May 9, 2012

BC’s P3s promise “eye-watering” profits” for private investors. And more of them coming


Two stories that came out on the same day last week should raise concerns about where the BC government continues to go with public private partnerships (P3s). 

The government announced it was going to build two hospitals on Vancouver Island in Campbell River and in the Comox Valley.  Premier Clark then told the Campbell River Courier-Islander that:

It is going to be a P3,” she said. “We just haven’t announced it yet. So now we’ve announced it. We are planning it as a P3. We’ll see what happens, but that is our plan.

This will make about eight hospitals that BC has built as public private partnerships under the Liberal government.

But the same day as the Premier’s announcement the Public Accounts Committee in the UK came out with one more extremely critical report about the use of P3s.  In the UK P3s, the use of private funding for public projects like hospitals is called Private Finance Initiative or PFI.

The Chair of the Committee, The Rt. Hon Margaret Hodge MP, said:

Time and again my Committee has reported on problems with PFI, including the costly contracting process and the prospect of little risk being transferred but high returns being enjoyed by  investors. 30 year contracts are inflexible and don’t allow managers to alter priorities or change services that have become outdated. We have even seen evidence of excess profits being priced into projects from the start.

Hodge continued:

The Treasury review must find a private finance funding model that allows flexible delivery of public services and ends the era of investors receiving eye-wateringly high rewards while taking ever decreasing risks.

Private companies benefitting from taxpayer funded contracts must be transparent over the use of public money so that the public can be assured that value is being secured from the investment.

BC’s public private partnership program was based on the UK’s PFI program and has the same problems.  The difference is that here, things like details on profits and costs are withheld from the public.  In one example where cost information has been made public – Vancouver General Hospital’s Diamond Centre – the P3 cost vastly more than it would have to do the project publicly.

Citizens for Quality Health Care, a North Island group that obtained 19,000 names on a petition to get the two hospitals built, has expressed concerns about the use of a P3 for the project.  They want the hospital publicly funded and services publicly delivered.  A CQHC release stated:

CQHC remains committed to the position that there are many compelling reasons to ensure that these new hospitals are not P3s.

This stand is based first on the principle that health care in Canada must continue to be publicly funded and publicly delivered, and secondly on the wealth of experience of P3s in the UK, Canada and elsewhere that prove that P3s result in excessive cost, deterioration of care, and loss of control of decision-making.

Eye popping profits.  Little evidence risk is transferred.  Loss of public control.  Lack of flexibility.  Deterioration of care. So why are P3s a problem in the UK and not here?  The difference is just a matter of timing.  Eventually, BC’s government will be forced to release the information it has been hiding on costs and other issues. The fuse has been lit.  Who will be in government in BC when these P3s blow up?

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