Jun 102013
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Citizens, councillors should be allowed to study the case for proposed public-private LRT line.

by Ricardo Acuña

Somewhere at Edmonton's city hall there is a document that everyone in Edmonton should read. The document is called Southeast to West LRT P3 Business Case and it was prepared by the city's administration. Within it is the detailed financial and risk analysis for Edmonton's new southeast LRT line, which is to be built as a public-private partnership (P3).

P3s come in a variety of shapes and sizes, but in the case of the southeast LRT it means that a private for-profit company or consortium will be handed responsibility for all aspects of the project, from design and building to operation and maintenance, for a 30-year period.

In the spring of 2012 the federal government essentially bullied the City of Edmonton into proceeding with the southeast LRT line as a P3, making it clear that would be the only way the city would get any federal money at all for the project. At that point, city council, behind closed doors, voted to accept the terms from the feds and proceed with the project as a full P3.

No one is actually allowed to study that document until after the LRT contract is signed sometime in 2015, not even city councillors.

P3s are currently quite trendy among right-wing governments and the business community because they allow private companies to make a profit from what would otherwise be public infrastructure. These projects also tend to be largely risk-free for the businesses that take them on, because they usually build some sort of profit guarantee right into the 30-year contracts.

In their presentation to city council in the fall (again behind closed doors), city administration told councillors that going the P3 route would save the city three to 10 percent from what it would cost to build the project along traditional lines. The case for that level of savings, they say, is fully detailed in the "Southeast to West LRT P3 Business Case" document mentioned above.

The problem with that is that no one is actually allowed to see that document until after the LRT contract is signed sometime in 2015. Even city councillors were apparently only allowed to see it while administration was making its case at the meeting, but had to return reports as soon as the meeting ended. In other words, they were not allowed to study the business case beforehand to prepare questions and do their own analysis of the numbers, nor were they allowed to take it back to their offices to look at it in more detail after the meeting.

How can a councillor fulfil their due diligence on a document that they only have a few hours to look at while someone else is interpreting it for them? How can Edmontonians hold their councillors and municipal government accountable if we're privy to neither the decisions they are making or the data they are using to make those decisions?

These questions are especially important in the case of a P3 project for transit. A recent article in the Financial Post quotes former deputy minister of federal infrastructure André Juneau as saying "the execution of P3s shouldn't be done without a public consultation process; that the public for whom the service is being provided must buy into the concept before too many grand plans are made." The same article quotes John McBride, CEO of PPP Canada, as saying "the private sector costs more" and that P3s only make sense for about 10 – 15 percent of infrastructure projects needed today. It is worth pointing out that these warnings come from proponents of P3s.

John McBride, CEO of PPP Canada and a proponent of P3s, has said that “the private sector costs more” and that P3s only make sense for about 10 – 15 percent of infrastructure projects needed today.

Even a new report released last week by the unfailingly pro-corporate anti-government Fraser Institute warned that P3s will fail when governments have not established "an open, transparent and accountable environment," and when thorough and transparent value-for-money assessments are not conducted. These concerns are all aggravated by a new paper published by U of T professors Matti Siemiatycki and Naeem Farooqi in the Journal of the American Planning Association which found that using P3s adds on average 16 percent to the cost of infrastructure projects.

Examples from across Canada and the world highlight the fact that P3s for public transit infrastructure are incredibly risky for municipalities and taxpayers. I suppose it's possible, though highly unlikely, that the report by the city's administration adequately addresses all of these risks and concerns and makes a strong case for proceeding with this P3 project. Unless they let us see it and make that assessment on our own, however, we will never know for sure. And if we as citizens cannot know for sure, this project should not proceed.

About Ricardo Acuña

Ricardo Acuña is Executive Director of the Parkland Institute, a non-partisan public policy research institute housed at the University of Alberta.

© Copyright 2013 Ricardo Acuña, All rights Reserved. Written For: StraightGoods.ca

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