Nova Scotia

Victoria General Hospital replacement should not be P3, says coalition

The Nova Scotia Health Coalition says public-private partnerships are too costly for taxpayers and shouldn't be used to replace the Victoria General Hospital.

Nova Scotia Health Coalition says public-private partnerships only an 'accounting trick'

The Victoria Genearl Hospital in Halifax has been experiencing problems for years. (Craig Paisley/CBC)

The Nova Scotia Health Coalition wants the provincial government to stay away from public-private partnerships as it works to replace the problem-stricken Victoria General Hospital

The Nova Scotia Health Coalition is a community group that aims to stop the privatization of the health-care system, ensure high levels of care and foster discussion of health-care issues.

Exactly how the Nova Scotia government will pay to replace the VG hasn't been worked out yet. It's not even clear how much the new building could cost.

P3s an 'accounting trick'

Public-private partnerships, or P3s, are a funding model that allows for the construction of new public buildings by private companies. The companies cover the cost of the construction and own the building, while the government pays to lease the space. It's a way to for the province to avoid going into debt to construct a new building.

The Victoria and Centennial buildings are set to be demolished in the next four years. (Robert Short/CBC)

The Nova Scotia Health Coalition said that formula is not the win-win it's made out to be.

"It's not actually a sustainable funding model. It's essentially an accounting trick," said Chris Parsons, the provincial co-ordinator for the coalition.

P3s costly in Ontario

In 2014 Ontario's auditor general revealed that public-private partnerships to build hospitals, schools and roads in that province actually ended up costing taxpayers more money.

Ontario Auditor General Bonnie Lysyk delivered her 2014 report during a news conference in Toronto. (Nathan Denette/The Canadian Press)

Over a nine-year period, the partnerships cost $8 billion more than if they were managed by the public sector.

"If a private company actually finances it, they're not just taking money out of their pockets, they're not taking money out of their bank account," Parsons told Information Morning, "They're borrowing the money themselves and then they charge the government for it and they charge a premium for their profit and they charge a management fee."

No actual savings

Parsons said it's much easier for the public sector to borrow money at a lower rate than the private sector, meaning less interest and smaller debt. There's no evidence P3 deals have saved government's money over the last 30 years, according to Parsons.

The coalition is also concerned that the partnerships aren't transparent enough and that the contracts are often kept secret because of the private companies involved.

P3s not ruled out for VG

The province is still trying to determine exactly how much it will cost to replace the VG. In April, the finance minister told CBC News that until designs for the new building are established it's difficult to know how much the new hospital will cost.

Nova Scotia Finance Minister Randy Delorey said in April that the province is still looking at how it will pay for a new hospital. (Legislative TV)

Randy Delorey said at the time that public-private partnerships hadn't been ruled out.

The Nova Scotia Health Coalition will hold community meetings with the public in October and November to discuss public-private partnerships. No specific dates or locations for those meetings have been released.

with files from Information Morning