The secrecy and manipulation the report describes are all too typical of P3s and other privatization schemes.
Ottawa (4 Oct. 2019) —A Canadian Centre for Policy Alternatives (CCPA) report released this week shows how important details of two P3 privatization schemes for the redevelopment of the Queen Elizabeth II Health Sciences Centre in Halifax are being kept from Nova Scotians. The report, Shrouded in Secrecy, The Queen Elizabeth II Hospital Redevelopment and the Privatization of Nova Scotia’s Health Care Infrastructure, also shows how using a P3 privatization scheme will cost more than public borrowing.
Value for money report will be kept secret until it’s too late to reserve decision
According to the CCPA report, the Nova Scotia government is refusing to release the value for money report that it claims justifies the decision to use P3 privatization schemes until after the contracts are signed — when it’s too late to reverse the decision without paying expensive penalties. The provincial government is also refusing to release the request for proposal documents that outline what will be included in the project.
There are good reasons for the public to be suspicious. As the CCPA report mentions, the company preparing the value for money report, Deloitte, profits from privatization. According to the Deloitte website, the company’s “global Public Private Partnership (PPP) team are at the forefront of the sector around the world.” It is hard to have faith in a decision to use P3 privatization schemes, when that decision is based on a recommendation from a company that profits from P3s and the public is not allowed to see the basis for that recommendation.
Auditors general have shown how value for money reports artificially inflate the cost of P3s
A section in the CCPA report called, “A Primer on ‘Voodoo Accounting’”, outlines some of the questionable assumptions provincial auditors general have found in value for money reports. These questionable assumptions manipulate the figures to artificially inflate the cost of public procurement. Without these questionable assumptions, value for money reports would have to show that the cost of public procurement was lower than P3 privatization schemes.
Borrowing costs could be 125% higher with a P3
In additional to the secrecy and loss of public control, P3 privatization schemes are an expensive way to borrow money. It’s estimated that using P3 privatization schemes for the Queen Elizabeth II Health Sciences Centre will increase borrowing costs by 125%. This estimate is based on the difference between what it costs the Nova Scotia government to borrow money directly and the rate of return for investors in a P3 privatization scheme in British Columbia that is similar to the proposed P3s.
Report confirms NSGEU right to oppose the decision to use a P3
The Nova Scotia Government and General Employees Union (NSGEU/NUPGE) has been very critical of the Nova Scotia government’s decision to use P3 privatization schemes for the Queen Elizabeth II Health Sciences Centre. In a media release when the decision to use a P3 was announced, NSGEU pointed out that there have been serious problems with other P3 privatization schemes in Nova Scotia. The CCPA report confirms that the NSGEU was right to raise concerns about the decision to use P3 schemes.
Business as usual for the privatization industry
It would be nice to say that what the CCPA report on the Queen Elizabeth II Health Sciences Centre P3s is describing is an isolated example. Unfortunately, that’s not the case. The secrecy and manipulation the report describes are all too typical of P3s and other privatization schemes. That’s why part of the National Union’s efforts to fight privatization include pushing for the public to get all the details of what’s being proposed before decisions are made.