- Toby Sanger asks who really bears the risk when governments agree to hand over billions to the private sector through P3 arrangements:
While Canada may be one of the leaders in the market for P3s, we’re far from a leader when it comes to transparency, assessment and accounting for P3s. P3s are already a murky business when it comes to financial transparency—and we’re close to the bottom of that pool. The value for money assessments used to justify P3s in Canada are simply not credible for a number of reasons...
All the Canadian P3s I’ve seen in the past decade or so have been justified on the basis that they transfer large amounts of risk to the private sector. This is also what U of T professor Matti Siemiatycki and Naeem Farooqi found when they analyzed all the P3s conducted by Infrastructure Ontario for an article published in the prestigious Journal of the American Planning Association last year. Every single P3 project was justified on the basis of Value for Money assessments that claimed P3s transferred large amounts of risk from the public to the private sector.
The average amount of risk calculated for these projects was almost half (49%) the base project costs. For some projects, the value of the “risk” calculated amounted to over 80% of the base project cost, averaged over $100 million for each of the 28 projects and over $3 billion in total. That’s a lot of money, no matter how you count it. Just to be clear: not one of these P3s would be justified on the basis of the central Value for Money assessments without this assumption that large amounts of risk were transferred to the private sector. And Ontario isn’t unique: P3s in other provinces are also justified on the basis they transfer large amounts of risk to the private sector. (see note #2 below).
But how is this risk calculated? They don’t say. The value for money risk assessment templates Infrastructure Ontario provides are frankly embarrassing from a public policy perspective, especially for decisions that have involved billions of dollars of the public’s money. There’s no evidence provided for any of the numbers proposed in their risk matrix—and other provinces are no better. The value for money assessments release for each P3 project are superficial window dressing that provide none of the details necessary for an independent assessment. And in the instances where auditors have reviewed the actual finances of P3s, they’ve generally always found that the project would have cost less if it were publicly financed and not run as a P3.
But no matter how complicated—and secret—these key calculations of risk transfer for P3s are, none I’ve seen acknowledge a crucial fact: the real risk the private sector assumes through a P3 is limited by the net amount of unsecured money they have put into the project. This amount is represented by the equity they provide and any net cash they have committed, less funds received. The initial equity share of the cost of P3s is usually no more than 10-15% and sometimes as low as 8% or less. Since P3s are invariably set up as “special purpose vehicles” (SPVs), the big companies behind them can simply walk away if they aren’t making enough profit or if things go wrong, thanks to limited liability laws for corporations. The maximum they lose is any equity and any net cash they’ve put in, less what they’ve been paid. And a number of P3 companies have abandoned their projects, or used the threat of doing so to get more money out of the government.- Scott Stelmaschuk highlights how inequality undercuts the foundation of any meaningful concept of self-determination - while being readily reduced if we make a collective determination to do something about it. And Rick Smith notes that we have no reason to be satisfied with the structural disparities as matters stand now.
- Josh Wingrove reports on the latest abuses of the temporary foreign worker program - featuring the Harper Cons arguing that they're helpless to so much as inform provinces of TFWs working in their jurisdiction based on the belief that workers should be free to be exploited by their employers in total secrecy:
However, provinces say the federal government isn’t sharing detailed information about the workers. It means that provincial workplace safety inspectors can’t proactively enforce labour laws, because they don’t know who the workers are or where they’re working.- Finally, Marc Mayrand shares his take on how to get younger citizens more involved in our political system.
“It’s for us to know where these workers are, so that we can make sure their rights are being protected,” Ontario Labour Minister Yasir Naqvi said, adding the province had been pushing for more information for four years.
It was a request echoed by several ministers, and Dr. Leitch said she would push to improve information sharing, saying privacy issues are among the barriers.