Letter: No evidence P3s are cost effective

creynolds News Release, Own Your NL, Privatization

The following letter to the editor from CUPE NL President Wayne Lucas was published in The Telegram on September 201, 2017.

Provincial government Ministers Steve Crocker and Dr. John Haggie have taken exception to the alarm bells CUPE is ringing about the higher costs of P3 deals. 

In a letter to the editor of Aug. 26, the ministers claimed two recent P3s were proof of successful P3 projects: Swift Current Long Term Care Centre in Saskatchewan and Interior Heart Surgical Centre in British Columbia.

Coincidentally, Plenary Health, in the running to build the Corner Brook Long Term Care P3, was involved in the Saskatchewan and British Columbia P3 projects.

Saskatchewan’s Auditor General reviewed the Swift Current Long Term Care Centre and three other P3 deals in 2015 concluding that the value for money assessments were rigged by consultants to favour the P3 model. There was no hard evidence to prove P3s were more cost effective than the public-sector option.

British Columbia’s Auditor General raised major concerns about the high cost of debt through P3 projects in 2014. She examined 16 different P3 projects in the province and reported that interest rates on the province’s $2.3 billion of P3 debt ranged from 4.42 per cent to 14.79 per cent. The BC government can borrow money at around 3.1%. Her review concluded that P3 projects created higher levels of debt than if the government had financed the projects itself.

CUPE’s Senior Economist reviewed the numbers for the Interior Heart Surgical Centre in British Columbia and estimates that the project would have cost $37.5 million more than claimed if an appropriate discount rate had been used. This would have made the P3 more expensive than the public-sector comparator.

Most of the cost-savings boasted about by P3 advocates are based on value for money calculations and when these calculations are scrutinized by impartial experts, like a provincial auditor, they are proven to just not be credible. 

I would urge ministers Crocker and Haggie to put away the glossy consultant flyers and read the Auditor General reports on P3s.
Wayne Lucas
President, CUPE Newfoundland Labrador

New Radio Ads: August 14 – September 3, 2017

creynolds Collective Bargaining, Crossroads

Two new radio ad campaign by public service workers in Newfoundland and Labrador hit the airwaves this week, on radio stations across the province. CUPE’s public services workers launched the ads to voice their concerns about the Ball Government’s failure to protect good jobs, as well as the impact on our economy and our public services.

The radio ads will play until August 20.


Listen to radio ads 3 & 4

CUPE believes the Ball Government should recognize the public sector as a driver of economic growth. There are steps the Province can take in the collective bargaining process – and in the next budget – that put people first, protect the public services we need, create good jobs and a stronger economy.

CUPE Newfoundland Labrador represents approximately 6,000 public service workers in health care, education, treasury, public housing, provincial libraries, university, transition and group homes, child care and much more.

Listen and watch all the ads at nl.cupe.ca/crossroads.

Let’s stop the Ball Government from saddling us with even more debt

creynolds Opinion, Privatization

People living in Corner Brook and the surrounding region have needed new health care facilities, including more beds in long-term care, for many years. It came as welcome news to everyone, including CUPE members and their families, when the province announced two new facilities would begin construction later this year.

However, the secrecy and lack of transparency around these two projects are very troubling. In a meeting with Minister Bennett and Minister Hawkins, in March this year, our representatives were told the details of these projects would be made public, but only after the contracts are signed. That’s a red flag!

Send your MHA a message: Stop P3 deals before you saddle us with more debt

What exactly are public-private partnerships? Instead of using its own borrowing power, a government looking to build public infrastructure uses private-sector money for the project. The private sector invests some (or all) of the required money in return for healthy financial returns and a measure of control.

As explained by economist Toby Sanger, financing a project at the 7-9% return rate that private investors expect from infrastructure investments would dramatically increase the total cost of a project financed over 30 years. If the province directly borrowed the funds, they would get the current 30-year bond rate of 3.7%. There’s another red flag!

The NL Government has stated that the Corner Brook long-term care facility will cost $120-140 million and the hospital will cost $700-900 million. Assuming the province is borrowing money to finance these projects, P3 deals would cost almost twice as much to borrow as public procurement. Why on earth would we do that?

Long-term care facility borrowing costs

Principal Public:

3.7% amortized over 30 years

P3:

7% amortized over 30 years

$120 million $79 million $167 million


Hospital facility borrowing costs

Principal Public:

3.7% amortized over 30 years

P3:

7% amortized over 30 years

$700 million $460 million $977 million

There is plenty of evidence to show that P3s are the wrong way to finance public infrastructure.

The additional beds and services in Corner Brook will create new jobs, but that will happen regardless of how the facilities are built, and assuming the two projects don’t go over budget.

