Privatization by a different name
Governments at every level have a big revenue problem.
This is largely a problem of their own making. For decades, Conservative and Liberal governments, under the cover of tax cuts for the general population, made massive tax cuts to the wealthy and their corporations. Now to solve their revenue problem to build critically needed infrastructure, they are turning to this very same corporate class, selling the myth that somehow free money is to be had from public-private partnerships known as P3s.
Prime Minister Justin Trudeau introduced his P3 infrastructure bank in 2017 and is now going full steam ahead with a P3 high frequency rail (HFR) project between Quebec City and Toronto. Trying to solve revenue problems in Ontario, on Nov. 2 last year, Premier Doug Ford announced the creation of an infrastructure P3 bank here.
In whose interests are the proponents of public-private partnerships operating? Claims of “increased efficiencies,” “innovation” and now “dynamism” are completely false. In the past, proponents have claimed they were off-loading risk onto the private partners. All completely bogus.
Make no mistake, P3s are privatization. There are three kinds of privatization. First is the outright sale of a public asset or service. The second is leasing public assets to the private sector. The third and most insidious form are P3s.
The record of P3 privatizations around the world is dismal. Before the HFR project gets underway, we should look at what happened when rail was privatized in the U.K. It is a national joke. In fact, the privatization of electricity, water, rail and hospital construction has been a complete failure there. New Zealand and Australia also had expensive experiences with P3 privatizations.
The most famous privatization gone bad was Cochabamba, Bolivia, when water was privatized. Martial law was declared there after two popular uprisings, then water was put back under public control.
In Europe, most water and electricity facilities leased or sold to the private sector were brought back under public control with the de-privatization trend in 2010.
One doesn’t have to look that far for failed examples of privatization. The privatization of Highway 407 and hydro has left the people of Ontario with no appetite for anymore privatization of public assets.
The privatization of Connaught Labs by Brian Mulroney hurt us badly during the pandemic. The privatization of the Bruce nuclear plant in a long-term lease was one of the worst. The profits were privatized, but the debt risks and pollution remained public.
Governments did not privatize public assets during the world wars, nor the Depression. They wisely kept those public assets for the future. We worked our way out of those terrible times by co-operating in a robust public sector and non-profit public enterprise, and that is what we must do now.
We have a very good example of how to do that. In 1905, forward-looking Conservatives brought in public power in Ontario with the motto “power at cost for the people.” Rates dropped by half. The rest of the country quickly copied that model, making Canada’s economy very successful.
In the end, there is no free money. P3s are a very expensive and inefficient way of financing infrastructure and services. They hide public borrowing while, at the same time, they provide long-term guarantees of profits to private companies.
It is a big mistake to bring in P3s. Close P3 infrastructure banks or we will pay and pay. Reversing tax cuts on the wealthy and corporations is not raising taxes, it is restoring revenue to build a civil society.