By ALEC STRATFORD
More questions remain after the Sept.11 legislature public accounts committee meeting about the Nova Scotia government’s decision to enter into a public-private partnership (P3) for the highway-twinning project between Antigonish and Pictou.
As with all P3 projects, the proponents continue to claim that this approach provides the best value for money, and that this model will be more efficient, will save money and offers greater risk-management offsets. At the public accounts meeting, the argument was also made that by building this project through a P3, the government was able to secure a $90-million grant through the National Trade Corridor Fund.
However, upon careful examination, all the purported benefits of P3s are as easily achieved through traditional government procurement as outlined in the Canadian Centre for Policy Alternatives-Nova Scotia report on the Cobequid Pass highway build, Highway Robbery: Public Private Partnerships and Nova Scotia Highways.
The witnesses before the committee also confirmed that they did not approach the federal government with an application to the National Trade Corridor funds for a traditional build, and that they only pitched it as P3. There are no conditions laid out by the NTC funds that projects must be built through P3 model; these funds might have been available through a traditional build.
What was striking about the testimony with week was the amount of questions that could not be answered on the government’s value-for-money assessment. The public received traditional talking points that governments cannot reveal the request for proposals or details of the value-for-money assessment, as this could hinder the competiveness of the bidding process.
Key to effective democracy is accountability, and central to accountability is information. If information is not available, or the conduct of government is shrouded in obscurity, how are citizens to know the costs, benefits, effectiveness, and efficiency of government practices and programs?
Public scrutiny is essential to good governance.
The question remains: Why does the government not want the public to look deeper into this major infrastructure project? It has a lot to answer for and it has yet to explain to Nova Scotians’ satisfaction why it has decided a P3 is necessary to build this section of highway. Evidence has continued to show that these models, in Canada and many other jurisdictions, don’t save on money or time.
The public accounts testimony from high-ranking officials failed to answer key questions on the logic of going with a P3. For instance, they could not say what the interest rate that the private company will have to finance the project, and how this would compare to the interest rate that the government has access to.
Generally, in P3 arrangements, private partners borrow money for the build. Here is the critical distinction: governments borrow money at far lower interest rates than does the private sector. In the case of the Cobequid Pass project, the private bonds that financed it as a P3 carried interest rates of 10.76 per cent and 10.13 per cent. This was at a time when government bonds had interest rates of 5.7 per cent.
Every Nova Scotian who has ever had a mortgage or loan will understand what this means. Much higher interest rates on very large sums (the construction costs of the project were $124.6 million), financed over 30 years, have cost Nova Scotians a fortune in needless interest payments –indeed, $102.1 million more than it would have cost to finance the identical project through government bonds.
Senior bureaucrats were unable to answer how much profit the private company will be banking through this build. The CCPA-NS report shows that Nova Scotians paid $232 million more for the Cobequid Pass highway expansion than they would have paid, had it been delivered through traditional public procurement.
Given the crisis in health care, homecare and child protection, how can the government justify choosing an infrastructure model that has proven to not save time or money, but has boosted profits for the most affluent in our society?
The testimony revealed discourse that continues to demonize the capacity of the public service to deliver key services to the people of Nova Scotia, continually labelling public services as inefficient and costly compared to what the private sector can offer.
Yet there is clear evidence that P3s are, in fact, no more efficient. In fact, they are costlier. Nova Scotians are already familiar with the bitter disappointments of P3s in regard to the education system. A CCPA study based on several Nova Scotia auditor general's reports on the 39 schools that were procured in this fashion, found the P3 approach to be a “failure in terms of cost, risk management and evidence-based decision-making … that cost Nova Scotians tens of millions more than the traditional procurement system.”
So why are we using them? If they don’t save time and money, then who is benefiting from this model?
As Nova Scotians, we are constantly told that we have scare resources to deliver core infrastructure projects, health care, long-term care and child protection services. We are told that we must spend less in these areas in order to balance our budgets to maintain competitive tax rates, and that this will grow our economy and ensure prosperity for all.
The problem with this narrative is that while the economy has grown steadily over the last two decades, only the incomes of the richest 20 per cent of Canadians have actually increased. The rest have lost income, contributing to rising inequality. Rising inequality and the continued class divide between the rich and the poor has allowed the voices of oppressed to go unnoticed, eroded trust, and increased anxiety and illness for all.
This has contributed to governments enacting austerity policies (expanding corporate influence in the process). P3s are another example of government decisions that benefit a few wealthy elite in our society, enabling rising inequality.
Nova Scotians should be concerned about whose interest their government has in mind when they are selecting P3s as the model for delivering key government infrastructure.
Alec Stratford is chair of the steering committee for the Canadian Centre for Policy Alternatives-Nova Scotia
RELATED:
