If it works, Pallister could reap P3 rewards for years

Opinion

Hey there, time traveller!
This article was published 02/05/2017 (3049 days ago), so information in it may no longer be current.

There are several things you can count on when you go to hear Premier Brian Pallister deliver a speech.

First, he will make brief mention of how he was an accomplished athlete. And it is true he was very good at basketball and softball and that playing high-level sports taught him quite a bit about life and leadership.

Second, he will crack a few jokes. Without a word of a lie, Pallister has pretty good comedic timing. Even when he bombs, he shows a natural ability to regroup and make fun of his own lame jokes, which is also pretty funny.

And third, the premier will stretch facts and numbers to the point of breaking in a bid to portray the former NDP government as incompetent fools.

A speech Tuesday morning had all three elements — and then some. Pallister had been invited by the Winnipeg Chamber of Commerce and the Canadian Council for Public Private Partnerships to outline Manitoba’s vision for so-called P3 financing of public infrastructure.

The premier cracked a little wise, briefly mentioned his athletic endeavours, then launched into the details of the province’s first concerted foray into P3s, which will see four new schools built — three in Winnipeg and one in Brandon — at an estimated price of $100 million.

The province will collect information from a request for proposals on each of the four schools to determine if any or all are suitable to be built via a P3.

Pallister told the chamber audience that utilizing P3 financing — where a private consortium is awarded a contract to design and build public infrastructure in exchange for a long-term payment — was part of a bid by his government to improve the overall process of building or renewing major public assets.

He said the success of P3s in other jurisdictions, most notably Saskatchewan, would help guide the establishment of a process in Manitoba that would “deliver high-quality services more cost-effectively.”

The premier made the case for P3s by referring to the abysmal record of the previous NDP government when it came to funding infrastructure. Pallister claimed his predecessors underspent by more than $2 billion on core infrastructure and used that money to fund wasteful whims in other departments.

None of that is even remotely true, but this claim has become one of the premier’s greatest hits when delivering a speech.

Why would Pallister continue to make claims that verge on dishonesty? Perhaps it’s payback for the nearly two decades the NDP accused Progressive Conservatives of laying off 1,000 nurses, an equally fallacious allegation. However, if we put aside the premier’s affinity for hyperbole, we are still left with a core question: is it a good idea to use P3 financing to build these four schools?

That depends on your perspective.

For the families most affected, the announcement a new school is going to be built is a political home run.

All four communities are so happy the schools are being built, they won’t dwell on the details of how they are being built.

The construction industry — particularly non-unionized building trades and contractors — is also very happy. P3 projects offer the people that design, build and maintain infrastructure a chance to make significantly more money than just winning a contract to build something for government.

Who is unhappy? Well, the NDP is certainly not pleased, nor are left-of-centre think tanks and big public sector unions, many of whom believe P3 financing is just a fancy way of contracting out work that would normally be done by government employees.

That more or less covers the spectrum of special interests that have a stake in the P3 debate. But what of taxpayers? Are public-private partnerships a better deal for the people who ultimately pay the bill?

Echoing the arguments made by the Canadian Council for Public Private Partnerships, Pallister believes P3s represent an opportunity for taxpayers to have their cake and eat it, too: top-notch public infrastructure, delivered faster and cheaper than infrastructure designed and built by government.

The case for P3s says private consortiums will be better at holding down costs than government and move quicker to complete projects.

To that end, council president Mark Romoff claimed completed P3 projects in Canada had “saved” taxpayers $9.9 billion by getting projects done better and cheaper than government could have done itself.

That is a tenuous claim and appears to ignore the enormous cost of failed P3 projects.

A council official was asked if the $9.9-billion figure accounted for some of the larger P3 failures in Canada, such as Nova Scotia’s ill-fated school building program that wasted more than $50 million of public money and an Ontario hospital that was $200 million over budget and smaller than promised. The official said those projects were not “true” P3s because they ignored many of the council’s best practices for a successful public-private partnership.

That is a pretty silly argument, but it reveals the difficulty of coming to a definitive conclusion about the value of P3s. In fact, when you compare the failures with the success stories, you realize that both government and the private sector have authored numerous examples of very poor project management.

The only thing just about everyone agrees upon is P3s allow governments to get new infrastructure now and pay less for it up front. Even if the total cost of the project is higher, it is spread out in smaller payments over a much longer period of time, which allows government to build more infrastructure with less money on hand.

Pallister appears to be moving cautiously on P3s and that’s a good thing. He has promised before any project is approved for P3 financing, it will have to meet the strictest standards for cost-efficiency and certainty, so taxpayers will never have to face horrendous cost overruns.

If he is successful, Pallister will reap the political rewards for having brought new schools to four school-starved communities at a time when the government is fiscally constrained. And he’ll have done so with the comfort of knowing he will be long gone from politics by the time we figure out what it really cost us.

dan.lett@freepress.mb.ca