The hidden price of public-private partnerships

Tens of billions of dollars have been sunk into some 180 projects, including Ontario’s Highway 407, and many more are in the works.

 

The Globe and Mail:

Governments are essentially “renting money” they could borrow more cheaply on their own because it’s politically expedient to defer expenses and avoid debt, Prof. Boardman added. P3 has become a “slogan” with often dubious benefits, he said.

Based on a new study of 28 Ontario P3 projects worth more than $7-billion, University of Toronto assistant professor Matti Siemiatycki and researcher Naeem Farooqi found that public-private partnerships cost an average of 16 per cent more than conventional tendered contracts. That’s mainly because private borrowers typically pay higher interest rates than governments. Transaction costs for lawyers and consultants also add about 3 per cent to the final bill.

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