The additional costs could result in closing beds, laying off staff and reducing quality of care. Look at the P3-built North Bay Regional Hospital, which cost at least $160 million more than public procurement would have cost. Over 50 beds have been closed, and they’re on the third round of layoffs with over 100 jobs cut.

The P3 deals that the Ball Government wants to use are a Trojan Horse that will allow the quality of our public health care to be influenced by private interests and profit margins.

CUPE Newfoundland Labrador urges the Ball Government to take the following action:

Make public the full details of the Corner Brook value-for-money report and business case – before final decisions are made and any contracts are signed.

In addition, the Province should mandate:

  • Public consultation
  • The involvement of a provincial auditor
  • Public-Private Partnership Transparency and Accountability legislation that demands a preliminary analysis – available to the public – outlining the risks, costs and benefits of using a P3

We are going to pay for these projects one way or another. We might as well build our health care facilities publicly. Let’s own and control them ourselves, for the public interest and not for private profits.

Wayne Lucas
President, CUPE Newfoundland Labrador

Send your MHA a message: Stop P3 deals before you saddle us with more debt

Keep our health care facilities out of the hands of private interests: Rally on August 15

creynolds News Release

The P3 deals that the Ball Government want to use to build health care facilities in Corner Brook are a Trojan Horse that will allow the quality of our public health care to be influenced by private profits.

People living in Corner Brook and the surrounding region have needed new health care facilities, including more beds in long-term care, for many years. It came as welcome news to everyone, including CUPE members and their families, when the province announced two new facilities would begin construction later this year.

But at what cost? The secrecy and lack of transparency around these two projects are very troubling.

The Ball Government’s plan to use public-private partnerships (P3s) to build Corner Brook health care facilities could cost almost twice as much as public procurement.

Please join us and tell the Ball Government to keep our health care facilities out of the hands of private interests! Meet our 15-foot tall Trojan Horse too!

WHEN: Tuesday, August 15 at 4 p.m.

WHERE: 40 University Drive, Corner Brook

WHO: Speakers will include Mark Hancock, CUPE national president; and Wayne Lucas, CUPE NL president


Media contacts:
Please contact Wayne Lucas or Colleen Reynolds.

 

Meet our Trojan Horse at the Royal St. John’s Regatta

creynolds News Release, Privatization

CUPE Newfoundland and Labrador would like to invite everyone to meet our 15-foot tall wooden Trojan Horse at the Royal St. John’s Regatta on August 2. Members will be on hand to talk to the hidden dangers of using public-private partnerships (P3s) to build health care facilities.

The Ball Government plans to use P3 deals to build two health care facilities in Corner Brook – as if it’s a gift to the people of Newfoundland and Labrador. But they’re not willing to make public all the details of their value-for-money assessment before the contracts are signed. We think that’s a huge red flag!

Like the mythical Trojan Horse, P3-built health care facilities are a hollow promise that threatens our public health care system with increased costs down the road, leading to fewer beds, job cuts and lower standards of care.

Private financing is more expensive than the rate the province could borrow at and the facilities become too expensive to operate. The health care facilities will be forced to make cuts and the only part of the budget that is not tied up for 30 years are the doctors, the nurses and other staff. Inevitably, quality of care will suffer.

If these P3 deals go through, the provincial government will pay more over the long-term, pushing costs onto generations of taxpayers.

To date, we have wisely avoided using P3 deals in Newfoundland and Labrador. P3s have been a disaster in every jurisdiction they’ve been used – in every province and every sector.

Let’s talk about it. Please join us at the St. John’s Regatta.

Learn more about P3 deals

 

 

 

Call for Volunteers – Join CUPE at the St. John’s Regatta!

creynolds Privatization

Say NO to privatizing our health care! 

CUPE needs your help to hand out information telling the Ball Government to keep our health care facilities out of the hands of private interests.

Please join us August 2nd at the Regatta! Every CUPE member who helps will get a CUPE Trojan Horse t-shirt.

While at a meeting in Deer Lake yesterday, Minister Haggie said, “Staff from the province were meeting with three vendors interested in taking on the project.” Haggie went on to say the long-term care build is estimated at $120 to $140 million, a $20 million variance and the acute care build would see numbers over $700 million, approaching $900 million.

A $200 million variance! I don’t take a lot of comfort in these inconsistent numbers.

To volunteer, contact Sister Sherry Hillier with your availability. Please indicate whether you can volunteer for 4 hours, 2 hours, all day, in the morning or in the afternoon.

Email: sherryhillier@nl.rogers.com

Telephone: 709-765-2996

PLEASE DISTRIBUTE THIS MESSAGE TO YOUR MEMBERSHIP.

