P3s and I told you so

It’s sometimes hard in this province not to channel your inner seven-year-old, putting your hands on your hips, leaning forward defiantly, and screaming out, “I tooooold you so!”

That was certainly the case for many this past week when Wayne Drysdale, Alberta’s minister of infrastructure, announced the province would not be proceeding with public-private partnerships for the building of 19 of the 50 new schools promised over and over again in recent years.

The main reason given by Drysdale is that going the P3 route would cost the province $14 million more than it would building them the traditional way. Now, for anyone who has been paying attention, this will not come as a surprise. There has been a tremendous amount of research and information produced in Alberta and across the world in recent years demonstrating that P3s for public infrastructure always cost more, always result in reduced accountability and transparency, and always impact the quality of services.

In 2007, for example, the Canadian Union of Public Employees contracted economist Hugh Mackenzie to conduct an in-depth review of the Alberta government’s plans to build 18 new schools as P3s. What Mackenzie found was that the P3 would cost so much more, that building in the traditional way would have allowed the government to build 10 more elementary schools for the same amount of money. Likewise, a 2013 paper published by University of Toronto professors Matti Siemiatycki and Naeem Farooqi in the Journal of the American Planning Association found that using P3s adds, on average, 16 percent to the cost of infrastructure projects. There have been similar studies, reports and articles released over the past 10 years from the Parkland Institute, the Canadian Centre for Policy Alternatives, academics from around the world and numerous other organizations and unions.

Despite all this information, the Alberta government has held steadfast in its defence of P3s, and in its policy of defaulting to P3s for infrastructure projects. They have claimed all along that this method saves money, but they have never provided a shred of evidence that this is the case. What P3s actually do is facilitate the transfer of public money and private infrastructure to their friends in the private sector, padding their profit margins and bottom lines at our expense.

Now, for the first time ever, the government has admitted that building these schools through a P3 would cost more and is therefore not a good use of public dollars. Once again, however, we will not be allowed to see the full details of the accounting and calculations that led to this assessment. You can be certain that if the government is publicly owning the $14 million extra costs and actually backing off the P3 because of it, the real figure is significantly higher. Using Siemiatycki and Farooqi’s 16-percent figure, for example, would result in the traditional procurement method costing some $78 million less than the P3.

Sadly, in this case, it is not enough to say, “I told you so.” What’s needed is for Albertans to place pressure on the provincial government to stop ignoring the evidence and completely abandon the notion of P3s for any future infrastructure project. It’s a model that does not work and that does not benefit the public interest in any way, shape or form. The use of P3s, especially here in Alberta, has been driven exclusively by blind ideology rather than evidence, and Albertans deserve better than that. May this P3 school fiasco, and the accompanying delay in getting these schools built, be the straw that breaks the P3 camel’s back. V

Ricardo Acuña is the executive director of the Parkland Institute, a non-partisan, public policy research institute housed at the University of Alberta. The views and opinions expressed are his own and do not necessarily reflect those of the Institute.

Leave a Comment