North Bay Hospital coverup tactics: Ontario government hides figures, uses dubious accounting to distort the costs of privatized P3 hospital deal

    NORTH BAY, ON, June 18 /CNW/ - The Ontario government's deal for a
privatized, for-profit P3 hospital in North Bay relies on secrecy and dubious
accounting to conceal its exorbitant costs, says a noted economist.
    Economist Hugh Mackenzie, who has examined the released project agreement
between the government and private investors, says, "The government has
resorted to coverup tactics to evade public scrutiny, and released a heavily
blacked out version of the agreement. All financial numbers but one have been
blacked out. Even so, the government admits the financing and transaction
costs for the private hospital will be $160 million more than if they had
built public. That's $160 million extra in higher interest rates, unnecessary
lawyers' fees, consultants' fees, and money for middlemen. Despite
acknowledging its higher cost, the government rationalizes its insistence on
the P3 hospital by assigning a value of $230 million to a dubious 'risk
tranfer,' without disclosing any details about this risk transfer."
    "We have fought for years for full disclosure in the public interest,"
says Natalie Mehra of the Ontario Health Coalition. "But in this document the
government blacked out the financial information, even after courts ordered
extensive disclosure in the case of the similar privatized P3 hospital in
Brampton. The government is playing games because, as with Brampton, the high
costs of North Bay's privatized P3 hospital will put pressure on service
provision, requiring cuts to services, healthcare staffing cuts, tax
increases, and money taken away from community health services. This is an
example of a powerful private lobby group that has achieved hefty profits for
itself at the expense of the public interest."
    "With a provincial election coming, the people of North Bay have a chance
to make the government accountable and stop further privatization of our
hospitals. At risk is the long-term P3 privatization of a dozen hospitals
across Ontario," says Sheena Nesbitt, chair of the North Bay Health Coalition.
"We're calling on people across the North Bay region to come out on Saturday,
June 23 to sign pledges that they will vote in the coming election to keep
Ontario hospitals 100% public. That means no private finance, no private
ownership, no privatized services, and no staffing cuts."

    (See also attached summary of Hugh Mackenzie's key findings.)

    Summary of findings: North Bay Hospital Project Agreement

    -  The disclosure on the North Bay P3 hospital project is inadequate and
       falls far short of the disclosure ordered by the Court in the Brampton
       P3 project.

    -  Virtually all of the key financial information has been deleted.

    -  The Value for Money comparison of the projected costs if the hospital
       was to be built under a traditional publicly financed model to the
       costs under the privatized P3 is so limited as to be meaningless. The
       government's independent consultant did not assess the basis for the
       cost projections in either the public model or the private bid.

    -  The extremely limited information provided in the Value for Money
       summary shows that the financing and transaction costs under the
       privatized P3 model are significantly higher (by $159.7 million or

    -  The entire financial case for the government's decision to privatize
       rests on a controversial cost adjustment called "risk transfer".
       However, no information is disclosed to allow public scrutiny or
       evaluation of the risk transfer, and the assumptions underlying the so
       called "risk transfer" model used are fatally flawed.

    -  This is a gargantuan contract, with a disclosed total cost of $1.05
       billion and a duration of 30 years. It is in the public interest that
       this agreement be subject to complete public disclosure and rigorous
       scrutiny of the assumptions that have been used to justify the
       significantly higher costs ($159.7 million) of the private financing

    -  The limited information in this disclosure flies in the face of
       repeated promises by the government for "public interest",
       "transparency" and "appropriate public control". Moreover, the
       mounting evidence in Ontario and abroad is that the high costs of P3
       privatization will have a damaging impact on health care budgets that
       will likely result in cuts to hospital and community health care
       services. There is nothing in the disclosed documents that provides
       any reassurance that this will not be the case in the North Bay P3
       hospital project.

For further information:

For further information: Natalie Mehra, (416) 230-6402 (cell); Hugh
Mackenzie, (416) 884-5378 (cell); Sheena Nesbitt, (705) 476-9534 (office)

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