Home / Op-Ed / NDP’s P3 math doesn’t add up

NDP’s P3 math doesn’t add up

2B Public DomainWEBAuthor: scott pettigrew- contributor

Although the vast majority of infrastructure and procurement experts across Canada have nearly unanimously agreed that P3 projects can deliver excellent value for money and expedite project speed, there are many people who still feel threatened by them. They’ll tell you that ‘we’re selling off public assets,’ and that ‘it’s only good for the rich.’ They’ll also probably tell you how they’re ‘Union-busting’ (my new least favourite phrase), and probably throw in a bit of ancient rhetoric to further extend their already overwhelming degree of ideological bigotry and irreverence towards expert opinion and facts. Unfortunately, for big union bosses and leftist politicians everywhere, rarely do any of these arguments come from a thorough understanding of P3 projects, and rarely do they have any basis in fact.

In reality, a public-private partnership (though differing greatly in definition between projects) is merely the government hiring a corporation to carry out a project instead of doing it internally. This usually relates to financing, maintenance, staffing, and/or the initial construction of the facility. The cost savings can be anywhere from miniscule to monstrous, but when applied correctly, experts across the country (and the world) agree that P3s can be a very effective method to deliver value to the Canadian taxpayer effectively. Also, P3 projects, despite claims from the opposition, most definitely do not mean selling off public assets. In the vast majority of P3 projects, including all four of Saskatchewan’s major P3 initiatives, governments maintain total ownership of the property throughout and after the lifespan of the contract. This is probably the most common criticism of P3 projects, even one echoed by the leader of the NDP; and it has absolutely no basis in truth.

I want to address the concerns, no matter how ignorant, of those opposed to the P3 model. The first concern is the irrational fear of privatization. Many hard-left, and even center-left people feel that the private sector is somehow out to get them. The most ironic part about these people is that they criticize a system for which they, and everybody they know, has benefited from so greatly. The iPhone from which they tweet nonsense at you, the Prius they use to patronize you, the clothes they wear to appear more ‘intellectual’ than you, are all bi-products of the organic system that they spend their lives preaching against – free markets. The most efficient, productive, organic, and innovative economic system that the world has come to know; and with very few exceptions, has come to adapt.

Thanks to the economic power of global free trade, 31.3 per cent of the world’s population has risen above the poverty line in just over 30 years, and world GDP has soared by trillions of dollars every year, even in times of global recession. Free markets, driven by a profit incentive and by competition, are inherently efficient, innovative, and accountable. Unlike government, where there is no incentive to innovate or competition, the private sector is constantly finding new and better ways to accomplish tasks efficiently. P3 projects use market competition to entertain multiple bids from different firms, each with a unique approach to meeting the taxpayer’s needs in the best possible way. This process pushes the limits of convention, and has been proven to deliver value to taxpayers. In short, P3 projects are merely a method of harvesting the power and innovation of the free market to complete public-funded projects to enrich the lives of Canadians, resulting in better value and higher quality of service to the taxpayer.

Obviously, not every P3 project is going to save millions of dollars. In fact, there are a few examples of P3 projects that have resulted in costing the taxpayer nearly as much or slightly more than a traditional design-bid-build project. After all, P3 projects are a relatively new procurement method, and there is a definite learning curve in evaluating when and how to implement them. However, in aggregate, P3 projects in Saskatchewan alone have saved an estimated $586 Million; enough to pay for the GTH land acquisition, the Sask Party flight “waste”, and pay off 100 per cent of our $262 Million deficit; twice. Cam Broten’s first official campaign announcement was to cut SaskBuilds which means ‘saving the province $15 million a year’. That $15 million dollar saving Broten promises will be coming from operating costs and salaries of Public Servants, a practice he opposes in every other circumstance. The NDP also fail to factor in the opportunity cost implications of the millions of dollars saved by the province of Saskatchewan every year on the P3 model that would be lost by slashing SaskBuilds- a further indication of the ideological recklessness of this announcement.

