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Ottawa (09 Aug. 2019) ― A recent Canadian Centre for Policy Alternatives (CCPA) blog post explains why P3 privatization schemes are still being approved. Using a graph from a report by the United Kingdom National Audit Office (NAO) on P3 privatization schemes, the post shows why politicians who only think in the short-term, like P3s.
The NAO graph shows that over the life of a project using a P3 privatization scheme is 40% more expensive than public procurement. However, because the cost of public procurement is paid up front, it will take 15 years before the total amount of P3 payments is greater than the cost of public procurement.
As the CCPA points out, most politicians are only around for about 8 years. That makes it very tempting for politicians who are only thinking of their short-term interests to use P3 privatization schemes for infrastructure projects. Using P3s means they are able to pass most of the cost onto their successors. By the time the full cost comes due and people realize that using P3 privatization schemes are more expensive, the politicians who made the decisions to use them will be long gone.
Convenience outweighs good policy when it comes to P3 privatization schemes
The short-term convenience P3 privatizations schemes provide helps explain why, after all the problems with them, they are still being used.
P3s have been shown to be more expensive. The secrecy surrounding them reduces public accountability and makes corruption more likely. The quality of public services also suffers when P3 privatization schemes are used.
But because P3 privatization schemes allow politicians to get infrastructure built and leave the bill for their successors, they are still being used.
Secrecy means less criticism of short-term thinking
The secrecy surrounding P3s and other privatization schemes also helps politicians get away with ignoring the actual long-term costs. When decisions are being made about whether to use a P3, almost all information is kept from the public. Even after P3 privatization schemes are approved, when documents are released, key information is blacked out.
This is one of several reasons to attack the secrecy surrounding P3 privatization schemes. If people have complete information about the costs and problems with P3s and other privatization schemes, it will be far harder for the privatization industry and their political allies to get them approved.