Welcome to CUPE Nova Scotia’s call to establish transparency in disclosure and reporting of public-private partnerships (P3) contracts through legislation.
For too long, P3 contracts have been a black hole for accountability and transparency, with generally negligible disclosure by the provincial government. Meanwhile, the use of P3 deals has accelerated, while providing sweet deals to corporations and private investors.
We need to stop the drain on our finances, and one of the first steps we can take is to legislate disclosure and reporting of how our money is spent in P3 deals. There should be no secrets when public money is spent on public infrastructure and services. We have the right to know.
We’ve paid a high price by not keeping an eye on the details in P3 contracts, most recently when the 20-year old deals for the construction of 39 schools in Nova Scotia was made public. The province recently bought back the leases for 37 of the schools. The alternative was to walk away empty handed, while developers pocket the money spent over the years and keep the buildings.
The province spent nearly $1 billion dollars, including lease buy-outs, principal and interest payments. Nova Scotians lost hundreds of thousands of dollars – if not millions. Think of all the public services we could have today with that much lost revenue – hospitals, doctors, long-term care beds, teachers, child care, mental health services, and more kilometres of safe highways.
Good public policy requires the best information
It is essential that legislators, policy-makers and members of the public know more to gain better knowledge of our existing and future fiscal state, but also to better inform and influence our current public policy-making.
“Debt bombs” are being created by P3 projects whose costs are largely hidden up front. These deals are usually locked in for 20 to 30 years. Decades later, Nova Scotians discover the size of these debts, reducing the revenue we need for valuable public services.
In Nova Scotia we have no way of knowing the magnitude of P3 liabilities and long-term obligations. What are Nova Scotians on the hook for? How much debt are we carrying from P3 deals?
It’s almost impossible to know since we do not have access to the information contained in the contracts – negotiated through secret backroom deals.
We also have no knowledge of the much larger obligations associated with P3s, such as the cost of buying back leases or the operations and maintenance costs that have also been handed over to these private companies.
Canada has one of the most active and largest markets in the world for P3 projects, but we also have one of the weakest legislative, accountability and transparency regimes for P3s in the world.
Bias and influence-peddling must be reduced. Legislation should put a requirement on consultants and decision-makers to prove that the option they support, whether public or private, is in fact in the public interest.
Reporting standards also need to apply to other operational arrangements for delivering public services beyond these more strictly-defined as P3s. For example, the growing interest in and use of social impact bonds and private financing for public infrastructure through the Canada Infrastructure Bank. This will create additional obligations and liabilities that should be adequately reflected in public sector financial statements.
CUPE opposes public-private partnerships and believes that we can count
on public services to be accountable, accessible, locally-controlled and a wise investment of tax dollars. Privatization is risky and expensive for provinces and citizens. Costs rise, quality suffers, and local control is weakened. Public funds are diverted from core services to corporate profits.
CUPE strongly supports more detailed and comprehensive disclosure and reporting requirements both in general and in relation to public-private partnerships. We also strongly support the requirement that operating and maintenance payments, as well as any other payments, or minimum revenue guarantees, also be required to be itemized.
We note that the International Public Sector Accounting Standards include significant disclosure obligations and hope that Nova Scotia’s public sector accounting at least meets these standards. While these accounting principles apply to financial decisions that have already been taken, we would
also like to see them applied to the business case development upon which the decision is made whether to opt for a P3 or traditional procurement. This would ensure decision-makers and the public receive relevant information in a timely manner to ensure greater accountability and transparency in the development of public infrastructure.
It makes sense to recognize the value of engaging the provincial auditor general in the review of contracts for public infrastructure and services. Legislation should require that the auditor general be granted complete access to information and adequate resources to analyze and report back on each project.
Transparent disclosure and reporting standards should apply to all public or private operations that provide public services and receive public funding, regardless of their particular operational structure. Legislation will ensure that disclosure and reporting for them cannot fall through the cracks.
