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In the news
Campbell becomes a leader in
stealth privatization P3s
Mary
Lynn Young
Thursday, January 20, 2005
Globe
and Mail
What a shift. Four years ago, when B.C.'s Liberal
government entered office, expectations were it would privatize everything from
Crown corporations to liquor sales. These ideas got it into a lot of trouble
with voters and the public sector unions, so it backed off.
But instead of abandoning the privatization urge,
the government merely changed the name and refocused.
Now, British Columbia is leading its provincial
counterparts in developing P3s or public-private partnerships. Indeed, Quebec
recently announced it plans to follow in B.C.'s footsteps by creating
legislation that will form a designated government agency to stimulate P3
development.
This silent privatization is consistent with the
Liberals' conservative fiscal leanings. It also provides a convenient cover for
a government skittish about union backlash. P3s sound less radical and are
significantly more complex than traditional privatization but the end result is
the same -- more private sector involvement in government infrastructure and
services.
Stealth apparently works well. In fiscal 2004-05,
17 per cent of B.C.'s total capital projects will involve P3s. This figure is
only slightly lower than the United Kingdom -- birthplace of P3s more than a
decade ago -- where P3s amount to 20 per cent of total capital expenditures.
Some of these deals involve major Canadian players, such as SNC-Lavalin Group
Inc., which will build Vancouver's $1.7-billion rapid-transit line to improve
transportation for the 2010 Olympics.
P3s are gaining traction in other provinces. A
count of the major capital projects on the website for the Canadian Council for
Public-Private Partnerships indicates that while B.C. is leading with nine out
of the 16 P3s listed across the country, Ontario and Alberta have three projects
each.
For B.C. taxpayers, the big question becomes:
what exactly are P3s and how will they affect public expectations and delivery
of government services? P3s are defined in different ways depending on the
jurisdiction. In Britain, P3s or private finance initiatives include
public-private partnerships where everything from the design to construction,
financing and operations of a major capital project are transferred to a private
company.
Canadians take a broader approach. Here, P3s
involve public-private partnerships where there is some transference of risk.
For instance, there have always been private
contractors for public roads that are maintained by civil servants. With a P3,
the private company might not only construct the road, it could maintain it
and/or keep the tolls. In Canada, P3s involve moving some of the traditional
government tasks in major capital projects, such as operations, over to the
private sector -- but not necessarily all of them. The relationship continues to
be a partnership with a complex contractual arrangement.
The definition is important because it becomes
blurred when services are included. For instance, the number of P3s in B.C.
would rise if the tally included new government services deals.
There are currently 10 to 12 major
alternative-service delivery projects under way, which by definition fall under
the P3 umbrella of public-private partnerships and shared risk. One of the
largest and most contentious deals involves a $383-million contract with EDS
Advanced Solutions Inc., a subsidiary of Texas-based Electronic Data Systems
Corp., which has been hired to collect non-tax revenue in B.C. It is the first
time services of this nature have devolved to the private sector in Canada.
Unfortunately, meaningful discussion on the
extent of these projects and their impact is largely absent from public
discourse for a number of reasons.
First, P3s are a new breed of government. Second,
while B.C. is the only province with a dedicated body (Partnerships B.C.) to
manage the P3 process for capital projects, P3s involving services are handled
by a different government department -- so centralized data is difficult to come
by. There are also proprietary bid information concerns and ideological divides.
For instance, P3s are a red flag for unions, who conflate them with outsourcing
and see them as a personal attack on labour.
What we do know is that most governments need
money for infrastructure and operations. The proliferation of P3s in B.C.
indicates a willingness on the part of the Liberals to experiment with private
provision of these services. There is also academic evidence that these
partnerships offer a more efficient model than the past.
The challenge is whether these traditional public
services, such as hospital construction and transportation, can be maintained at
the level the public has come to expect.
In February, B.C.'s Auditor-General is expected
to release a report on one of British Columbia's first P3s, the construction of
a hospital in Abbotsford. Read the document closely. It contains our future.
Mary Lynn Young, PhD, is an assistant professor
at the University of British Columbia's School of Journalism.
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