Friday, November 14, 2008

What Price Budget-Balancing? Note the P3 Dimension

{The federal government is on record as saying 'the time for study is over, this is the time for action' when it comes to Public-Private Partnerships (P3s). Yet a great deal of the research that has been done is ambivalent about the value of P3s, which often trade off public sector accountability and long-term economic benefits for the sake of short-term improvements to government financial accounts. Now that the federal government is under pressure to take steps to avoid a budget deficit, that ideological and political commitment to P3s is about to become as strong federally under Harper as it has provincially under Campbell. Keep your eyes peeled for dodgy deals designed to conceal true long-term costs from Canadian citizens. Here are some apposite remarks from Professor John Loxley, from his 2008 CAUT Distinguished Academic Award Acceptance Address:---MC}

"As the Council of CAUT is aware, the decision by the administration at my university to award a five year contract to Navitas, through the International College of Manitoba, to recruit and teach overseas university students at pre-university and university 1 course level has been controversial for a number of reasons. The contract did not go through either the Board of Governors or the Senate. There appears to be no provision for academic oversight of courses, teachers or standards by the Senate, and the details of this forprofit agreement are confidential. Clearly, this would not make the ICM a model for accommodating pre-entry needs of Aboriginal students. But the Navitas/University of Manitoba agreement is interesting to me for other reasons. It is an example of a public-private partnership (PPP) and for the past decade or so I have been studying the theory and applicability of PPPs in Canada and around the world.

Declaring that ‘The time for study is over; this is the time for action’, the federal government recently made it a prerequisite of it signing infrastructure
co-financing agreements with provinces that they consider PPP arrangements for all large infrastructure projects. Yet serious academic studies of PPP experience suggest that they uniformly cost more than public sector alternatives, rarely provide value for money, do not necessarily shift risk to the private sector as they are supposed to do, and do not reduce effective government debt as they often promise. In the light of this, the Navitas agreement raises many unanswered uestions. For instance, was a public sector alternative to Navitas ever considered or costed out by the University of Manitoba? Is this a way of undermining the collective agreements which protect those who teach first year courses? How much is Navitas paying the University for using its premises? What safeguards are in the agreement to maintain academic standards and appropriate academic behaviour? Without public access to the legal agreement, it is not possible to answer these questions. But that is not unusual in PPP agreements as access to information is frequently barred by reference to the need for commercial secrecy. This secrecy is rarely justified when public money is being spent and, in a University setting is deeply disturbing. I commend CAUT for its efforts to address our concerns over Navitas and I raise the matter here because, regardless of what the federal government might claim, the academic debate about the wisdom of PPPs is far from over.

What drives administrators to enter into questionable arrangements with the private sector are real or perceived budgetary problems. I have always seen budgets not as mere financial statements, but as profoundly ideological and political statements. To paraphrase Julius Nyerere who was speaking about planning, ‘to budget is to choose’. A critical examination of budgets involves, therefore, a critical examination of political choices made and put to numbers. My involvement in helping develop alternative budgets in Canada in the 1990s arose out of widespread dissatisfaction with budgetary choices being made at the federal and provincial levels, in particular. Those choices had a profound impact on people and institutions on the ground, and universities were not exempt from this. While there is a perfectly legitimate justification for simply critiquing budget choices, developing an alternative budget helps put those critiques into a more disciplined, constructive framework, thus helping to head off the counter claim that the demands being made are unrealistic, unmanageable or fiscally irresponsible. This is, of course, highly political and contentious work since it involves challenging the political power behind the budgets, be it the federal government, the provincial government or the university administration. It helps, enormously, to have the protection of tenure, academic freedom and a strong collective agreement. Working from an academic base also makes it easier to work, collegially, with civil society
organizations; women’s groups, environmental groups, trade unions and anti-poverty groups, as one is perceived, rightly or wrongly, to have a high degree of independence and impartiality.

Linking my work on PPPs and on budgets, leads me to caution against universities building closer links to the private sector for budgetary reasons. The budgetary impact of PPPs is often quite negative as governments replace direct borrowing by paying for leases on assets purchased by the private sector at higher interest costs."
---John Loxley, FRSC

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