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    Canadian Centre for Policy Alternatives
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    Canadian Centre for Policy Alternatives
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The Progressive Economics Forum

Regina Hosed by P3 Waste Water

Regina City Council has voted to proceed with a 30-year public-private partnership (P3) in which a private company would design, build, finance, operate and maintain the city’s new waste water treatment facility.

The municipal administration’s rationale has been that, although a P3 will be more expensive than traditional public financing, it is required to access federal money from the P3 Canada Fund.

However, Hugh Mackenzie’s recent analysis concludes that the additional costs of a P3 would actually exceed the full value of the federal grant. As my dad noted with the following letter in Saturday’s Regina Leader-Post, that means this federal “infrastructure” funding is not helping to pay for the infrastructure but is simply being transferred to private financiers.

P3s wrong model

Your May 7 article (Project ‘doesn’t make any sense’: economist), states: “Proceeding with a public private partnership (P3) to upgrade the city’s waste water treatment plant is going to cost Regina taxpayers $60 million more than if the city paid for the project itself.”

Economist Hugh Mackenzie’s study also concluded that even after subtracting the expected federal funding, the P3 model would still be more expensive.

P3s are very costly. In essence, the city is hiring a private operator to borrow money to finance part of the plant.

The private partner must pay higher interest rates to borrow than the city and will expect to make a profit each and every year. In addition, the costs to structure a complex P3 deal are substantially more than the costs of straightforward public borrowing.

The city claims the only available federal funding requires a P3 model. Without P3 strings attached, the proposed $50 million federal contribution could be used to reduce the cost of our $200-million wastewater plant to $150 million.

With a P3, the $50-million federal grant will not be used to reduce the cost of the project to citizens of Regina. It will be misused to pay the higher private interest charges, the profit demanded by the private partner and the higher P3 deal structuring charges – enriching bankers, lawyers and financiers.

The Harper government should help fund infrastructure. But requiring the P3 model squanders our tax dollars to support their friends in business.

David Weir, Regina

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