(Vancouver) An independent analysis of the Sea-to-Sky highway project has found that it will cost taxpayers an extra $220 million over the next 25 years as a P3 than if the government had used its traditional financing and procurement processes.
Marvin Shaffer, an economist and author of the analysis released today by the Canadian Centre for Policy Alternatives, examined Partnership BC’s “Value for Money” report that estimated the costs of going with a P3 versus traditional government financing and procurement for the highway upgrade and maintenance project. The Partnerships BC report concluded that the P3 option would cost $46 million more, but it was nonetheless chosen. Shaffer’s analysis shows the price difference is actually much larger.
“Partnerships BC’s report exaggerated the cost to taxpayers under the public option and double-counted the benefits of the risks that the P3 will assume,” says Shaffer. His analysis details how the Value for Money report inflated the cost of government borrowing by over 2.5 percentage points, incorrectly assuming the cost of government borrowing is the same as the P3s cost of capital. The report also applied an inappropriately high discount rate to the future payments that will be made to the P3, giving too little weight to the tax burden British Columbians will carry in future years.
“Is this P3 worth a $220 million premium to taxpayers? Absolutely not. There may be some benefits to the P3, but there is no evidence that they total anywhere near that amount. It was an ideological, not economic decision to go with the P3.”
Shaffer says the provincial government should develop more accurate, transparent methods for estimating and reporting the costs and benefits of P3s versus traditional public financing and procurement. “Partnership BC’s Sea-to-Sky Value for Money Report simply did not provide accurate information about what the real costs to taxpayers will be.”
The Real Cost of the Sea-to-Sky P3: A Critical Review of Partnerships BC’s Value for Money Assessment was published today by the CCPA. To arrange an interview call Shannon Daub at 604-801-5121 x226.