It looked good on paper, but as with most of these ideas from the seventies they have proven their time has come and gone.

In fact in Canada it is your and my pension funds that paying for these P3's. So we get screwed twice as taxpayers.

Nova Scotia Throne Speech eyes privately funded roads, bridges

The Canadian Press

November 22, 2007 at 1:33 PM EST

HALIFAX — Nova Scotia's Conservative government has opened the fall session of the legislature with a Throne Speech promising a return to public-private partnerships in constructing roads, schools and other facilities.

In a document entitled “Throne Speech for the New Nova Scotia,” the government says it has learned from the mistakes made when a previous Liberal government introduced the P3 concept that built 30 schools in the 1990s.

The government says with a $12.4-billion debt, it has to find ways to reduce the costs of building and maintaining public roadways and buildings.

The speech estimates the province is facing a long-term bill of $8-billion to build and maintain infrastructure.

The document also says a new department will be created that is focused solely on the environment, along with a new Ministry of Labour and Workforce Development to help deal with a shortage of skilled labour.

The government is also promising new education standards with primary attention paid to mathematics and literacy and says it will continue a freeze on university tuition with more reductions planned.

SEE

Nova Scota Imitates Alberta

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Dumb and Dumber

P3's don't save taxpayers money.

This was a costly dumb idea under the Mulroney Conservatives and the Harper Conservatives are going to repeat the same mistake.

The government has reportedly received advice that Edmonton's Canada Place is the most valuable of the nine buildings being considered for sale. It is worth $265 million if sold under a 25-year lease-back deal.

Canada Place was valued at $152 million when the Treasury Board approved its construction in 1984. But in 1988 Kenneth Dye, then the federal auditor general, reported that the new Edmonton home of 3,200 federal civil servants would end up costing taxpayers $100 million too much.

Part of the extra cost was the result of a decision to have Canada Place built privately under a lease-purchase deal instead of having the government build it.

And the irony in this is that it will be public sector workers pensions that will probably ending up owning it.

But Dawson wasn't sure how a benefit for business can work for the government.

"They're not in business and they're not necessarily going to re-employ that money at any kind of a return."

As for possible buyers for Canada Place, Dawson said large pension funds may be interested.

The Canadian Pension Plan Investment Board (CPPIB) now invests 45% of its assets outside Canada, up from 36% in 2005. Ontario Teachers' Pension Fund increased the percentage of non-Canadian assets in its equities portfolio from 56% in 2005 to 66% in 2006. OMERS has increased its foreign assets from 29% in 2000 to 39% in 2006.

With almost $500-billion in combined assets, the five top Canadian pension funds are getting a bigger piece of the global play book.

Not surprisingly, Canadian pension funds are now viewed as virtual private equity groups, says David Mongeau, of U.K.-based Avington International, a global mergers and acquisitions advisory firm that stickhandled a number of recent deals including the Legacy REIT sale with Caisse de depot, and the BCIMG purchase of the Canadian Hotel Income Properties Real Estate Investment Trust.

See:

Minister of P3

Mr. P3

Super P3

Public Pensions Fund Private Partnerships

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P3 Failure In Alberta

What raving leftist said this?

"Although it appears that ideology has ruled over common sense. Monopolies have to be rigorously regulated. When they aren’t – the Edmonton Regional Airports Authority and CLS being two obvious examples – they get out of hand. Having the private sector market alcohol has led to competitive pricing, extended business hours and a huge ramp up in selection. It hasn’t been all bad. Even though the trend recently has seen the mom-and-pops being squeezed out by the big chains."

Neil Waugh in the Edmonton Sun on the failure of the current privatization monopoly in liquor distribution in Alberta.

You see when the government privatized its liquor business it sold off its buildings at fire sale prices, and sold the rights to its lucrative government run distribution business, warehousing and trucks included, to a private company. But that company also maintained the State's monopoly. And as a P3 it is not subject to the usual checks and balances that even the promoters of P3's say need to be in place.

The Alberta Liquor Association called it the “disastrous warehouse mess.” The Alberta Hotel and Lodging Association said it’s had a “serious and negative impact” on its members.

Meanwhile, the Canadian Restaurant and Foodservices Association notes that the outfit running the province’s liquor distribution monopoly “enjoys” a deal where there is “no risk of losing market share due to poor service.”

