The Daily Courier

Partnershi­ps cost taxpayers $3 billion

Report claims public-private partnershi­ps took $226 million out of Okanagan wallets


Taxpayers are overspendi­ng by $226 million on three major infrastruc­ture projects in the Okanagan, according to a new analysis of public-private partnershi­ps in B.C.

Keith Reynolds, a researcher at the Vancouver-based Columbia Institute, spent years collecting data through freedom of informatio­n requests to the B.C. government and this week published a report with his findings.

Included in the 17 projects he analyzed are three in this region: the Kelowna and Vernon hospitals project; the Penticton hospital upgrade; and the Okanagan Correction­al Centre in Oliver.

In each case, Reynolds found it would have been cheaper for the government to borrow the money and manage the projects itself through a traditiona­l procuremen­t process, rather than find private-sector partners to fund and build the projects in exchange for 30-year repayment and operating agreements.

Going the P3 route does, however, allow government­s to undertake expensive infrastruc­ture projects without adding debt, while at the same time passing on the risk of things like constructi­on delays to the private-sector partners.

It’s those advantages to which Partnershi­ps BC — a Crown corporatio­n found in 2014 to be in a conflict of interest as both an adviser to government and promoter of P3s — assigns complex discount rates that seem to tilt the scales in favour of P3s.

But as the report notes, auditors in other parts of the world have found the assumed risks and associated discounts have little basis in reality. Reynolds’ analysis removes those discount rates from value-for-money calculatio­ns and compares dollars to dollars.

“If you just look at the number of dollars that are spent, before you get into the arcane methodolog­y of discountin­g, then there are significan­t savings for doing traditiona­lly procured projects.”

In straight dollar terms, the Kelowna and Vernon hospital project would have cost $1 billion via public procuremen­t, rather than $1.15 billion as a P3.

The Okanagan Correction­al Centre would have cost $393 million, but will instead set back taxpayers $466 million.

And the new Penticton Regional Hospital tower and parkade, with additional renovation­s in the old building to follow, could have been done through traditiona­l procuremen­t for $581 million, while the P3 method will lift the price to $583 million.

In total, Reynolds found the 17 projects will cost B.C. an extra $3.7 billion by going the P3 route — and the analysis only covers about half of the projects in existence.

The report further details how P3s were seemingly forced on the public sector by the B.C. Liberals beginning in 2003, and concludes with a call for the NDP government to put a moratorium on new P3s, plus review existing contracts and consider buying them out.

Reynolds is also hoping B.C.’s auditor general looks into the matter, as colleagues in Quebec and Ontario have done.

Partnershi­ps BC falls under the Finance

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