British Columbia’s new Auditor General, Carol Bellringer, published her annual report on government’s 2013-14 summary financial statements today and it contains some pretty interesting highlights.
First of all, and for the first time, the AG has published a comparison of how much it costs the government to undertake projects on its own compared to using private investment through public private partnerships (P3s) for roads and hospitals. Her findings? She says:
As well, it is interesting to note that while government’s weighted average cost of borrowing is approximately 4%, on the $2.3 billion that government borrowed through public private partnerships this is 7.5%
In other words, the government is paying nearly twice as much for borrowing through P3s as it would if it borrowed the money itself. Over the 35 years these projects run the difference in borrowing costs could come to hundreds of millions of dollars.
One other point she raised referred to the government selling off its assets to balance the books. She found:
did you know that government earned $601 million from the sale of assets this year? That is much more than the prior year and contributed significantly to ensuring a balanced budget. It is important to note that assets can only be sold once and cannot be relied upon as a continuing revenue stream.
So much for the family silver.
BC’s former Auditor General, John Doyle, was pretty aggressive in the way he looked at the government’s books. There were some concerns a new AG would be more pliable. If today’s report is any indication that might not be a problem.