But more to the point, the new Alberta Tories’ first dive into the P3 shark tank appears to have popped its top.

All this and a whole lot more was revealed in a damning report by Pricewaterhouse Coopers into what’s wrong with the province’s liquor distribution system released by the government yesterday. The very first line of the report warned that “a simple, expedient solution to Alberta’s current liquor supply chain challenges does not exist.”

But at least we may now get a liquor warehouse and distribution operator, that has a contract with Alberta taxpayers with performance measures and penalties. Because right now Connect Logistics Services has a sweet deal where “no incentives or disincentives exist for good/poor performance,” the report determined.

But the Pricewaterhouse report is a clear warning that public/private partnerships aren’t the dream team that the PCs would have us believe. Especially if no one is willing to keep a firm hand on the private partner.

But now the Stelmach government is determined to charge ahead. Ring roads are going to be run as P3s under long-term contracts. There’s talk of “bundles” of schools turned over to the private sector. The new Calgary hospital was originally shopped around as a P3. There were no takers. The liquor warehouse report may have just told us why.

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Privatization


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Fire Sale

After costing taxpayers an extra $100 million dollars in construction costs due to being a Mulroney government P3 the Federal Building in Edmonton and eight others across Canada are being sold at fire sale prices.

The $400 million they make off this mistake will not cover the 25 year rental cost to taxpayers of $79 million a year. Instead it's going to cost us almost $2 billion to lease back.

So would you sell your house and then rent it back, and agree to invest in upgrades? This is another example of neo-con ideology trumping economic common sense.

The federal government is selling nine office complexes, including two in Ottawa, to a private Vancouver developer for $1.64 billion -- $400 million more than the appraised value for the properties.

At the same time, the union representing many of the federal workers in the buildings labelled the deal "a give-away of colossal proportions."

"In addition to ceding ownership of the nine premium properties, the federal government has, in effect, written a $630-million cheque signed by Canadian taxpayers," said Patty Ducharme, the union's national vice-president.

The union cited its own study, done by Informetric, an Ottawa economic consultant. It valued the nine properties at almost $2.3 billion, Ms. Ducharme said.

The deal involves the sale of government property to Larco Investments Ltd., but also requires the federal government to lease back the office space for 25 years. That substantially reduces the risk to the new private owner.

The lease-back agreement calls for the government to pay base rent of $79 million a year plus operating and maintenance costs, officials said. Rents will be set annually by Public Works and Government Services to cover agreed-upon services, including annual maintenance costs.

Of the $1.644-billion purchase price, $1.567-billion will go to the government. Of this, RBC and BMO will each receive commissions of $5.7-million, according to a government official. There will also be up to $500,000 in expenses for the sale.

The remaining $77-million of the sale price will be used to undertake a 10-year capital repair program, while the government will be responsible for other expenses, including maintenance, repairs and other building improvements.

The government has agreed to lease back the nine buildings for 25 years, with payment amounts rising in five-year increments. Lease payments will total $505.3-million over the 25 years, rising from $82.2-million in the first five years, to $122.1-million in years 20 to 25.

See:

Minister of P3

Mr. P3

Super P3

Public Pensions Fund Private Partnerships

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P3 Scandal Down Under

In a scenario that sounds like something one expects from the Alberta Government or their clones in Ottawa, Australians in Victoria have found out P3's are public funds paying for private profit.

And key to the scandal is the fact that P3's are neither accountable nor transparent. Gee just like here.

And the government has a problem underestimating its surpluses. Gee just like here.


Secret deals with private sector under fire

■ Melbourne's formula one Grand Prix posted a record loss this year, leaving state taxpayers with a $21 million bill.

■ Departing Auditor-General Wayne Cameron put himself at odds with Mr Brumby by insisting the Government's budget surplus was more than $3 billion above that reported this week.

■ An independent consultants' report said the EastLink tollway would boost Victoria's economy by $15 billion and provide thousands of jobs.

EastLink is among 16 public-private partnerships entered into by the Bracks Government since its election in 1999. Others include Southern Cross Station and the Melbourne Convention Centre redevelopment. But the process of attracting private investment to help pay for public infrastructure has prompted concerns.

