Thank you, Mr. Speaker. My questions today are for Minister Miltenberger and Finance. I have questions about the P3 contract we are proposing for the retrofit of Stanton Territorial Hospital.
I am worried that it may not be the best deal for the people of the Northwest Territories. Research indicates that failure rates are high, that they amount to a huge transfer of tax dollars to private financers, and buyout of P3s are becoming more common. Because it’s politically expedient to defer expenses and avoid debt, the government is essentially renting money rather than borrowing it more cheaply on their own.
I’d like to ask the Minister why has he chosen this justly maligned model for a project so important to the well-being of our citizens as the retrofit of our territorial hospital.
Thank you, Mr. Bromley. The Minister of Finance, Mr. Miltenberger.
Thank you, Mr. Speaker. We have looked at this carefully. There is a process. There are a number of considerations that are there. The public interest is paramount. The value for money must be demonstrable. Appropriate public control and ownership must be preserved. Accountability must be maintained and all processes must be fair, transparent and efficient. We’ve put this project through the rigour, for value, for money, a review, and we looked at it because we are required to under our P3 policy, anything over $50 million, and we are of the opinion that we can demonstrate and have demonstrated that, well, as the Member indicates, it’s a much maligned process that in this instance seems to be something that’s very, very worth considering.
Thanks for the Minister’s response. I’m sure all the other jurisdictions that have had such failures have similarly done the analysis and so on. A 2012 study of 28 Ontario P3 projects worth more than $7 billion found that public-private partnerships cost an average of 16 percent more than conventionally 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 percent to the final bill, and of course, private financiers are looking for a large return on their investments.
Specifically, what are the checks and balances the Minister refers to that makes our P3 project so different and so safe, from Cabinet’s perspective, and it will protect us and the public from the 16 percent-plus cost penalty typical of such an approach. Mahsi.
Mr. Speaker, from my time in government, it has been my experience that there is no particular construction project that is ironclad and failsafe anywhere. So, are there challenges with the P3? Yes. Are there challenges with other processes? Yes, there are.
We have a management framework for P3s. We have some of the best finance people in the world that are looking at this and they are very, very capable people that have delivered, time and time again, good budgets, that are very knowledgeable. We have the Public Works department that has a lot of skills in terms of overseeing projects, and in spite of the very many challenges, we have managed some fairly substantial projects over the last few years, if I look at the Inuvik East Three School, we’ve worked our way through the bridge and we are now fully engaged in delivering the Tuk-Inuvik highway on time and on budget all with separate and different approaches to the construction.
So I wouldn’t be so quick to write this off. I know there are some concerns in some quarters, but we believe that we had the rigour on this and the very thorough review, and we’re making the case that we should be considering this. Thank you.
Thanks to the Minister. You know, many times I’ve heard my colleagues, and I myself have asked the questions, what are the specific challenges that the Minister mentions and what are the specific safeguards in response to those. Once again, the Minister said, we’ve got great people working on this. So again, I hope the Minister will make that clear to the public and to the House.
Mr. Speaker the RFP for the Stanton rebuild has just been made public. The list of jobs to be privatized is growing. In addition to maintenance jobs, we now know help desk services, plant services, waste management services, road and ground maintenance, parking management, pest control, security and surveillance and laundry and linen services are to be privatized. In recent years catering and housekeeping were also privatized.
How is the increasing privatization of public service jobs possibly considered good for the economy of the Northwest Territories, the delivery of critical health care and the expected employees? Mahsi.
Mr. Speaker, what is critical and what is going to be good for the Northwest Territories and all the people living here is that we’re going to have a $350 million project that’s going to give us a state-of-the-art health centre, that’s going to come in on time and on budget, that’s going to be 40 percent larger than it currently is, it’s going to provide us some of the best services, it will be our flagship acute care facility for the next 30 years or so, and it will be done in a way that we make sure, in fact, the staff complement at Stanton is going to grow. Yes, there are some potential non-core services that may not be government jobs, but as part of the process, we’re looking at it and no final decisions have been made. But what we have to focus on is this is a very, very much needed project and it’s going to give us a facility that’s going to serve us well into the future. Thank you.
Thank you, Mr. Miltenberger. Final, short supplementary, Mr. Bromley.
Thank you, Mr. Speaker. I do appreciate the Minister has a vision. Again, some specifics would help us get on board with that.
What are the checks and balances in response to these challenges that are out there? If there is a fair chance that this P3 initiative will fail, based on vast experience nationally and internationally, as we saw with the Deh Cho Bridge boondoggle and so on, but most notably with the building and retrofitting of hospitals in other jurisdictions such as Ontario, what is this government going to do? What is this government doing to ensure we have the fiscal capacity to bail out the Stanton Territorial P3 projects, again, such as many other governments are doing now? What is our fiscal capacity? How is the Minister assuring we have the resources to bail us out if need be? Mahsi.
Mr. Speaker, first let’s just look at the bridge. Yes, it had some issues as it was built, but it has won, subsequently, all sorts of awards. I have talked to a lot of people about the bridge and I’ve asked them all the same question and there is always the same answer. Given some of the critics about the bridge and the dislike for the bridge and they don’t like how it was done and what it looks like, would you all go back to ferries and ice roads? It’s an unequivocal 100 percent no way. We love being able to go in and out. We love the service and access that the bridge gives us. If you consistently call it a boondoggle, we have a piece of infrastructure… I’ve been in Edmonton where they have overpasses that cost more than that bridge. It’s a great piece of work.
We have experience with hospitals, not to the magnitude of this one, and the Member has made up his mind that once again it’s going to be the process. He will say that this is a good project; he just doesn’t like the process, like many things. We will have to and we will demonstrate, we have demonstrated, that there is value for money here and the P3 process is one worth considering. Thank you.
Thank you, Mr. Miltenberger. Mr. Menicoche.
