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June 15, 2010

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Quebec Auditor General slams Montreal P3 project

Report finds public option $10.4 million less expensive

BURNABY—A recent report by the auditor general of Quebec warning decision-makers to avoid a public-private partnership (P3) option for a major public infrastructure project reinforces previous reports by Ontario and B.C. auditors general—and reaffirms its own position on P3s, says CUPE BC.

For the fourth year in a row, Quebec’s auditor general has found that the choice to pursue a P3 for upgrades to Montreal’s University Health Centres (MUHC) is based on faulty and inaccurate assumptions and will end up costing taxpayers millions more than if they chose a public model.

In his report to the National Assembly for 2010-2011, Auditor General Renaud Lachance concludes that Infrastructure Quebec did not provide decision-makers with the appropriate information to accurately assess the long-term financial impacts of the project. As a result, “the signing of the PPP contracts for the CRCHUM and the MUHC projects, the duration of which is 30 years, was done or will be done without having a vision of the projects as a whole in terms of their global costs and the operating budgets that will be necessary for these new institutions.”

The 2010-2011 report finds that comparisons between the public and private sector models were biased towards the P3 option. Analyses unjustly add costs to the public sector comparator which are not included in the private model by assuming an exaggerated maintenance deficit starting in the first year of operation. When this faulty assumption is eliminated, public operation and delivery of health services at the Centres is $10.4 million less expensive than under a P3 model.

The auditor general also cautions that comparisons between the private and public models inappropriately portray the extent of analysis that has been done. The information sent to decision-makers indicates that analysts reviewed total costs with a discount rate of 6.5 per cent and with no asset and maintenance deficit. In fact, this analysis was never carried out.

“This just confirms what we have experienced here in B.C., time after time, with major infrastructure projects the government turns over to the private sector,” says CUPE BC president Barry O’Neill.

“As far as the design and build part of these projects is concerned, the private sector has always done a good job. But the public option is always the best option for the operation of these projects—particularly for core infrastructure such as water, schools and health care facilities. And yet this government continually—and stubbornly—refuses to recognize this fact.”

Read the full report.

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