The public accounts committee's final report, tabled in Parliament yesterday, found the Government's reliance on "commercial in confidence" to limit access to important information about PPPs had "diminished the accountability of government to the Parliament for substantial state expenditure".


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P3

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Infrastructure Collapse

When your infrastructure was built fifty years ago, and was expected to only last half that time, well this is what happens when you waste a decade fighting the deficit chimera of the nineties.

Tunnel ceiling cracks close Montreal streets

–A large section of downtown Montreal will remain closed for the weekend after two cracks were found in a tunnel that makes up part of the underground city.

Montreal police widened a safety perimeter last night to include a number of blocks in the city's downtown core after officials felt there was a real risk of a road collapse following the discovery of cracks in an underground tunnel.

Fire chief Serge Tremblay told reporters last night that a second fissure was also found, but experts haven't been able to conclude what caused the cracks or how long they had been there.

Bridge to Laval latest to undergo repairs

Since the collapse last year of the Laval overpass, Quebec's Transport Department has been conducting more thorough inspections of the province's infrastructure.

Last week, responding to fears a 69-year-old north-end Montreal overpass could collapse because its concrete has "weakened," the city barred all trucks from the heavily-used structure and announced plans to demolish and rebuild it next year.

This is the empirical result of the neo-conservative political agenda of reducing taxes and regulations,failing to fund infrastructure and public services, and promoting privatization.

Bridges in Canada have reached 49 per cent of their useful life, according to a 2006 Statistics Canada study, and experts warn our country's roads, wastewater plants and other infrastructure isn't in any better shape.

A Statistics Canada study examining the age of infrastructure in Canada cited wastewater treatment facilities as the oldest, with 63 per cent of their useful life behind them in 2003. Roads and highways had reached 59 per cent of their useful life, and sewer systems 52 per cent.

Of course it is not only occurring in Canada, but also in the U.S. which originated the daft ideology of the neo-cons.

Emergency personnel look over a truck that lies in a hole in the street after a steam explosion in midtown Manhattan, New York, Wednesday, July 18, 2007. (AP Photo/Seth Wenig)

Cataclysmic infrastructure collapse: Who pays?
A recent Minneapolis bridge collapse and New York steam pipe explosion, both of which collectively caused the deaths of at least six people and more than US$250 million in damages, has brought infrastructure liability to the fore, according to a report by KPMG.

At issue is whether insurers are on the hook for the cataclysmic failure of a decaying urban infrastructure.

KPMG Insurance Insider quotes Claire Wilkinson, the vice president for global issues at the Insurance Information Institute, on the issue of where liability falls in the event of a massive infrastructure failure.

She notes that, in the United States, federal and local authorities that administer bridges and road can claim "sovereign immunity" to avoid liability. But she adds the common-law defense may no longer apply if the infrastructure was under repair, opening the public entities and contractors to charges of negligence..
"A contractor employed by the state could cause damage where the state would be held liable," KPMG quotes Wilkinson as saying.

And even if a contractor has liability coverage, Wilkinson adds, in a world of multi-million construction projects, the limits would likely be quickly eclipsed. KPMG notes that in the event a state contractor exceeded liability limits, the pubic entity might be held responsible for project liability associated with the costs of reconstruction, casualty, property business interruption and/or workers compensation claims.

And so the result is the idea that P3's will solve the under investing done by Governments at all levels for the past two decades. Except the so called 'private' partner, ain't. It's your and my pension funds. In other words you and I pay twice, as taxpayers then as Pension Fund participants.

The bridge collapse in Minneapolis is giving rise to other concerns. Hundreds of billions is needed to rebuild the nation's infrastructure. It's not just roads and bridges. It's also generation and transmission.

Enter infrastructure investing: Public and private pension funds currently invest in varied assets that range from stocks to bonds to real estate. But some are now taking a look at vital infrastructure as a way to earn better-than-average returns as well as to guarantee the longevity of an area's economic growth. If such allocations could provide competitive returns, pension experts say that fiduciaries and trustees would not violate their obligation to act solely in the interest of plan participants.

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Minister of P3

Mr. P3

Super P3

Public Pensions Fund Private Partnerships

Pension Fraud Brings Down Japans Government

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Mr. P3

Another example of the Harper regime planning to implement it's ideology of privatization at all costs is his appointment of Mr. P3 Michael Wilson as Canada's ambassador to the United States.

