Presentation is loading. Please wait.

Presentation is loading. Please wait.

Private Affluence, Public Austerity: P3s, Economic Crisis, and the Public Response Heather Whiteside SSHRC Postdoctoral Fellow University of British Columbia.

Similar presentations


Presentation on theme: "Private Affluence, Public Austerity: P3s, Economic Crisis, and the Public Response Heather Whiteside SSHRC Postdoctoral Fellow University of British Columbia."— Presentation transcript:

1 Private Affluence, Public Austerity: P3s, Economic Crisis, and the Public Response Heather Whiteside SSHRC Postdoctoral Fellow University of British Columbia

2 Tony Clement, then-Health Minister of Ontario (2001): P3 use will mean “better, faster, and cheaper” hospitals Jim Flaherty, then-Finance Minister of Ontario (2001): “The building will get built more quickly and sooner and more effectively and efficiently than were it done solely within the (public) sector” The P3 model should be widely used: from “hospitals to hockey rinks”

3 Public-private partnerships (P3s) P3s were first initiated in Canada in the early 1990s, but were not used in the health care sector until 2001 P3 hospitals now make up about three quarters of all P3s in BC and half of all P3s in Ontario (although this is changing over time as transportation projects are increasingly developed as P3s) BC: 15 P3 hospital/health care projects are currently in various stages of development Ontario: 40 P3 hospital/health care projects are currently in various stages of development

4 P3s A private for-profit partner designs, builds, finances, and operates public infrastructure and services Lengthy (multi-decade) lease-based bundled contracts and complex risk sharing arrangements ‘Build now, pay later’ “Better, faster, cheaper”? Higher costs: private financing, social costs

5 P3 Enabling Fields BCOntario Enabling legislation and capital planning frameworks Capital Asset Management Framework (CAMF) (2002) Infrastructure Planning, Financing and Procurement Framework (IPFP) (2004) The Health Sector Partnerships Agreement Act (Bill 94) (2003) Alternative Financing and Procurement (AFP) (2004) Institutional support Partnerships BC (2002)Infrastructure Ontario (2005)

6 P3s and the 2008 Global Financial Crisis More expensive private financing: the interest rate spread increased from 2% to 3 or 4% ( ), private financing costs roughly 70 percent more in present value terms Project delays, cancellations, and financing difficulties Examples: Fort St. John Hospital P3 project (BC): a new private financing partner was brought in Niagara Health Systems P3 project (ON): delayed for months when the private financing portion fell through

7 P3s and Austerity: Ontario Ontario’s 2012 austerity budget cut total program spending by $17.7 billion over three years but it also committed to 30 new hospital projects using the P3 model and 25 P3s currently under construction The budget uses four hospital projects as examples of P3 value for money (VfM) superiority: Credit Valley Hospital in Mississauga (VfM savings of $26 million), London Health Sciences/St. Joseph’s Health Campus (VfM savings of $50 million), North Bay Regional Health Centre (VfM savings of $57 million), Quinte Health Care in Belleville (VfM savings of $9 million)

8 Hospital Base Project Costs (construction, maintenance, and financing) Base Costs (million) P3Traditional Difference Credit Valley Hospital (Mississauga) $162.8$152.3 $10.5 London Health Sciences & St. Joseph’s Health Campus $211.8 & $49.2$204.9 & $47.4 $6.9 & $1.8 North Bay Regional Health Centre $551.7$404.6 $147.1 Quinte Health Care (Belleville) $72.2$68.3 $3.9

9 Federal spending to support P3s Federal Budget 2012 P3 Canada Fund received a $2.8 billion commitment Federal Budget 2013 P3 Canada Fund received a $1.25 billion commitment Federal Budget 2014 New Building Canada Fund (worth $14 billion over 10 years) has a P3 screen for proposals in excess of $100 million

10 Future contradictions: P3s and austerity Despite being justified as better value for money, P3s will paradoxically undermine future efforts to cut budgets since the public sector is ultimately on the hook for more expensive privately-provided services and infrastructure UK P3 hospital scandal : Astronomical fees and hyper-inflated charges NHS Trust bankruptcies 30 Trusts have such substantial P3-related debt burdens that these organizations are “unviable in their current form” In Canada: P3 hospital infrastructure costs are paid by the province, services come out of uncertain local agency budgets (RHAs, hospital boards) Austerity today = future justification for privatization?

11 Resistance Resisting P3s can/should be done in number of ways, including: Developing new and viable alternatives to private financing (particularly at a time of austerity) Risk pooling Public Asset Fund (CCPA) Public Bonds Greater politicization: projects and policies supporting P3 institutionalization


Download ppt "Private Affluence, Public Austerity: P3s, Economic Crisis, and the Public Response Heather Whiteside SSHRC Postdoctoral Fellow University of British Columbia."

Similar presentations


Ads by Google