The Canadian Centre for Policy Alternatives recently released an evaluation of the 1990s private-public partnership (P3) program under which four private contractors built 39 public schools they then leased back to Nova Scotia.
P3 shell-game deals are “typically used to conceal government expenditures and provide guaranteed long-term profits for contractors.” In Nova Scotia, the CCPA notes there was “a lack of evidence-based decision-making, [with] no kind of cost-benefit analysis… prior to the initiation of the projects, or at any time since.”
Those 20-year leases expire over the next few years, and we face Hobson’s choices:
- renew the leases for another five to 10 years at exorbitant rates;
- buy back buildings we’ve already spent $750 million to build for yet another $230 million;
- or walk away and start the construction process all over again.
The costs of P3 schools are real. As former interim opposition leader Maureen MacDonald pointed out: “for every dollar we overpaid on those P3 schools to the private sector, that’s a dollar out of the classroom.”
The McNeil government must not only decide what to do with its existing P3 schools — the CCPA says we should hold our nose and buy them back because “schools are critical resources [that] need to belong to the public, not private corporations.” — but it must also decide how to finance other long-overdue infrastructure renewal.
Because it continues to pursue a discredited, faux-balance-the-books austerity strategy, P3 projects appear attractive. In its 2016-17 business plan, the government still says it “will explore opportunities for innovative delivery models, including P3 partnerships where appropriate.”
That means using P3 to twin highways, perhaps even replace the Victoria General Hospital.
The government claims it’s learned from the mistakes of the past. But the CCPA report is just the latest in a long line of critical evaluations of the P3 process, including several by the province’s auditor general, that suggest steering clear of such deals. In the larger world, the UK, which pioneered P3 projects in the 1980s, recently “completely overhauled the practices used in these contracts.”
Do we trust this government to do what’s right for the long term, or to focus on the next election cycle?
That is the question.
Consider two numbers.
- When it opened in 1998 as a P3 partnership, the Annapolis Valley’s Horton High School cost at least $47 million.
- When it opened in 2007 as a public sector project, Halifax’s Citadel High cost just $21 million in tax dollars.
This version has been corrected to reflect the fact that the cost of P3 financing is now counted as part of the public debt in Nova Scotia for accounting purposes.