P3 model simply adds more costs

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Editor:

The Government of Saskatchewan recently presented it’s Throne Speech to the people of the province. Among the many issues addressed, was the need to construct new schools throughout Saskatchewan. While we certainly need new schools, what the government has proposed is that a number of schools in our province be built according to a P3 privatization model. But what do P3s mean for us?

Sometimes misleadingly called public-private partnerships, P3 privatization deals involve signing complicated contracts with construction and supply companies, where the companies construct and operate buildings and then lease them back to the government. These kinds of deals are being signed for a variety of purposes, including hospital, homecare facility, and school construction.

Of course, companies don’t agree to build things for the government without some kind of incentive, which is why P3 privatization deals almost inevitably cost more than normal government construction projects. Companies only agree to participate in projects that are profitable, and corporate profits add significantly to the cost of construction. Instead of simply paying for construction, taxpayers are forced to pay for construction and corporate profit.

The P3 privatization model for school construction has already been tested in a number of Canadian jurisdictions. In Alberta, for example, a number of P3 schools have been constructed since 2007. Before the projects even began, early estimates were that P3 privatized schools would cost 51 per cent more than publicly-built and operated schools. In 2007 alone, the budget for the P3 schools project rose from $200 million to $512 million. Analysis of the project after its completion found that three schools could have been built using conventional government construction deals for every two schools that were built under the P3 privatization scheme. What’s worse, cost cutting measures at one school, including the use of substandard roofing materials, caused the roof to leak only six months after it opened.

P3 privatization schemes amount to little more than government handouts to construction and supply companies. They’ll cost the people of Saskatchewan more, and provide less of a return. They’re just bad business. Hopefully our government will think twice about signing such terrible deals.

Larry Hubich - President, Saskatchewan Federation of Labour

Organizations: Saskatchewan Federation of Labour

Geographic location: Saskatchewan

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