He is spokesman for the The Canadian Council for Public-Private Partnerships


As he told the Empire Club back in 1987.

Another way that we are getting government out of the way of the private sector is by privatising Crown corporations that are no longer required to meet public policy goals. Privatisation can bring increased vitality to the companies involved as well as to the economy as a whole.

We can stimulate the performance of the economy but we can also insure a greater degree of assurance for those people who are working in those companies. DeHavilland here is probably one of our best examples of success in privatising companies. We've already privatised eight companies, the most recent being TeleGlobe Canada. We're reviewing possible future moves involving such other Crown corporations and Air Canada and Petro-Canada.

In addition to removing government-made obstacles, we've been promoting private-sector growth in a number of ways. One of the first is in the area of investment, so important to creating jobs right across the country. We wanted to make it clear to people both within and outside Canada that Canada welcomes investment and welcomes foreign investment. Our changes to the Foreign Investment Review Agency and the changed mandate for Investment Canada to encourage investment have been very important in the increase of foreign investment coming to Canada in recent months. This little amount of friendliness has gone a long, long way.

Ironically his call for privatization has been the same agenda the Liberals followed, disasterously with the Firearms Registry, the contracting out of DND computer technology and now with their Super National Agency. It the agenda for the Neo Liberal State in Canada regardless of which party is in power. While the Liberals practiced Reinventing Government by stealth the Tories will hasten it as public policy.

Wilson is Chairman of the Canadian Coalition for Good Governance. Which calls itself THE VOICE OF THE SHAREHOLDER. Which does not mean Joe or Janey Canuck investor but the corporate investment community. The Big buck institutional investors who are promoting P3's.

The Coalition also introduced its first Board of Directors. Chairman: Mike Wilson, President and CEO of UBS Global Asset Management. Other Board members include: Tony Arrell, Chairman and CEO of Burgundy Asset Management; Morgan Eastman, Chief Investment Officer, OPSEU Pension Trust; Emilian Groch, Executive Director, Alberta’s Teachers’ Retirement Fund; Stephen Jarislowsky, Chairman, Jarislowsky Fraser Ltd.; Claude Lamoureux, President and CEO of Ontario Teachers’ Pension Plan; Don Reed, President and CEO of Franklin Templeton Investments; and David Beatty, Managing Director, Canadian Coalition for Good Governance.

He sits on the Board of Manulife Canada which reads like a who's who of the right wing buiness lobby,Canadian Council of Chief Executives (‘‘CCCE’’),formely the BCNI. Which lobbied during his era as Finance Minister for the FTA and NAFTA. Today they call for the direct integration of the Canadian and American economies. They too will have the ear of the new Ambassador as they did during the Mulroney era.

The corporate financial industry in Canada is a veritcally integrated structure a classic old boys network as Manulife shows. It is this industry which benefited most from Michael Wilsons deregulation during the eighties and ninties. His insight was his reward, he has spent the past twenty years as a scion for that same financial industry.

Wilson is not only proud of his role in getting NAFTA through and the GST but is also proud that the Conservatives went further in their cuts to services and the deficit than either Reagan or Thatcher, which resulted in the economic crash that left Paul Martin with a debt and deficit crisis as Finance Minister.

And Martin merely followed the formula that Wilson had already set in place thanks to a bueraucrat named David Dodge, who is now the Head of the Bank of Canada.

When Dodge moved into the deputy minister's office, he hung a plaque on his door. It read: "Due to current financial constraints, the light at the end of the tunnel will remain off until further notice." It set the tone for his five years in the post-a period of deep, deep budget cuts. When the Liberals came to power in 1993, Dodge intervened to get a reluctant Paul Martin, who coveted the Industry portfolio, to instead take over at Finance. The Tories had abandoned their credo of fiscal restraint; the deficit hit a record $42 billion by the time they were voted out of office. Dodge needed an MP of Martin's stature to get the government back on fiscal track, first of all by reneging on the Liberals' promise to kill the GST.

What Mr. P3 offers Harper is Bay Street credentials he so badly needs now that he is in Ottawa. Oil money got him there, old money will keep him there.

What can we expect from Mr. P3 when he goes to Washington, well this speech from 2003 may give us a clue. It sounds much like the values Paul Martin was spouting during the election. Strangely so. Must be how Finance Ministers think.

