Ontario auditor says P3s cost an extra $8 billion

A report from Ontario’s auditor released Tuesday shows that 75 P3 projects will cost taxpayers in that province an additional $8 billion.

“It is time for the government to listen to the mounting evidence from other jurisdictions on P3s,” said NDP Deputy Leader Trent Wotherspoon. “Especially when it comes to our kids’ schools, it’s time for this government to walk away from its expensive P3 rent-a-school scheme.”

Like Saskatchewan’s government has said it will do, Ontario conducted value for money audits on each potential P3 deal. Instead of giving taxpayers a true assessment of price, those audits added millions in “risk” to the calculation of what a provincially-owned build would cost, making it falsely look more expensive. Ontario’s Auditor General Bonnie Lysyk said outside parties advised on the price of the risk without backing up their claims.

The pricey P3 method has been used in Ontario for projects ranging from schools to hospitals and is often called Alternative Finance and Procurement (AFP) in that province. Lysyk concluded that the cost of construction for infrastructure is the same whether the private or public sector is the buyer, but in a P3 deal higher costs including the high cost of interest makes the P3 price tag much higher.

In late November, the auditor general in British Columbia released a report which found that province has racked up an extra $2.3 billion in debt because of very high interest rates on P3 projects, averaging 7.4 per cent and reaching as high as 14.79 per cent. That compares to about 4 per cent interest for regular provincial financing of a project. A Conservative government in Nova Scotia scrapped the province’s P3 schools plan because it found the P3 schools were costing $2 million more, each. Alberta recently scrapped a plan to use a P3 bundle for schools because it found the bidding process wasn’t competitive. Alberta has also had major problems with cookie-cutter schools that didn’t fit communities’ needs and shut out groups like day cares, sports teams or community groups who wanted to use the school.

Wotherspoon said the problems with local access and control, and bundled cookie-cutter schools that don’t fit communities’ needs are significant concerns for Saskatchewan. The bundled deals will also cut out Saskatchewan’s local construction industry.

The government voted against making P3 deals in Saskatchewan transparent last fall, voting down The P3 Transparency and Accountability Act. The act would require an independent accountability watchdog on each P3 to conduct analysis and report publicly before a contract is signed, and would prevent the government from using the P3 method for major capital projects if there are less than three bidders on the contract. The law would also require the full cost of the project – including the cost of credit – to be reported to taxpayers. The NDP re-introduced The P3 Transparency and Accountability Act this fall, and expects to be able to bring it to a vote again early in the spring.

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For more information, contact:
Erin Morrison, NDP caucus
306-787-6349
emorrison@ndpcaucus.sk.ca