Public works best for infrastructure and services May 27, 2010 - CUPE files

We enjoy good quality of life thanks to public services. Canadians expect their services to be accountable, accessible, locally-controlled and a wise investment of tax dollars.

Privatization undermines these community values. Contracting out and public-private partnerships (P3s) are risky and expensive for municipalities and taxpayers. Costs rise, quality suffers and local control is weakened. Services are less accessible, and projects are delayed. Public funds are diverted from core services to corporate profits.
A growing body of evidence points to traditional public procurement as the best way to finance public infrastructure. This research highlights the economic and social costs to communities of privatization through public-private partnerships.
Among the key findings:
• Private financing costs more;
• P3s lack transparency. Full financial information is not available before a contract is signed – if at all;
• Lengthy P3 contracts bind municipal councils for decades;
• P3s are inflexible. Contract amendments lead to cost overruns or new and increased fees;
• The business cases and value for money analyses used to justify P3s are biased and flawed;
• P3s hamper local control and accountable public governance; and
• P3s compound the problems with international trade agreements.
Despite the evidence favoring publicly financed and operated infrastructure and services, the federal government and several provinces continue to promote P3s through P3 agencies and infrastructure screening processes.
The following is a list of new evidence in support of public procurement and delivery.
Analysis of the business case for Victoria, B.C. sewage treatment
In this review, forensic accountant Ron Parks assesses the business case developed by Victoria, B.C.’s Capital Regional District (CRD) for a new sewage treatment system. The business case outlines three procurement options (traditional, hybrid or P3) for the region’s wastewater treatment needs.
Parks examines how the options were considered. He scrutinizes whether the cost of public procurement was artificially inflated and private costs underestimated, and finds the CRD’s business case is built on faulty assumptions and biased calculations.
Parks concludes “there is no reasonable rationale provided” to back up assumptions that public sewage treatment will cost more. In fact, Parks calculates that public operation is actually $116 million cheaper than a P3.
In late March, the region voted for public operation in at least five, and possibly all seven communities covered by the sewage treatment plan.

For details see CUPE webpage