WATCH ABOVE: To P3 or not? How an $8-billion price tag in Ontario’s could impact the future of Saskatchewan’s public infrastructure
REGINA – From highways to schools: increasingly, Saskatchewan is partnering with the private sector to build them.
That method, called a public-private partnership (P3), is under fire following a damning report from Ontario’s auditor general, Bonnie Lysyk.
Lysyk said value-for-money audits, which showed it costs more when a government takes on all the risk of an infrastructure project, were wrong. If Ontario built 74 projects without P3s, nearly $8 billion would have been saved.
Critics in Saskatchewan believe it serves as a warning.
“It’s time to recognize a bad idea for what it is, a costly process for what it is, and start delivering in the best interests of Saskatchewan people,” said deputy NDP leader Trent Wotherspoon.
The cost of borrowing is higher with P3s, similar to leasing a car instead of paying for it up front.
“The only explanation is that it’s an ideological perspective.”
SaskBuilds minister Gordon Wyant wouldn’t comment directly on the Ontario report, but said delaying any P3 projects would be a ‘significant risk’ to the Saskatchewan economy.
Wyant said the government isn’t just arbitrarily coming up with the dollar value associated with risk-transfer.
“We see time and time again with traditional procurement, projects going over budget, they’re not delivered on time,” Wyant said. “That doesn’t give value for taxpayers.”
The cracks are showing in other provinces too. Beyond Ontario’s $8-billion blunder, a British Columbia auditor’s report said P3s added $2.3 billion to that province’s debt.
Nova Scotia bailed on plans to build schools with private help when it found each facility would cost an additional $2 million. Alberta made the same decision when it found the bid process wasn’t competitive.
It comes as cities like Prince Albert are being told the government will only provide funding for a new bridge if it’s tied to a public-private partnership.
Analysts say it’s partially driven by politics.
“I don’t think there’s any reason why governments should tie the hands of municipalities in that way,” said Anthony Boardman, a University of British Columbia business professor who co-authored a study suggesting taxpayers get the short end of P3 deals.
“The only explanation is that it’s an ideological perspective,” Boardman said.
There’s no shortage of research to make a case for either side of the P3 debate.
With contracts for some of these projects spanning 30 years, it’s possible we may not know until then who was right.