New Kingston rehab and mental health hospital a departure from recent P3s

The decision to do a long-term private deal to build and maintain the new Kingston rehab and mental health hospital suggests the McGuinty government is ramping up its efforts once again to engage in major privatization of Ontario’s infrastructure.

In Ontario the P3 brand – P3 representing “private-public-partnerships” – has been repeatedly damaged by deals that have clearly not been in the public interest.

There is a Mike Constable comic that shows the private partner eating the public partner – a likely accurate analogy to the present situation.

Ontarians are still vexed by the giveaway of Highway 407 north of Toronto, one of the most expensive and profitable toll roads in the world. The folly of public-private partnerships was visible to all when the McGuinty government found they didn’t even have the power to limit rate hikes on the toll road.

Let’s not forget the government tried to rebrand the P3s as “alternative financing and procurement” projects (AFP) – a moniker that failed to get any traction, especially when the Canadian Council for Public Private Partnerships continued to place these projects on their website as P3s, not AFPs.

Ontario has far more P3 projects underway than all other provinces combined.

For several years the government has kept a low profile on the development of P3s. A new paper published in the Journal of the American Planning Association (JAPA) suggests the Ontario Liberals may have deliberately limited the scope of such projects in recent years to build back the brand and make P3s more acceptable to the public.

“Despite petitioning from industry to more fully involve the private sector in all aspects of project delivery, the Liberal government since the mid-2000s adhered to a strategy to begin with simple build-finance PPPs to shape public acceptance of the model, before proceeding to more complex PPP approaches involving revenue risk transfer and facility operation,” states authors Matti Siemiatycki and Naeem Farooq of the University of Toronto.

A “build-finance” P3 is very limited in scope. It basically means the private sector builds and finances the project until the keys are handed over to the public sector tenant. At that point both the financing and operation of the building are the responsibility of the public sector.

The proposed new hospital in Kingston appears to go further than that – it is a 30-year deal that includes life cycle maintenance of the building. The higher interest charges alone will likely spike the cost of this building far beyond traditionally procured public infrastructure projects.

Tonight in Kingston the community will have an opportunity to learn more about these projects. A town hall meeting sponsored by the Kingston Health Coalition is planned early – from 5:30 to 7:30 pm at the Kingston Frontenac Library, 130 Johnson Street. Come and participate. Admission is free.

More on this issue in the weeks to come.