Volume Ten, Number One   January 2005   www.columbiajournal.ca

New report advises looking at alternatives to costly P3s

CPP News

The BC Liberal government insists Public-Private Partnerships in operating public services save taxpayers money in borrowing costs, but a new report suggest this is not the case, as the cost of for-profit operations may be taking its toll.
 
A new report released October 21 entitled Financing Canada's Hospitals: Public Alternatives to P3s argues that P3s are an expensive way to finance public infrastructure. 

The author, economist Hugh Mackenzie, makes several recommendations in the report, including the creation of a stable capital investment program funded by all levels of government that would amortize the cost of public projects over the life of each asset.
 
"P3 deals are inherently risky," says John Irwin, a researcher at the Canadian Centre for Policy Alternatives.  "Private partners must pay higher borrowing rates than governments.  If and when these companies run into financial trouble, governments end up bailing out projects to the tune of millions of dollars because communities cannot go without hospitals."
 
"The BC government is steamrolling ahead with P3 contracts for the Abbotsford Hospital and the VGH Ambulatory Care Facility even though, countless studies show that P3s lead to added costs, less transparency, poorer quality of service, and even longer waits for patients," says Alice Edge, co-chair of the BC Health Coalition.  "Not only that, but this government continues to contract out more and more surgeries to private clinics instead of using public facilities that are already built and sitting idle."
 
BC Health Coalition Coordinator Lesley Moore says senior levels of government are neglecting their responsibilities, turning to P3 financing to take costs of the books.  "One way or another we're still paying for it, the question is whether we want to pay more and get less," says Moore.