Posts Tagged ‘Partnerships BC’
“Bad News for P3 Loving BC Liberals”
The Tyee opinion piece is based in a report that went to the government just before Christmas. This blog has long been a critic, not just of P3s in principle, but also the way that Partnerships BC is supposed to work.
“There is a concern that Partnerships B.C. is potentially biased towards certain procurement methodologies because it is mandated to be both a self-sustaining organization and an advisor to government. This creates the perception that Partnerships B.C.’s advice may be biased towards revenue generating opportunities for the organization.”
You can read the press release which carries its own naturally laudatory title “Crown review finds Partnerships BC fulfilling its mandate” or the Partnerships BC Crown Review Report:
http://www.fin.gov.bc.ca/ocg/ias/pdf_docs/Review%20of%20PBC.pdf
and the Steering Committee Recommendations Letter:
http://www.fin.gov.bc.ca/ocg/ias/pdf_docs/PBC%20Steering%20Committee%20Recommendations.pdf
But actually I think just reading the Tyee is more likely to steer you right: for instance
While the report specifically says it did not examine the methodology that justifies the use of P3s, some of its findings touch on this methodology. For example, Partnerships B.C. says it bases its decision on whether or not to use a P3 by comparing the cost of a P3 with a public sector comparator. However, PBC frequently uses what it considers to be the most expensive possible method of public procurement (Design/Bid/Build), ignoring less expensive methods of public procurement such as Design/Build, which even the Canadian Council for Public-Private Partnerships (C2P3) considers public procurement.
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In a final irony, the report itself may be a conflict of interest. Partnerships B.C. is a private company owned by the Ministry of Finance, thus the Ministry of Finance is reviewing its own agency which raises its own conflict of interest issues.
Financing the Evergreen Line
MAJOR construction works on Vancouver’s Skytrain Evergreen Line are set to begin by the end of the month after the provincial government of British Columbia signed a finance-design-build contract for the $C 1.4bn ($US 1.39bn) project with the EGRT consortium, which is led by SNC-Lavalin.
That comes from The International Railway Journal – but my question to the readers of this blog concerns just one word. “Finance“. Why do EGRT need to finance anything?
If my understanding is correct, the funds for building this project come from three levels of government – Canada, BC and Translink. The good thing about government funded projects is that there is almost no risk – since the loans needed to pay for the outlays can all be “underwritten” by the taxpayers – you and me. That means that when governments go to the financial markets for loans, the interest rates they have to pay are lower than commercial activities. You can buy so called “gilt edged” bonds, but the rate of return will not be anything like as great as if you buy commercial bonds or, even riskier, buy equities. The return won’t be great but it is (almost) certain. Governments of places like Canada, or BC or even Metro Vancouver do not normally welch on their obligations, because they have the power to raise taxes. Of course if there is a violent revolution then the bonds you bought will become worth very little: some people do sell Chinese railway bonds from pre-revoltionary times.
You probably recall that the Port Mann Bridge was going to be a so called “private sector partnership” but they could not finance it. So it had to built using more conventional public sector financing – which, like I say, was cheaper.
So can someone please explain to me why we have to pay EGRT to finance this project as well as design and build it? I do understand that there are economies of management when contracts to design and build are let. And sometimes – but not in this case – operate and maintain too (like the Canada Line). But since this is an extension of the existing SkyTrain system, the operate and maintain bits are still with the Translink subsidiary British Columbia Rapid Transit Company Ltd. And while the Translink web page is open about its operating companies, there are other companies it owns that do things that provide much better value for money than going to outside commercial ventures. Their own insurance, for instance. A nice little earner is also the sale of rolled coins – where Translink beats the banks, if you need lots of rolled change.
While right wing politicians have long made it an act of faith that the public sector is inefficient and wasteful, the reality is quite different. Some places do indeed compare P3s to public sector comparators – and the private sector doesn’t always win. Our own Partnerships BC has a quite different method of operations – “Our mission at Partnerships BC is to structure and implement partnership solutions which serve the public interest” and indeed the Evergreen Line is one of their projects. You won’t find a public sector comparator on their site.
In case you missed the announcements, in the same edition of IRJ is the announcement of the 47km extension to RER Line E in Paris/Ile de France for €2bn and of a recommended second Cross Rail project in London for £12bn. Now that’s what I call transit investment. The only equivalent size projects here are, of course, highways.
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