Look south to America, look east to Europe, but never forget to look west to China, where the world’s largest and fastest-growing economy is transforming our traditional view of developing and developed nations. For China is both. Yes, most of its 3.1 billion people are incredibly poor compared to North American standards. And yes, Ontario alone does more business with America than China does. But that’s all changing. It’s economy will grow by 7 to 8 per cent this year. And in terms of purchasing-power parity, it is the world’s second largest economy. More important is where China is headed: in the last five years, without much notice by the western media, China has become the low-cost, high-quality production centre of the world.

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Study: Public private partnerships better at promoting equity than widely assumed

University of Maryland researchers find P3 projects set higher DBE goals compared to “design-bid-build”

Peer-Reviewed Publication

UNIVERSITY OF MARYLAND

 

IMAGE: DISTRIBUTIONS OF ADJUSTED DBE GOAL AND ADJUSTED DBE ATTAINMENT BY DELIVERY METHOD view more 

CREDIT: A. JAMES CLARK SCHOOL OF ENGINEERING. UNIVERSITY OF MARYLAND

COLLEGE PARK, Maryland--Public private partnerships have a better track record in promoting equity than many assume, researchers at the University of Maryland’s (UMD) A. James Clark School of Engineering have found.

In fact, they generally set higher U.S. Department of Transportation’s (USDOT) Disadvantaged Business Enterprise (DBE) program goals than do Design-Bid-Build (DBB) projects, the findings suggest.

The newly-released study, conducted by UMD civil and environmental engineering professor Qingbin Cui and doctoral student Kunqi Zhang, and published this month by Transportation Research Record, is the first ever to empirically test how different delivery methods correlate with the setting and attainment of DBE goals--typically expressed in terms of the percentage of contract dollars expected and actually awarded to minority and women-owned businesses that participate in federally-funded transportation projects.

Drawing from the U.S. Major Highway Projects Database, Cui and Zhang sampled 134 federally assisted contracts. Linear regression models created by the team showed that two delivery methods--Design Build/Construction Manager at Risk and P3--outpace DBB in setting equity-related goals.

“In this case, conventional wisdom turns out to be wrong,” Cui said. 

In Ohio, for instance, value-weighted DBE goals stood at 14.3% for P3, 10.7% for Design Build/Construction Manager at Risk, and 9.2% for DBB; in Texas, the numbers were 12.8%, 9.9%. And 8.0%. Similar trends were found nationwide, and DBE goals were also found to be the most robust predictor of actual DBE attainment.

Contract size is an important factor, Cui and Zhang found: the larger the contract, the more opportunities for subcontractors, in turn fostering a greater capacity to meet DBE goals. And both P3 and DB/CMAR dwarf DBB when it comes to contract size, with average amounts of $954.2 million, $466.6 million, and $89.1 million, respectively.

“Larger-scale contracts offer more opportunities for business that might otherwise not be able to get a foot in the door,” Zhang said.

P3 projects may also have an incentive to promote diversity and equity because of the amount of public scrutiny these large, high profile projects often generate. “There’s a public relations component,” Cui said. “Companies involved in these projects are in the media spotlight and they want to be seen as doing the right thing.”

Cui and Zhang conducted their research in partnership with the Maryland Transportation Institute, a UMD research hub that brings together experts from across the University of Maryland System.

The primary source for the study--the U.S. Major Highway Projects Database--was also developed at UMD, under Cui’s direction. Unveiled in 2019, the tool covers nearly two decades of highway projects and allows researchers a ready means to make cross-project comparisons.

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The A. James Clark School of Engineering at the University of Maryland serves as the catalyst for high-quality research, innovation, and learning, delivering on a promise that all graduates will leave ready to impact the Grand Challenges of the 21st century. The Clark School is dedicated to leading and transforming the engineering discipline and profession, to accelerating entrepreneurship, and to transforming research and learning activities into new innovations that benefit millions.

JOURNAL

Transportation Research Record

DOI

10.1177/03611981211031210

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DOI

10.1177/03611981211031210

ARTICLE TITLE

Public–Private Partnership and Social Equity: An Empirical Study of the Disadvantaged Business Enterprise Program

ARTICLE PUBLICATION DATE

28-Jul-2021