New information on BC P3 privatization schemes reveals real cost

“The size of the gap between what the cash flows for the three hospital projects show and what Partnerships BC claimed shows why the public needs access to all information regarding P3s and other privatization schemes” — Larry Brown, NUPGE President

Ottawa (8 Aug 2017) — The Canadian Centre for Policy Alternatives (CCPA) is reporting that using P3 privatization schemes for three British Columbia hospitals that are currently under construction will cost the public $262 million more than using public procurement.

According to a newly released supplements to the project reports, over the life of the projects, using P3s for the three hospitals will cost $3.11 billion. In contrast, public procurement would only have cost $2.85 billion.

Report shows extend to which costs manipulated to make P3s appear cheaper

The extra cost for P3s is very different than what Partnerships BC, a BC government agency set up to administer P3s, originally reported. While the cash flows show P3s costing $262 million more than public procurement, the reports produced by Partnerships BC claimed that using P3s would save $250.3 million.

As the CCPA article explains, this is done by making several questionable assumptions about the cost of public procurement. The effect of these assumptions is to artificially inflate the cost of public procurement and make P3s appear better value than they really are.

Manipulating costs and P3s go hand in hand

Manipulating costs to make P3s appear cheaper isn’t just a problem in British Columbia. Auditor Generals in several provinces have expressed concern about how cost comparisons are done by provincial agencies administering P3s.

As well, Partnerships BC is involved in more than just British Columbia infrastructure projects. Provincial governments in Saskatchewan and Newfoundland and Labrador, as well as the territorial government in the Yukon, use Partnerships BC for infrastructure projects.

P3 cash flows kept secret for over a decade

For over a decade Partnerships BC refused to release information on the cash flows used for reports on whether P3s provide value for money. The only information the public had were the figured produced by Partnerships BC manipulating the costs.

When cash flow information is showing P3s cost $262 million more than public procurement and Partnerships BC are telling people P3s save $250.3 million, it’s safe to say the public weren’t getting complete information about the costs of P3s. And that’s just for three projects.