CUPE Newfoundland Labrador President Wayne Lucas and CUPE Senior Economist Toby Sanger met with the Honourable Kathy Bennett, Minister of Finance, and the Honourable Al Hawkins, Minister of Transportation and Works, on March 28 to discuss the dangers of using private-public partnerships (P3s) to build infrastructure.
CUPE firmly believes that P3s are not in the best interest of workers, our families or our communities. On the contrary, we can count on public financing to be accountable, transparent, locally-controlled and a wise investment of tax dollars.
“We’re glad that government has agreed – as a result of resistance by CUPE, other unions and the public – to ensure that workers providing health care services will continue to be public employees and excluded from P3 contracts,” says Lucas. “However, we still don’t have anything in writing that says our members’ jobs and the quality of our public services will be protected.”
At the meeting on Tuesday, CUPE was encouraged that government representatives were receptive to concerns the union expressed about P3s. Both parties agreed there is a need for objective project planning and analysis on infrastructure projects.
The union requested that the department disclose all analysis to the public. Finance and Transportation and Works representatives made a commitment to publicly release the fully detailed business case, with all the appendices and numbers, in the fall when they are ready to award the contract.
Some of the union’s concerns that were discussed include:
- Higher-cost private finance can double the cost of infrastructure projects.
- Private finance will likely lead to higher user fees, which will increase inequality.
- P3 projects involve far higher transaction costs — fees paid to lawyers, financial advisors, accounting firms and other consultants — to develop the deals.
- Much of this extra money will likely flow out of the province, to large companies and investment funds.
“Private financing comes at a much higher cost, including off book debts, which will ultimately mean that less public funding will be available for public services, or for public infrastructure investments, in future years,” says Sanger.
So why would the Ball Government rely on P3s with higher-cost private financing?
There’s a desire by many politicians to keep borrowing costs off their books, at least in the short term. There is also pressure from the P3 and finance industry which want to gain higher rates of return from investing in public infrastructure or privatized public assets.
“Numerous auditors’ reports have found that P3s cost more, including the Ontario Auditor General who found that public sector financing and delivery for 74 projects would have saved the province $8 billion,” says Sanger. “P3 projects in the UK have resulted in £300 billion in debt (a half trillion Canadian dollars), equivalent to more than $25,000 per family. They also lead to cuts in public health services to pay for the higher financing costs.”
Lucas points out, “During the meeting we were not provided with evidence of any P3 deals throughout the country that were in the best interest of citizens.”
“If Government goes down the risky path of P3 deals, taxpayers in Newfoundland Labrador should be prepared for more debt and less reliable services.”