$8 billion down the drain in Ontario P3s

Michael Butler
6 years ago


Today’s Auditor General Report in Ontario revealed that P3 projects had cost the people of Ontario $8 billion in extra costs.  While the media may run with stories about smart meters, make no mistake the P3 issue is the real story.

It was reported that, “Infrastructure Ontario assumes the private sector can deliver projects 13.3% cheaper because of unspecified “innovations” that private companies will find, but that governments somehow will not. But Ms. Lysyk found there was no evidence such an assumption is actually true... 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... The province had to pay $2.3-million extra to a company building a hospital because the contract had not actually transferred the risk of design changes to the company”

For anyone who has been following Ontario politics and particularly the shady P3 deals for hospitals the Liberal government is all too keen to sign off on, this type of news comes as no surprise (or other private public scandals like e-health or orange). The report outlines that there is no empirical evidence to support the claims of “risk transfer” under these schemes which is the regular rhetoric the government gives the people of Ontario.

And with the  $8 billion in added costs, the report also revealed that Infrastructure Ontario is favouring P3s based on assumptions that are not backed up by data(many of these costs remain hidden from public scrutiny, and now we know why). Without full details of all costs related to these projects, it is impossible to assess their total cost to the province.

If we dig a bit deeper into the report we seen the it goes beyond $8 billion. The total liabilities, debts and commitments that Ontarians will have to pay, as a result of these half baked projects totals more than $28.5 billion.

Let’s put this in context.  This is billions and billions of dollars of public money being given away at a time when the government is closing hospitals across the provinces and tossing people off of home care because they say that they don’t have the money.

So what could we do with $8 Billion?  After some rough calculations, if we wanted to spend it in one place here is what it could get people in Ontario:

·         20,000 more hospital beds operating year-round

or

·         27 Community Hospitals

or

·         19930 acute care beds

or

·         Around a 15.4% increase of annual health care budget

or

·         26,060 new doctors for a year

or

·         82,000 new nurses for a year

For their part, the Kathleen Wynne government is sticking to its old rhetoric of not wanting to take on risks, while promoting innovation and efficiency (those are code words used when you're full of it).  In fact, in response to today’s report the Infrastructure Ontario chief executive officer Bert Clark stated, “It would be a travesty for everyone if we said, ‘Let’s go back and try to deliver our large complex projects using [public] means.”

But to be fair, this isn’t the only government with its head stuck firmly in the sand. As Council of Canadians Water Campaigner Emma Lui pointed out in a recent blog, “Earlier this month, Liberal Party Leader Justin Trudeau gave a speech to the Canadian Council for Public-Private Partnerships where he promoted Public-Private Partnership (P3s) as a solution to infrastructure needs. The Harper government has also been promoting P3s in infrastructure projects such as water and wastewater and transportation through the P3 Canada Fund. A P3 model is also being planned for a new Saskatchewan Hospital in North Battleford.”


So what we are dealing with is an ideological position that defies fact and reason. The liberals and conservatives (both provincially and federally) continually make the false ideological assumption and regard public debt as a sign of mismanagement while paying more into schemes that increase it. Yet, as is the case with P3s hospitals, they are commonly accounted for as "operating leases" in a provincial budget, instead of capital expenses.  This leads to the impression that provincial debt is lower when P3s are used (I.E. creative accounting, but at the end of the day it is still a cost which the public has to pay but with a higher price tag). 

Lastly we are increasingly seeing these deals are also a Trojan horse to destroy many unionized support staff and service workers jobs. In addition to expensive financing and construction costs, these P3 hospitals deals often include hidden privatized services such as maintenance, security, cleaning and laundry, adding tens of millions more to the final price tag and reducing health outcomes for patients. When the privatization of services was initiated in 2003 in BC, the wages of housekeeping aides with Aramark (a multinational health privateer/corporation) dropped from the usual rate of $18.32 per hour to the starting wage of $9.50 per hour, raising to a meager $11.21 per hour after 6 years, which represents a 79% decline in pay.  With this, and the cuts to front line workers training, wages, union protection, and so on, there are serious erosion of standards and negative health outcomes for patients that are the result of companies looking to save money by abusing vulnerable support workers

Study after study, and report after report, demonstrates that P3 projects cost more and are less transparent and accountable. Privatizing hospital facilities has inflated costs across the country and it is time we put a moratorium on crooked P3 deals and invest the money back in public health care for patients.