Wednesday, 27 June 2012

Katz stands against P3 Accountability

Image from the CBC

Well, the country club conservative of Tuxedo was at it again earlier this month, whining at the Province for introducing safeguards. The safeguards would be over our city's more lucrative Public-Private Partnerships (P3s).  Last time Katz was whining about the Legislature putting its foot down and ending corporate/union donations to city councillors. It seems that in any case where there's a risk of corporate welfare - as was the case with corporate donations and as there is with P3s - Katz just hates Provincial safeguards. Sometimes, though, the adults have to step in to oversee the child in such risky sitatuons.

The new provincial oversight is coming in the form of Bill 34: The Public-Private Partnership Transparency and Accountability Act.  This act sets in place rules for City Hall's future P3 deals when it comes to "major capital projects".

 "major capital project" means a project that 
 (a) involves the creation or development of a public work or improvements to a public work; and 
 (b) has a projected total cost — including the costs of any contract renewals or extensions, project add-ons and future phases planned for the project, even if they are not included in the initial procurement for the project — of $20,000,000 or more. (« projet d'immobilisations important »)
           From the Public-Private Partnership Transparency and Accountability Act, section 1

From section 3

Application of Act  
3 This Act applies to every major capital project of a public sector entity for which the P3 procurement method is used, but only if the procurement process is initiated after this Act comes into force.
So the infamously secretive Veolia deal as well as an upcoming P3 to deal to build a police station won't be covered by this legislation. Nonetheless, there's quite a few good governance gems in Bill C-34, including:

  • Mandating an estimate of the cost under traditional procurement, a risk/cost/benefit analysis of the P3 procurement, & a written report of the analysis before moving forward with P3 procurement for a project. 
  • Establishing conflict of interest safeguards. 
  • Ensuring that risk/cost/benefit analyses and project details are to be made public to the extent they don't harm getting the best value for money in the competitive bid.
  • Establishing that a "reasonable opportunity" to comment on the P3 deal must be provided to the public. 
  • Establishing the position of fairness monitor, to advise on the procurement process and evaluate the fairness of the successful bidder's selection. The fairness monitor will write their findings in a report. 
  • Detailing that the Auditor General reviews the fairness monitor's report and a contract summary, in turn making their own review and comments.
  • Establishes that the Auditor General's reviews, the contract summary, and the fairness monitor's report is to be publicly available throughout the term of the P3 and one year after as well. 
  • Mandates that any public sector entity that uses P3 procurement to construct a major capital project must write reports on the results of the project.   
  • Gives the Auditor General the power to report on P3 deals to the Legislative Assembly. 

Katz is calling the Provincial bill introducing the measures "undemocratic" and claiming that the Province is responding to the concerns of democratically elected worker representatives (i.e. union officials). Now, granted, Bill 34 may have been different back when Katz made the remarks on June 8 (I don't know the exact timeline of all the changes Bill 34 - Ledg wonks, feel free to fill me in through comments section) - but I doubt massive changes have been made. The Winnipeg Free Press summarized Bill 34, as of June 8 as mandating cost-benefit analyses from "all levels of government" for P3 projects worth more than $25 million.

Mayor Sam Katz called the province's proposed changes to public-private partnerships "undemocratic" and said the overhaul is an attempt to satisfy unions. 
Two weeks ago, Manitoba Finance Minister Stan Struthers introduced Bill 34, which would impose a standard set of rules upon major capital projects financed with the help of private-sector construction companies. The new legislation would require all levels of government -- including the province -- to conduct cost-benefit analyses and engage in public consultation before going through with any P3 worth more than $20 million. This morning, Katz called on the province to put the proposed changes on hold so the details and full impact of the new rules can be discussed. He said the province is supporting the changes because unions have expressed concern P3s will take away jobs from unionized workers. 
Fort Rouge Coun. Jenny Gerbasi said it's not just union officials who are concerned about the transparency and cost of P3 projects. Gerbasi said members of council have previously expressed concern about public-private partnerships, notably the Veolia project. 
Gerbasi said the initial Veolia contract proposal would have seen Winnipeg's water department managed and maintained by a private firm, which meant any financial details requested would have been "blacked out," even to members of council. She said the public outcry about the Veolia contract started the discussion surrounding the transparency of these deals.  
("City eyes P3 to build new police station". Jen Skerritt. Winnipeg Free Press. June 8, 2012.)
Now, it seems like Katz is just whining about having to go through due diligence before signing long-term, lucrative contracts with private interests. That is, he's taking a stand against good government practices and in favour of secrecy, decrying the proponents of accountability as "undemocratic". Calling a democratically elected provincial legislature that has constitutional jurisdiction over Winnipeg's municipal government, one whose governing party received the most votes in Winnipeg no less, "undemocratic" for supporting transparency and accountability is Orwellian propaganda of the highest degree.

Sam Katz has a track record of secrecy on P3s. Before last election the mayoral administration pushed forward a deal in which private interests would help design, construct, and manage two waste-water plants. It's minimal value was $660 million, but it could be as much as $1.2 billion. That was the Veolia  deal, whose details the mayor kept secret even from councillors. The mayor, luckily for himself, had enough ally councillors to get it rubber-stamped by City Council. Public service management was being partly handed over to private interests, and the public was in the dark about the details.    

I'm not sure what Katz's business experience tells him, but if I were to be committed in a financial arrangement for 30 years I'd want to know the details before signing away to 30 years of fees of some sort1 . The Winnipeg public, likewise, should know where it's money will go to. There's great cause for concern as many P3s started out in a nasty way - as an expensive way of cooking the books. Those bad cases were runaway corporate welfare.


Bill 34 has measures to ensure competitive bids aren't compromised by transparency. It corrects a grave problem at City Hall - the failure to consult with the public before committing public money to long-term projects. The mayor claimed that the Veolia deal saved money. Surely, if P3s save Winnipeg money than Katz has nothing to hide? Why, then, is he opposing transparency and accountability when it comes to his favoured money savers?

1 Businesses are involved in P3 arrangements because they can make a profit of them. Businesses "recoup the cost" through direct user service fees (which suck) or through city councils taking money out of their own budget to give to the private business. Both of these are a form of public money being transferred to private interests. With earlier arguments based on flawed accounting, the new arguments for P3s are that the private sector is "better at raising capital" and involve less "government waste" (which I guess is Katz's reason for assuming they're cheaper than traditional procurement).

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