Labour Views - P3s and a Value for Money

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(From the July 19/17 issue of Yellowknifer)

Within the last month, the Stanton Renewal Project has been gloating to the public about how it is halfway through its $350 million construction project. Cory Vanthuyne, MLA for Yellowknife North, for example, recently posted to Facebook on June 24 some of the features of the project, including the fact that it is twice the size of the old hospital, has pellet boilers, and includes many material aspects that make it such a massive project.

All of this is smoke and mirrors.

The GNWT refuses to acknowledge that such a project is almost guaranteed in the end to cost NWT residents much more money because the project is a Public Private Partnership (P3). The labour movement in the North remains united against P3s, much like most unions in Canada, because there is more than enough evidence to show that P3s have a bad record in prioritizing profit over public services.

It is amazing how bad ideas refuse to die hard, so let’s recap the major problems.
First, cost overruns. Halfway through its construction, the project promises to be $350 million and completed on time in early 2019. We certainly hope this is the case, however if these objectives are successful, it will be one of the few in the country. In January 2015, for example, the Auditor General of Ontario announced after reviewing 74 hospitals under P3 arrangements that the Government of Ontario spent $8 billion more than it would have had to had it gone through more traditional public procurement procedures.  Groups like the Centre for Policy Alternatives and the Association of Certified Accountants (UK) have gone so far as to say that there is “no evidence that P3s were more successful at delivering projects on time because they were P3s; rather they succeeded because of the detailed way the contracts were written.”  When, or if, there is a need for cost cutting measures, it often leads to the privatization of services that would otherwise be public – something that would almost certainly mean a decline in the best type of service. It's foolish to think a P3 who has designed, built & financed this project would then turn it over to the GNWT at cost. Not only will we pay dearly for this hospital but so will our children and grandchildren because of a 30 contract signed with a P3 for the maintenance of this facility. Good paying jobs, that we need, will be lost to low paying precarious employment. There are conflicting philosophies that mix like oil & water. One who’s bottom line is profit and the other services.

Besides the hospital, the GNWT has had one other major P3 project of late –the Mackenzie Valley Fibre Link. Many residents know that that P3 arrangement not only exceeded cost projections but also exceeded the construction schedule earlier this year.

The second problem has to do with not only accountability to the taxpayer, but to the citizen seeking simple democratic oversight. The GNWT has bought into the Canadian corporate sales pitch that P3s are the cheapest and most effective way to go for massive public projects despite a plethora of evidence to the contrary. Indeed, the government has stated that foreseeable needs like highways to resources or long-term housing will likely end up being private public partnerships. This will mean that citizens will have to be especially vigilant because such contracts in their complexities will likely shift in the favour to those private companies and corporate conglomerates with the expertise in devising methods to take on public risk. Hence accountability to the electorate seems to be a much less sure thing as it would be under a public procurement effort.

Finally, we question how the GNWT is ever going to be able to staff such a building. Right now, the hospital is to be twice the size of the previous one and will be equipped to serve a city with 60,000 people. As many know, our sister organization the UNW is looking to complete a collective agreement with its GNWT employees who include health care workers. Many of those employees are disgruntled and open to the idea of leaving the territory if they are not competitively compensated for being here. If the GNWT cannot complete a collective agreement for the workers that already exist, how can it possibly equip an even larger building in the health care sector?
The labour movement does not wish the government ill in getting the best hospital possible, but we are concerned that the GNWT has opened the door to the misinformed notion that P3s in and of themselves are the answer to all of our public infrastructure needs. 100 per cent public ownership and control over our hospitals has proven to be more accountable and more cost effective and we hope our governments and citizens don’t find this out through their pockets as will likely be the case.