P3s sound like a great financial shortcut, but do the people of Saskatchewan know the dangers?
Some examples of excessive costs of P3s:
*Ontario hospitals: Ontario’s auditor-general recently revealed that the province’s flagship P3 hospital, Brampton Civic, cost the public $200 million more than if it had been publicly financed and built directly by the province.
*East coast toll roads: Approximately more than $300 million in tolls were produced on the CobequidPass for a deal in which private financiers put up $66 million. The Nova Scotia government is paying an interest rate of 10 per cent for 30 years, twice its rate of borrowing.
*Universities: A P3 project at the Universite de Quebec at Montreal failed, doubling the cost to the public from $200 million to $400 million.
*West Coast Highways: B.C.’s Sea-to-Sky Highway will cost taxpayers $220 million more than if it had been financed and operated publicly.
*The Confederation Bridge: Designed and built by SCDI, an international private sector consortium. SCDI will operate and maintain the bridge for 35 years, after which time it will be transferred to the federal government. (Just in time for major renovations). SCDI is entitled to all toll revenue from the bridge for 35 years. Capital was provided by a New Brunswick Crown Corporation, Strait Crossing Finance Inc. which issued bonds to raise the money to build the bridge. This bond issue was secured by the Government of Canada, which pledged to retire the bonds with a stream of annual payments of $41.9 million over 35 years. The sum is an estimate of the value of the annual subsidy which formerly went toward the Borden-Cape Tormentine ferry service.
*Winnipeg South District Police Station: In 2012, Winnipeg’s mayor announced that this P3 was a cost-saving initiative for the taxpayer. The P3 lease contract is now being canceled, with savings being found by bringing the financing and operations of the project fully public.
*Chicago: Chicago’s 36,000 parking meters were sold in a 75-year lease to an investor group. The city was paid $974 million less for this 75-year lease than they would have received from 75 years of parking-meter revenue. That’s nearly $1 billion into private coffers that could have been used for public services. Furthermore, Chicago cannot build parking lots for the contract duration because they might compete with the outsourced parking meters.