Labour officials oppose P3

The Whitehorse hospital board is considering contracting the private sector to expand the hospital, but Yukon labour officials are saying ‘no.

The Whitehorse hospital board is considering contracting the private sector to expand the hospital, but Yukon labour officials are saying ‘no.’

“On the face, (public-private partnerships) look pretty enticing for a government, but … at the end of the day it costs us more money,” said Alex Furlong, president of the Yukon Federation of Labour.

The possibility for P3 (public-private partnership) was raised by board chairman Craig Tuton at last Thursday’s annual general meeting of the Whitehorse hospital board of trustees.

The hospital wants to expand its emergency ward, buy new equipment and build a new nurses’ residence — projects estimated to cost about $60 million.

Under a P3 program, these facilities would be built by a private company and leased back to the territorial government.

The labour federation based much of its opposition to the proposal on a 2003 report released by the Canadian Centre for Policy Alternatives, a non-profit Ottawa-based think tank.

“On the basis of the record of other P3s, it is reasonable to expect P3 hospitals to be at least 10 per cent more costly than their public-sector equivalents,” said the report, entitled Funding Hospital Infrastructure: Why P3s Don’t Work, and What Will.

Citing a proposed P3 initiative in Ontario, the report said private initiatives suffer from three main setbacks.

First, private enterprise can’t acquire loans at low government rates.

Second, private enterprise must account for a profit margin.

“Companies don’t work for nothing. The profit margin needs to be within 10 to 15 per cent or they’re not going to do it,” said Furlong.

Third, the actual mechanics of negotiating and administering a P3 program can run in the millions of dollars, said the report.

In British Columbia, P3 projects currently constitute a large component of the province’s ongoing construction boom.

“Governments around the world are recognizing that while they are the best (often the only) bodies to set public policy and regulate performance, they are not often the most efficient entities when it comes to project management … with the assistance of private expertise, the results achieved provide greater efficiencies,” said a 2005 release by Partnership BC, a provincial agency that co-ordinates P3 initiatives.

In the recent construction of the Abbotsford Regional Hospital and Cancer Centre, it was estimated that P3 had saved the government about $39 million over the life of the contract.

Rather than look to the private sector, Furlong said that the hospital should be campaigning for the territorial government to provide $60 million.

He called on the government to “seriously consider” funding the upgrades.

Tuesday, Yukon Health Minister Brad Cathers told a news conference he could not comment on Craig Tuton’s recent proposal, but was not ruling out a P3 initiative.

A committee has been assembled by Cathers to research the advantages of P3 partnerships. Cathers said that he is waiting to hear the committee’s findings.

The hospital upgrades are not the first instance of a P3 initiative being investigated by a territorial government agency.

In 2005, then Public Works Minister Glenn Hart announced that he was looking towards the private sector to build a bridge to Dawson City.

The project fell through because it was “too expensive.”

“I have great respect for Mr. Tuton … but let’s be clear that at every turn we will be opposed to entering into any agreements that involve the private sector and the health-care system,” said Furlong.