NDP Urges Pallister Government to Maintain Transparency and Accountability in P3 Projects

The NDP is calling on the Pallister government to keep the current legislation on public-private partnerships (P3s) to maintain accountability and transparency while protecting taxpayers from financial losses from bad deals, NDP MLA James Allum said today.

“The current legislation ensures private-public partnerships are subject to public scrutiny, which can make them effective for undertaking projects that require major funding,” Allum said. “But now the Pallister government wants to tear up the legislation. That opens the door to privatizing public assets or hiding projects from public scrutiny. It could also lead to a mass transfer of wealth from Manitobans to the private sector.”

The Government of Manitoba can raise money for projects at a very low rate but the private sector will want much higher rates of return to be involved in a project, Allum said. So while the upfront cost of a P3 project could appear to be lower, the final cost could be a lot higher than if the government proceeded alone.

Examples of P3s that ended up burdening taxpayers with heavy losses include:

  • Ontario’s P3 hospital, Brampton Civic, cost taxpayers $200 million more than if it had been publicly financed and built by the province.*
  • In establishing the East Coast toll roads, the Nova Scotia government ended up paying an effective interest rate of 10 per cent for 30 years, which is twice its rate of borrowing. The road will produce an estimated $300 million in tolls for the private financiers, who invested $66 million.*
  • At the Université de Québec à Montréal a P3 failed, doubling the cost to taxpayers to $400 million from $200 million.*
  • In British Columbia, the Sea-to-Sky Highway will cost taxpayers an estimated $220 million more than if it had been financed and operated by the government.*

“Transparency and accountability in P3 arrangements are important to ensure the government is being open about the full costs of these arrangements,” Allum said. “Manitobans need an accurate comparison of the true cost of private-sector arrangements compared with public investments. The current act provides that level of openness and accountability. The government must not get rid of this protection for taxpayers for its own partisan reasons.”

Source: https://www.policyalternatives.ca/publications/monitor/problem-public-private-partnerships