UNW pans partnerships

Fact file
Public private partnerships could be used to help build new Inuvik and Iqaluit hospitals with the total bill costing as much as $33.7 million. Coles Associates Ltd. said the plan could look like this:
Private partner finances and builds the hospital.
A build-operate-transfer arrangement with GNWT is an option.
A new hospital would integrate a comprehensive range of health and social services from ambulatory care to acute care and from addictions to public health services.
Consolidating services lowers operating, management and administrative costs.
At completion, hospital ownership stays with private partner who enters a long-term operating lease with GNWT.
At the end of the lease, ownership could be transferred to the GNWT at market value.


by Doug Ashbury
Northern News Services

NNSL (Jan 19/98) - The GNWT's private public partnership plan means Northerners will pay more for services, the president of the Union of Northern Workers said.

"It's another way of saying we won't tax you but we'll make you pay through the back door," Jackie Simpson said Wednesday.

Prices will rise because the private sector will be profit-driven. And if a private company has to obtain financing, it faces debt costs which may drive prices up as well, she said.

Simpson pointed to drivers' licences.

When the GNWT let the private sector issue them, the cost rose to $68 from $60, she said.

She calls the partnership plan a sell-off of public assets, adding that it could not only mean higher costs for services but also loss of Northern jobs.

Facing higher costs, some Northerners will head south, Simpson said.

"We're told (private public partnerships are) the only way we'll get things like the needed hospitals in Inuvik and Iqaluit because the government simply can't afford to build them itself," Simpson said.

Government said through partnerships, the private sector could finance, build, operate and either lease back or lease to purchase hospitals, ferry operations and other services.

Under some partnerships, the GNWT would pay the private partner to maintain and operate the facility.

Still other arrangements could see GNWT guarantee loans made by banks to private sector contractors taking on government projects.

Under amendments to the Financial Administration Act, government can guarantee up to 15 per cent of total year revenue. UNW estimated the amount at $150 million.

Act changes -- the Bill was given ascent Oct. 24 -- removed the $500,000 cap on individual guarantees.

These partnerships -- a significant policy shift by the territorial government -- will bring needed money for capital projects to the North, the GNWT said.

Finance Minister John Todd said the "public purse must be protected."

If the North is to sustain current levels of program and capital spending, then greater private investment, economic growth and job creation must be achieved, said Richard Coles, president of P.E.I. engineering consulting firm Coles Associates Ltd.

In light of NWT social needs and fiscal limits, the North cannot continue on its current path and hope to achieve self-sufficiency, Coles said.

The GNWT gets a whopping 80 cents of every dollar of revenue from the federal government, he said.

Coles has helped develop private public partnerships in the Maritimes and assisted the GNWT for several months on its review of partnerships.

Coles said partnerships must be "affordable, sustainable and transparent."

He also said the private sector could offer some services cheaper than government.

Private companies have tax advantages not open to governments, he added.

Todd hopes to see some private public partnerships on the ground by summer.