Common Sense Canadian

Ontario squanders extra $8 Billion on public private partnership infrastructure: A-G

PostedDecember 17, 2014 by in Canada
Ontario squanders extra $8 Billion on public private partnership infrastructure- A-G

A bridge built under the P3 model is likely to cost taxpayers more than a publicly funded one, says a new report

Read this Dec. 9 story from The Globe and Mail on a new report from Ontario Auditor-General Bonnie Lysyk suggesting that public private partnerships are far more costly to taxpayers than publicly-funded infrastructure projects.

Public-private partnerships have cost Ontario taxpayers nearly $8-billion more on infrastructure over the past nine years than if the government had successfully built the projects itself.

The revelation, from Auditor-General Bonnie Lysyk, comes as Premier Kathleen Wynne stakes the province’s future on a vast construction program that will see dozens of new schools, bridges and subways built over the next decade. And it suggests Ms. Wynne can build that infrastructure more cheaply as she wrestles down a $12.5-billion deficit.

“If the public sector could manage projects successfully, on time and on budget, there is taxpayer money to be saved,” Ms. Lysyk said Tuesday at Queen’s Park.

Her audit looked at 74 projects – including several hospitals and the Eglinton light rail line – that were built using private partnerships, called Alternative Financing and Procurement (AFP), by Crown corporation Infrastructure Ontario since 2005.

Ms. Lysyk found that the province assumes there is less risk of cost overruns and other problems with AFPs than with the public sector. But she said the province actually has “no empirical data” to back up that assumption. Private partnerships, meanwhile, are more expensive because companies pay about 14 times what the government does for financing, and receive a premium from taxpayers in exchange for taking on the project.

In some cases, she said, the least expensive solution may simply be for government to get better at building infrastructure itself, rather than farming it out.



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    scotty on denman

    “Farming Out” public infrastructure projects is more than simply imprudent: we also lose the opportunity to cultivate career public-service professionalism. Some of those careers used to begin with summer jobs for high school students; these workers needn’t have gone on to a public-service career themselves to have benefited society—those summer jobs were often the first work experiences young workers had, and the values and ethics instilled were applicable to any field of employment, public or private. Often operational portions of, say, road maintenance or forest inventory, are farmed out, the public-servant invigilating; the interchange of ideas and points of view, private versus public, often inspire innovation, and, indeed, workers themselves could advance from one side to the other, strengthening both sectors.

    As much as so-called free enterprisers decried the supposed inefficiency of public sector work, the opportunity to gouge the public purse by almost completely farming out projects has often been taken, costing the public far more than this alleged inefficiency ever did.

    There’s nothing wrong with profit motive, but checks and balances affected by an active public service sector ameliorates potential excesses of profit-seeking or maximization, in addition to the achieving benefits above. Strict bottom-line analysis of public projects ignores considerations that are the purviews citizens deserve for their tax dollars; they should also be permitted to enjoy the collective investment of accrued surpluses and savings. This in no way deprives the private sector.

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