ADDITIONAL READING
What is Open Contracting?
Right to Know Coalition of Nova Scotia. June 2018.
nsrighttoknow.ca/wp-content/uploads/2018/06/Open-Contracting.pdf
Privatization Nation: The Canada-wide Failure of Privatization, Outsourcing and Public-Private Partnerships
Canadian Centre for Policy Alternatives – Saskatchewan (CCPA). November 2015. policyalternatives.ca/publications/reports/privatization-nation
Accounting for the true costs of P3s
Canadian Union of Public Employees. June 2017.
cupe.ca/accounting-true-costs-p3s
Nova Scotia’s Billion Dollar Trojan Horse
Canadian Union of Public Employees. July 2017.
nl.cupe.ca/2017/07/21/nova-scotias-billion-dollar- trojan-horse
IN THE NEWS
Everyone sees everything’: Overhauling Ukraine’s corrupt contracting sector
Sophie Brown. Medium. November 2016.
https://medium.com/open-contract- ing-stories/everyone-sees-everything- fa6df0d00335
In-house trash collection finds savings
April Cunningham. Telegraph-Journal. November 2013.
https://www.telegraphjournal.com/telegraph-journal/story/35181842/in-house-trash-collection-finds-bni?source=story-related
P3 school projects blasted by AG report
CBC News. January 2012.
https://www.cbc.ca/news/canada/new-brunswick/p3-school-projects-blasted-by-ag-report-1.1241669
Keith Reynolds: B.C. should end public-private partnerships
The Province. June 2018.
http://theprovince.com/opinion/op-ed/keith-reynolds-b-c-should-end-public-private-partnerships
Public-Private Partnerships Inflated Costs to Taxpayers, Says Report
The Tyee. June 2018.
https://thetyee.ca/News/2018/06/13/Public-Private-Partnerships-Inflated-Costs/
Bid process ‘stunning’: Management of multimillion-dollar Nova Scotia health records contract questioned
Paul Schneidereit. Chronicle Herald. October 2018.
https://www.thechronicleherald.ca/news/local/bid-process-stunning-management-of-multimillion-dollar-nova-scotia-health-records-contract-questioned-253235
Premier suggests 2013 promise not a promise, but a mistake
Jean Laroche. CBC Nova Scotia. September 2018.
https://www.cbc.ca/news/canada/nova-scotia/mcneil-privacy-commissioner-promise-letter-election-1.4828433
Access denied: the Nova Scotia Health Authority refuses to share the results of its transportation survey
Erica Butler. Halifax Examiner. May 2018.
https://www.halifaxexaminer.ca/province-house/access-denied-the-nova-scotia-health-authority-refuses-to-share-the-results-of-its-transportation-survey
Do P3 hospitals offer value for money spent? None of your business, says Stephen McNeil
Stephen Kimber. Halifax Examiner. October 2018.
https://www.halifaxexaminer.ca/province-house/do-p3-hospitals-offer-value-for-money-spent-none-of-your-business-says-stephen-mcneil
The Kasian report cost $3.4 million — 78 per cent higher than budgeted
Jennifer Henderson. Halifax Examiner. October 2018.
https://www.halifaxexaminer.ca/featured/the-kasian-report-cost-3-4-million-78-per-cent-higher-than-budgeted/#News
The Nova Centre was oversold: Morning File, Wednesday, October 4, 2017
Tim Bousquet. Halifax Examiner. October 2018.
https://www.halifaxexaminer.ca/featured/the-nova-centre-was-oversold-morning-file-wednesday-october-4-2017/#3.%20Jimmy%20Melvin%20Jr.