In Solidarity,

Wayne Lucas
President, CUPE Newfoundland Labrador

Volunteer now – Send an email

CUPE NL mourns the passing of Sister Susan Shiner

creynolds Uncategorized

CUPE Newfoundland Labrador was saddened to learn of the passing of Sister Susan Shiner who was a feminist activist and stood for social justice and equality within the CUPE family and in society.

Susan was a long-time member of both CUPE local 3762, Iris Kirby House and CUPE Local 3017, Daybreak Parent Child Centre.

Susan served on CUPE’s National Women’s Committee and also CUPE NL’s Equality Committee. She was a fierce advocate for equality for all, for childcare, and for universal non-profit childcare throughout the country.

Susan was always there when called upon and also worked very hard with our Political Action Committee.

She will be sorely missed.

Wayne Lucas
President, CUPE Newfoundland Labrador

Natalie Mehra talks about P3s on The Good Morning Corner Brook Show

creynolds Privatization

On May 1, 2017, Natalie Mehra joined Bernice Hillier on The Good Morning Corner Brook Show (CBC Radio) to talk about the public-private partnership the Ball Government will use to build two new health care facilities in Corner Brook.


Listen to the interview



Bernice Hillier: Earlier this year, government announced it would build a new hospital and long-term care in Corner Brook by partnering with private enterprise.

The P3 approach is relatively new in this province and not everyone is sold on the idea, including the union representing many health care workers in this province.

Tonight [May 1], CUPE is holding a town hall meeting in Corner Brook to talk about public-private partnerships and my next guest will be presenting at that meeting. You can come out and hear her speak this evening.

Natalie Mehra is with the Ontario Health Coalition, which is a health care advocacy group. She’s my guest in studio this morning. Good morning Natalie Mara.

Natalie Mehra: Good morning and thanks for having me.

Bernice Hillier: Thanks for coming in. First off, tell me about your experience with P3s in Ontario.

Natalie Mehra: Well they brought them in in 2001 and since then the new hospitals, that are full new builds, have been built that way and they have been unbelievably expensive.

They really have been a disaster in terms of funding. And they’re so expensive now that, basically, what they’re doing is closing two or three or more hospitals for every one that they build.

Bernice Hillier: Now, expensive to construct or expensive to operate?

Natalie Mehra: Both, because they’re a type of privatization. They called them public-private partnerships, but it was a name brought in by the industry itself to sell them to the public.

Really what they are is a type of privatization, and in them, the private sector forms a consortium, a group of companies, and they design, build, finance and then operate the hospital.

They sell it back to the public hospital board for 30 years, and bundle in a range of services. It can be from the portering (the moving of patients around the hospital), to the food, to the patient records and security. All those types of services are usually bundles into the deals.

The deals are much more expensive – and nobody denies that they’re much more expensive – than just building the hospital in the traditional way. They bifurcate, so they cut in half the management of the hospital. Half of it is handed over to the for-profit companies. Half of it is the public hospital.

They have totally different interests. The public hospitals run for altruism, for compassion. The private sector is in it to take as much money out as they possibly can and it leaves all kinds of problems.

Bernice Hillier: Now, the government in this province has consistently said that this hospital and this long-term care centre, that’s being discussed for Corner Brook using a P3 model, will be publicly run with employees who are still members of the public sector unions.

Would that make you think differently about the approach here, compared to what you’ve see in Ontario? Because it sounds like a little bit of a different model.

Natalie Mehra: Well, in Ontario we rolled back the amount of privatization. So, as I understand it, they [the Province of Newfoundland and Labrador] have put out the Request for Qualifications for the long-term facility in Corner Brook.

That’s a “Design, Build, Finance, Maintain”. So part of the operations are privatized in that model. The range of services to be privatized is not clear at this point and will be negotiated with the consortium.

The hospital hasn’t written the tenders yet. It’s not out yet and it remains to be seen the extent of the privatization, but it doesn’t matter. The financing is so expensive that basically… in Britain what they found… they cut the doctors by 11%, they cut the nurses by 14%, the support staff by 22 – 30%, in order to pay for the higher cost of financing.

Even after that, there’s what they call the “P3 effect”. The spin-off effect. They’re so expensive to operate that when the hospital, or the long-term care home, has to make cuts, the only part of the budget that isn’t tied up for 30 years are the doctors, the nurses and the clinical staff. That’s where the cuts have to come from. If it’s [where cuts are permitted] not written in the contract, they don’t have to do it, or it needs to be renegotiated.

The shell (building maintenance) is run by the private sector, so in the P3 schools you couldn’t tack anything up on the wall. You couldn’t rent out the school in the evenings to community groups if it was being used by the by the consortium. It fundamentally changes what was a public service because half of it is run (really owned and operated or in the control of) by a private for-profit consortium for an entire generation.