To summarize, if we take the NDP’s word on the costs accumulated by the Sask Party (which are highly disputed), their three biggest campaign issues cost less than half of what SaskBuilds has saved; and Cam Broten’s NDP pledges to cut it. To me, that logic just doesn’t add up. What does add up? The amount of money that has been saved nationally due to P3 projects, and the logic behind employing the free market to deliver public services at a higher quality and with greater efficiency. So no, P3 projects are not the right approach to every project; and no, they haven’t saved boatloads of money in every scenario in this country. However, when used effectively, P3s have been proven to save money and create jobs. And that’s a fact, which, if you’re an ideological zealot, is very hard to swallow.

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3 comments

  1. The problem with privatization is that when it comes down to accountability there is no one accountable because at most times the regulations are so wishy-washy that once your in a contract the costs in the later half is more than what the Government has said it has cost. It doesn’t matter which political party it is — they just wash their hands and allow the Government that replaces them to “deal with it”.

    http://www.vancitybuzz.com/2015/12/massey-tunnel-bridge-replacement/

  2. “Thanks to the economic power of global free trade, 31.3 per cent of the world’s population has risen above the poverty line in just over 30 years, and world GDP has soared by trillions of dollars every year, even in times of global recession. Free markets, driven by a profit incentive and by competition, are inherently efficient, innovative, and accountable.”

    Where is all that money? Why it is in the coffers of the super wealthy. It is not the economic power of free trade that has helped 31.3 percent of the worlds populations but rather the many private organizations and people who donate time and resources to the less fortunate. Or perhaps you are thinking of the slaves I mean workers in China, Pakistan, India, and other countries that now have jobs due to free trade. Sure they are making money, and the suicide nets that the business puts up are for show because when you are above the poverty line you are happy. And free markets being efficient innovative and accountable, not true, if they were why would lobbyists have jobs.

  3. Dear Mickey,

    If you read the article, you would be able to distinguish the difference between privatization and P3 contracts. They have very little in common. As for your concern about delaying maintentance costs, the presumption that you and the critic linked are making is that governments are maintaining buildings which they otherwise would not; thus implying that we should not invest in retaining the quality of our infrastructure investments through maintenance spending. To me, that is about as logical as buying a Ferrari and never changing the oil; if you are going to invest in high-quality public buildings and services, maintenance is a mandatory expenditure to retain the initial quality of the procurement throughout the entire lifespan of the facility.

    Dear Mr. “K Ichee”,

    You are clearly severely ignorant about free market economics. The rising level of income for people living in the third world is most definitely not a result of charity, but a result of work opportunities created due to global trade deals. The percentage of those living in abject poverty in countries like India, China, and Bangladesh has dramatically fallen over the past twenty years, very little of this can be contributed to charity.

    Your comments about “slaves I mean workers” is profoundly ignorant, as if you knew anything about global labour relations you would know that workers living in dictatorial authoritative states like China have their wages artificially supressed due to government policy and intervention; which is most definitely NOT a product of the free market.

    As for your claim “free markets being efficient innovative and accountable, not true, if they were why would lobbyists have jobs”, in a truly free market there would be no such thing as lobbyists because there would be little to no government intervention. We most definitely do not live in a free market, rather we have elements of a free market intertwined with socialistic and authoritative market domination strategies. Your “evidence” towards free markets exploiting people is rather evidence towards governments exploiting people.

    No, free markets are not perfect; however I would kindly invite you to observe the living conditions of early-mid 20th century Ukraine during the holodomor, early 1960’s Maoist China, or present day North Korea. No other economic system is inherently unbiased and accountable to the consumer as free markets, and no other economic system better distributes power without the need for central authority.

    I suggest you invest in a copy of “Wealth of Nations”, “Free to Choose”, or perhaps a collection of Voltaire’s Letters of Philosophy. While reading such fine literature, I’ve heard that a certain late 19th century economic fantasy novel written by an anti-semitic madman makes for some absolutely superb kindling.

    I hope you don’t take my critique of your comments as insult, but rather an agressive push to invest your time in such superior economic and political theories as Austrian Free Market Economics and French Enlightenment Philosophy. At one point in time, I myself was an authoritarian, however these timeless ideas that I’ve mentioned really opened up my eyes to the potential of a humanity unrestricted by government.

    Scott Pettigrew