On long-term costs

As promised yesterday, let's look at how P3s fit into the fiscal assumptions made by far too many Canadian governments and political parties.

To start with, it shouldn't be news that the Harper Cons have exhibited a regular pattern of pairing permanent and costly tax cuts with one-time spending in an attempt to pretend at balance between the two. And anybody questioning that choice is met with the claim that massive tax cuts never have budgetary consequences, while even far lesser projections in terms of government spending are fiscally irresponsible.

Now, the Cons have gotten away with that strategy largely because they aren't alone in the philosophy. Instead, the federal Libs have similarly hidden from the concept of "structural spending", and many provinces have fallen into the same trap. At best, social spending is thus allocated on a one-time basis in hopes of generating some sustainable non-profit or private institutions in the long run; at worst (as with the Harper Cons), it's instead orchestrated solely for immediate political benefit with no regard for whether it produces any positive policy outcomes.

Unfortunately, after a barrage of the same assumptions (with far too few exceptions), the result is that far too many people seem prepared to accept on faith that two types of action which are functionally equivalent in their impact on government budgeting should in fact be treated as having radically different effects, even though the costs of reversing either are exactly the same (i.e. the political cost of changing a structure which may benefit some individuals).

So the problem when it comes to the respective perceptions of tax cutting and social spending involves treating like things differently. From there, let's bring P3s back into the picture.

In effect, P3s (at least the typical model of signing a long-term contract to have a private entity build and operate a facility) actually suffer from the weaknesses normally and wrongly attributed to social spending. Unlike either tax cuts or spending programs, P3s create binding commitments which serve to tie the hands of governments for decades at a time. And even political will isn't enough to reverse the long-term costs since the government has entered into an enforceable contractual commitment to keep paying the money.

So if there was any genuine concern for effective use of government money and future freedom of action, P3s should be the first type of spending on the chopping block. But the amount of elite concern about multi-decade commitments to keep taxpayer money flowing to private operators to perform public services? To describe it as "crickets chirping" would be an insult to the volume level of crickets.

Instead, a perceived need for compromise between public and private interests has given rise to an incestuous cottage industry to promote the use of public funds in a way which is supposed to be unacceptable when it comes to direct benefits to citizens. But while the task of pointing out the real problems with P3s becomes more difficult with every government investment in promoting them, the costs deferred to the public sector for decades to come make the battle one which needs to be fought before it's too late.