Public-private partnerships: good business but bad governance

Posted on in Governance Delivery System – opinion/editorialopinion
December 18, 2012.   Rosario Marchese

There’s an old poker saying that goes, “If you’re looking around the table and don’t know who the sucker is, it’s you.” Unfortunately, the Ontario Liberal government once again is the last to realize it has been taken for a ride.

Last week, the Auditor General of Ontario revealed that Presto, the province’s long-promised and long-delayed transit fare payment system, is poised to become one of the most expensive systems of its type in the world, with soaring costs that have nearly tripled from the original budget estimates.

This is bad news for Ontario taxpayers and transit users, but Presto’s private sector partners are getting fat paydays. As the Toronto Star wrote on Dec. 12: “It all sounds like eHealth redux.”

If it was the first time this had happened, that would be bad enough. But such misadventures have become the signature of this government. From eHealth to ORNGE and now Presto, this government has demonstrated an addiction to private partnerships and fat consulting deals that are leaving Ontario taxpayers on the hook for huge risks and costs.

In a recent paper published by the Journal of the American Planning Association, University of Toronto assistant professor Matti Siemiatycki and researcher Naeem Farooqi revealed that the provincial government had overpaid on 28 projects by about $1 billion, or 15 per cent, after using public-private partnerships rather than traditional procurement methods. These arrangements are supposed to minimize risk, but the paper’s authors say the government has no idea how much risk is actually being reallocated with such schemes.

The government simply assumes private companies do a better job at reducing risk and costs. But then the government naively enters into contracts that allow these companies to shift risks and costs right back onto Ontario taxpayers.

And it continues. At this moment, billionaires from Las Vegas are landing their private jets in Toronto with the hope of scoring huge profits from a new Toronto casino. More than half of new registrations on the City of Toronto’s lobbyist registry are from the gambling and casino industry, egged on by the Ontario government.

Does the government really believe that casino tycoons like Sheldon Adelson are here because they want to serve the public interest? Are these billionaires lining up outside Mayor Rob Ford’s door because they want to create jobs, boost tourism and fill government coffers? Or is it because they understand that a government-issued gambling monopoly in downtown Toronto is a licence to print money?

The government says it respects the creative efficiency of the private sector. I say the government does not respect it enough. Time and time again, this government has allowed the private sector to creatively and efficiently entrench itself in monopoly positions, which then make it impossible for the government to seek better deals.

I can’t blame the private companies for making a buck and avoiding risk. If I was a shareholder, I would expect nothing less.

The private sector has much to offer the government, and some things are best left to private companies. But our government needs to realize that the private sector exists to serve private interests. It will never place the public interest first, as a government must do.

Public-private partnerships are not cure-alls and they are not magic bullets. And they are certainly no substitute for responsible governance and oversight, answerable to the citizens of Ontario.

Rosario Marchese is the MPP for Trinity-Spadina riding. He is a member of the Ontario New Democratic Party.

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