Privatization

What is privatization and why is it so corrosive to our province?

Privatization is the transfer of ownership or provision of services from a government to a private entity/business/corporation.

Public-private-partnerships (aka P3s) are an arrangement where a government enlists the private sector in any combination ways:

Design: Private sector designing the project

Build: Private sector responsible for constructing a project (e.g. building, road, etc.), including sub-contracting

Finance: Private financing for the project

Operate: Private sector operating and providing the service

Own: Private sector owning the infrastructure and maybe leasing it government

  • Tends to be more costly
  • Less oversight over the project
  • Complicated P3 requirements tend to lengthen the process and add delays
  • More costly and risky than public financing. Can often involve equity partners, consortia, shady ways of financing
  • Governments can borrow at much lower rates to finance projects
  • Frequently leads to lease payments and user fees after construction in order for private company to recover costs
  • Tends to lead to lower-quality service
  • Less accountability and transparency
  • Will cost government more in the long run
  • Government has less flexibility if private sector owns infrastructure

History has shown that privatization and P3s are:

  • More costly (for government and the taxpayers)
  • Whether it is the cost to build something or the cost to use a service (through user fees, for example)
  • Less accountability and transparency since they are further removed from government regulation and reporting requirements
  • Lead to lower quality services