Send your MHA a message: Stop P3 deals before you saddle us with more debt

Bernice Hillier: Government has said that the private sector can build these buildings more cheaply, that it will be more cost-effective. So you’re saying that’s not been your experience in Ontario?

Natalie Mehra: It’s not been the experience in any jurisdiction that’s done them anywhere. It’s not been the experience in British Columbia, it’s not the experience in Britain, it’s the experience nowhere in the world. They’re far more expensive.

Bernice Hillier: Why?

Natalie Mehra: Because the financing is more expensive. Government has the ability to borrow – it’s kind of like purchasing in bulk – they can borrow at a better rate.

There’s all kinds of other options. Government could issue bonds, Medicare bonds, to build our new hospitals… give a reasonable rate of return, but nothing like the usurious rate of return that the private companies are charging. And we would own and control them for the duration of their economic lives.

But in this case, the private sector is given the control, a large portion of the control. If you have problems, you have to negotiate it out. There’s all kinds of legalities around that and, for a hospital, every time you need to enforce the contract you’re making a decision… Do we take money away from the doctors and nurses and patient care to put it towards the lawyers and fighting with the consortium in court? Or do we just put up with them not fulfilling the contract?

One: exorbitant building costs [go] far beyond the costs of any public project. Two: the ongoing operating costs. In Ontario, the biggest cuts that we see in hospitals are in the P3 hospitals. They’ve been devastated. Some of them have been around now for the better part of a decade and every year they have massive cuts. In Sault Saint Marie, in North Bay… in those hospitals…

If there’s anything that I could do, as a health care advocate from Ontario coming to Newfoundland, it would be [to recommend], “Don’t go down this road. Everyone who’s been down this road has built a shrinking hospital system for the next generation, for exorbitant cost.”

Bernice Hillier: Are there any positives? Surely the government isn’t completely misguided.

Natalie Mehra: No, there really are no positives in these deals. They bundle a range of services that have no business being bundled in for 30 years. They tie up the hospital budget and give less ability for the public hospital management, operating in the public interest, to control what happens in the hospital. They privatize the lands and the facilities of the hospitals, and they cost more.

There’s just no upside. And they don’t deliver them on time or on budget. That’s utter nonsense. It has never been the experience. Not in Britain. Not in British Columbia.

Bernice Hillier: People here want a new health care facility desperately. It’s been a decade since it was first promised. The government says this is the only way to afford it.

Natalie Mehra: That’s what they said everywhere.

Bernice Hillier: In your opinion, is that a fair trade for a new hospital?

Natalie Mehra: Not at all. It’s cheaper to build it publicly. So if the issue is you can’t afford to build it, and therefore I have to wait, surely it’s better to do it the cheaper way than the more expensive way.

It’s the way of getting them [private companies] in. It’s governments that are ideologically predisposed to privatization, who have been meeting with the financial industry, who are unduly influenced by the consultants and the financiers and the construction industry, that are the prime beneficiary of these projects. Usually the consulting industry is really the one that brings them in. There’s massive transaction costs in these deals. They are gargantuan deals.

When we won disclosure… they’re all commercial secrets… even though it’s public money, it’s very hard to get access to them. We fought in court for four years and we won disclosure of the Brampton P3 deal in Ontario, a big hospital deal. The paperwork for the deal is taller than me. It was a six-foot deal. They cover the operations of the hospital for 30 years.

They are a gift, a huge gift, to the consulting firms of the world. They’re the ones who are lobbying government to bring them in.

There’s no need to do it. None whatsoever. You’re going to pay for your hospital one way or another. So might as well build them publicly. Own and control them yourselves, for the public interest and not for private interests.

Natalie Mehra is the executive director of the Ontario Health Coalition.

New Radio Ads: July 24 – 30, 2017

creynolds Collective Bargaining, Crossroads

A new radio ad campaign by public service workers in Newfoundland and Labrador hit the airwaves today, on radio stations across the province. CUPE’s public services workers launched the ads to voice their concerns about the Ball Government’s failure to protect good jobs, as well as the impact on our economy and our public services.

CUPE believes the Ball Government should recognize the public sector as a driver of economic growth. There are steps the Province can take in the collective bargaining process – and in the next budget – that put people first, protect the public services we need, create good jobs and a stronger economy.

Listen to radio ads 1 & 2

Four radio ads will play from July 24-30 and August 6-14.

CUPE Newfoundland Labrador represents approximately 6,000 public service workers in health care, education, treasury, public housing, provincial libraries, university, transition and group homes, child care and much more.

Listen and watch all the ads at nl.cupe.ca/crossroads.