Public-private school deals make 'no economic sense': study

Last Updated: Thursday, January 17, 2008 | 12:11 PM MT

CBC News

A new study says building schools in Alberta under public-private partnerships doesn't give taxpayers the most bang for their buck.

An economic study disputes the benefits of Alberta's plans to build 18 schools by 2010 using a public-private partnership.
(CBC)

An economic analysis released by the Canadian Union of Public Employees Wednesday suggests fewer schools will be built financed by the so-called P3 collaboration than if they were constructed as public projects.

"For every two schools that you can build under the P3 model, if you built them all conventionally, you could build three," said Hugh Mackenzie, an economic consultant who wrote the report titled, "Doing the math: Why P3s for Alberta schools don't add up."

Under a P3 deal, the province will contract out the design and construction of 18 schools to be built by 2010. The winning bidder will also have a 25- to 30-year contract for major maintenance and repair, such as replacing boilers and roofs.

School boards will retain ownership of the buildings.

Three companies have made the shortlist to bid on P3 contracts for nine schools in Calgary and another nine in Edmonton.

Using a mortgage analogy, Mackenzie questioned how private companies can build schools cheaper than the government could.
 
"How could it possibly be cheaper for me to pay somebody eight per cent to go and borrow money to buy a house when I can borrow the money myself for six? How could it possibly be cheaper?" he said at a news conference in Calgary.

"The evidence is clear that relying on P3s to finance public infrastructure makes no economic sense."

Minister dismisses economic study

Ron Liepert, Alberta's education minister, said he hasn't read the report and doesn't plan to because final figures won't be in until July.

"There are way too many assumptions being made on numbers that frankly, are not proven out yet," he said.

"Going this model in a large centre like Calgary and Edmonton, we can get schools built more efficiently and we can get them built at less cost."

But the Opposition Liberals disagree, predicting P3s will end up costing taxpayers millions of dollars in the long run.

"This is political opportunism at its worst," said Liberal infrastructure critic Harry Chase. "Because the people who sign these deals for P3s won't be around 30 years from now nor will they be liable."

Chase claims the province originally planned to build the Calgary Courts Centre, which opened in September 2007, as a public-private partnership, but abandoned that plan when the full costs became clear.