To P3 or Not to P3: That is the Question (Part I)
Mary Campbell. Cape Breton Spectator. October 2018.
https://capebretonspectator.com/2018/10/10/qu2-health-ns-p3-research
To P3 or Not to P3: That is the Question (Part II)
Mary Campbell. Cape Breton Spectator. October 2018.
https://capebretonspectator.com/2018/10/10/p3-qeii-ns-mcneil-health-research
Total cost of QEII redevelopment will be about $2 billion
Jean Laroche, Michael Gorman. CBC Nova Scotia. October 2018.
https://www.cbc.ca/news/canada/nova-scotia/province-opts-for-p3-model-to-replace-aging-halifax-hospital-buildings-1.4850094
RELATED SOURCES
Privatization Nation: The Canada-wide Failure of Privatization, Outsourcing and Public-Private Partnerships
Canadian Centre for Policy Alternatives – Saskatchewan (CCPA). November 2015. policyalternatives.ca/publications/reports/privatization-nation
Public Sector Accounting Board (PSAB) Statement of Principles on Public-Private Partnerships – Summary Comments from CUPE
Canadian union of Public Employees. November 2017.
https://cupe.ca/sites/cupe/files/summary_comments_psab_statement_principles_p3_2017_11_15_en.pdf
The Costs of Secrecy: Economic Arguments for Transparency in Public Procurement
Michael Karanicolas. May 2018.
https://www.opengovpartnership.org/sites/default/files/OGP_Costs-of-Secrecy_20180515.pdf
Information About Virginia’s Enterprise Electronic Procurement System Benefits and Savings Virginia Department of General Services. November 2015.
https://eva.virginia.gov/cd/files/evafact1benefits- savings.pdf
Nova Scotia Public Procurement Act
Including policies and processes, and list of entities covered under the Act.
https://novascotia.ca/tenders/policies-processes/public-procurement-act.aspx
Manitoba Infrastructure Bid Results Library
https://gov.mb.ca/mit/contracts/bidresults.html
eVA: Virginia’s eProcurement Portal
https://www.fairfaxcounty.gov/procurement/vendors/eva
Alberta Government Sole-source service contracts https://www.alberta.ca/sole-source-contracts.aspx
Government of Canada, Guidelines on the Proactive Disclosure of Contracts
http://www.tbs-sct.gc.ca/pol/doc-eng.aspx?id=14676
Nova Scotia Procurement Document Library
https://novascotia.ca/tenders/document-library.aspx
Nova Scotia Open Data Portal
https://data.novascotia.ca/Procurement-and-Contracts/Awarded-Public-Tenders/m6ps-8j6u
Canada Infrastructure Bank and the Public’s Right to Know
Columbia Institute Report. 2017.
http://www.columbiainstitute.ca/news-events/2017-canada-infrastructure-bank-and-publics-right-know
Our latest report: Public-Private Partnerships in BC: Update 2018
Columbia Institute. 2018.
http://www.columbiainstitute.ca/news-events/our-latest-report-public-private-partnerships-bc-update-2018
Liberal infrastructure bank will keep key privatization details secret
Canadian Union of Public Employees. September 2017.
https://cupe.ca/liberal-infrastructure-bank-will-keep-key-privatization-details-secret
Manitoba sets new ground with P3 accountability legislation
Canadian Union of Public Employees. June 2014.
https://cupe.ca/manitoba-sets-new-ground-p3-accountability-legislation
Manitoba opens door to public sector secrecy as Ottawa calls for increase in P3 projects
Policy Note. March 2017.
http://www.policynote.ca/canada-budget-opens-door-to-public-private-partnerships-manitoba-opens-door-to-p3-secrecy/
The Collapse of P3 Giant Carillion and Its Implications
John Loxley. Canadian Centre for Policy Alternatives (CCPA). January 2018.
https://www.policyalternatives.ca/publications/reports/collapse-p3-giant-carillion-and-its-implications
KPMG: Reasons to be skeptical of the advice they offer
Jim Silver. Canadian Centre for Policy Alternatives (CCPA). November 2017.
https://www.policyalternatives.ca/publications/commentary/kpmg-reasons-be-skeptical-advice-they-offer
In the Public Interest – Website
https://www.inthepublicinterest.org/our-resources-on-infrastructure