Alberta govt. picks costly privatization schemes for new schools

The value-for-money reports that Alberta Infrastructure produced in the past to justify using P3 privatization schemes for schools took secrecy to a new level.

Ottawa (12 Nov. 2019) ― Last week’s announcement by the Alberta government that it will use P3 privatization schemes for 5 new schools makes a mockery of its claims to be concerned about the provincial deficit. The last attempt to use P3s for schools in Alberta was canceled in 2014 after the Progressive Conservative government realized using P3s would cost $14 million more than public procurement (CBC News).

Impartial investigations find P3s more expensive

When P3 privatization schemes are examined by people who are not employed by or receiving funding from the privatization industry, the conclusion is almost always that P3s are more expensive than public procurement. The 2014 report of the Ontario Auditor General is a good example. This audit was one of the most comprehensive audits of P3 privatization schemes in Canada, and it found that P3s added $8 billion to the cost of 74 infrastructure projects.

P3s harm services

The problems with using P3s for schools and other public infrastructure are well documented. There are often issues with how they are built, as P3 consortiums look for ways to keep costs down by cutting corners. If the P3 consortium is responsible for maintenance, there are frequently delays in getting work done, or disputes about whether work should be done by the P3 consortium or the public sector.

An example of how this affected Alberta P3 schools was the problems that occurred at two P3 schools in south Edmonton where parents had difficulty with drainage and mud pits in the school yard. As the Edmonton Journal reported, in a letter pleading for action, the parent council stated, “The school looks like a jail, it feels unsafe in case of a fire or other emergency evacuation, and nothing is being done to the cracked, dry ground to encourage new grass growth.”

Secrecy, fudging figures have both been problems with Alberta P3s in the past

Secrecy and fudging the figures go with P3 privatization schemes like cold goes with winter. Alberta’s P3 school projects have been no exception.

The value-for-money reports that Alberta Infrastructure produced in the past to justify using P3 privatization schemes for schools took secrecy to a new level. In most provinces, value-for-money reports provide a breakdown of the cost estimates for both public procurement and P3 privatization schemes. What is kept secret are the assumptions used to prepare those estimates — and when auditors have had a chance to look at those assumptions, they have not stood up to scrutiny. In the case of the value-for-money reports produced by Alberta Infrastructure, there wasn’t even a cost breakdown.

Given how often provincial auditors general have found that value-for-money reports fudge the figures to make P3s appear cheaper than they really are, this secrecy should worry the public. Even with the limited information available, a 2010 report by Alberta’s auditor general found that “savings announced upon signing the P3 contract were overstated by approximately $20 million because the public sector comparator contained an estimate for the cost of furniture and equipment, but the P3 did not.”

Who benefits from P3s?

The decision to use P3 privatization schemes for new schools is yet another reminder that there is a big gap between how the Alberta government is trying to portray itself and the reality. Based on what independent investigations into P3 privatization schemes have found, there will be no savings for the public. But for those profiting from privatization — i.e., the investors, the companies operating privatized services, the law firms, the consultants, and the former politicians and the political staff employed by them — the announcement that P3s will be used for new schools is very good news.

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