IN CANADA: 'Incent' This!

FOR SOME folks, there's nothing blurry about the line between the and private sectors, or between the enterprises that should belong to each sphere. An Ontario cabinet minister recently quipped that government has no business fooling around with anything listed in the Yellow Pages. My phonebook has an extensive and growing section devoted to private schools. When next year's directory arrives, the list will be longer - perhaps much longer, if Ontario's current government is reelected for a third term this spring. In 2001 Ontario's finance minister announced that, beginning next year, parents of children enrolled in private and religious schools will receive a phased-in tax credit of $3,500 to offset the cost of tuition fees. The cost to coffers has been estimated at up to $700 million annually. This publicly funded incentive to promote privatization by a government accused of systematically starving education is hardly subtle, and the usual players have been quick to condemn it. But not all privatization schemes are so transparent. Well below the radar of most defenders of keeping services is a movement known as P3: public-private partnerships. According to the P3 spin, even though governments are cash strapped, they can still provide the with state-of-the-art, capital-intensive projects through P3s. The private sector finances and builds the project, reducing the short- term call on treasuries. The authority then leases the use of the privately owned prison/highway/water supply/school for a specified period, usually 20 to 35 years. In some cases, the public partner also agrees to purchase the facility outright at the end of the lease. Corporations eager to get in on the action are networked through an organization called C2P3: the Canadian Council on Public-Private Partnerships. When C2P3 held its annual conference in Vancouver last year, it reported that internationally, relationships [i.e., deals] between the private and sectors were fast becoming apolitical . . . supported by all parties.1 Journalist Murray Dobbin, who wasn't feeling apolitical, attended the event, but, like other journalists, he was prohibited from asking questions of the presenters. He later wrote that there were times when I felt I was at a meeting of the Shriners or some other secret society. The P3 priesthood even makes up its own language, with several promoters talking about the need for the 'incentivization' of businesses to get involved, and how to 'incent' business and government into embracing P3s. . . .2 Dobbin goes on to wonder if the P3 movement will be able to incent enough stupidification to get citizens to overlook the record of P3 disasters: trains in Britain, hydro in Ontario, water in Latin America - and schools in Nova Scotia. Indeed, although for some reason it was never referred to during the conference, the first Nova Scotian P3 school was awarded first prize in C2P3's infrastructure category in 1998. At the time, P3 schools were hot: after all, school construction is expensive; governments can easily be tempted by promises that they can meet demand for new schools without committing funds for capital projects. Parents are promised a quick solution to crumbling and overcrowded schools. The investors who finance the project ensure that the cost of the lease, as well as other terms of the deal, will generate handsome profits. Everyone has a reason to keep everyone else incented - and as far away from the fine print and a calculator as possible. None of the parties is anxious to point out that this is a ridiculously expensive way to build schools. Governments can borrow for capital projects at a much lower interest rate than the profit margin demanded by investors. And even the fastest-talking car salesman is going to have difficulty getting a customer to agree to a long-term lease - worth 89% of the vehicle's value - and to the purchase of the vehicle when the lease is up, whether or not it has fallen apart. …

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