Normally it is the departee receiving the gift. But the practice was reversed this week when Nova Scotia’s auditor general delivered his final report to our missing in action legislature. Michael Pickup, who is leaving after five years to take the same job in British Columbia, bequeathed the McNeil government a thumb’s-up on its plan to use the widely discredited P3 approach to replacing the Victoria General hospital.
While it was far from an enthusiastic endorsement, Pickup’s headline conclusion – that the public private partnership model was selected “based on a reasonable and appropriate business case” – will come in handy for fending off their critics as the Liberals blunder ahead with their $2 billon (so far) plan to replace the VG with an avalanche of bricks and mortar.
There’s a certain irony in Pickup handing a political gift to the Liberals on the health file on his way out the door. His proclivity for scaremongering and straying into political territory over Nova Scotia’s fiscal situation may have been helpful to McNeil’s austerity agenda. But, as described here, he and McNeil had a public tiff in 2017 after one of Pickup’s reports found fault with McNeil’s handling of the perceived shortage of family doctors.
The Premier, showing a flash of the petulance that has lately become his hallmark, said if Pickup didn’t like what the government was doing, he should run for the office. But Pickup held his ground, pointing out that he had every legal right to review the government record on health care delivery. “I’m 150 per cent comfortable that the work we’re doing lies within the mandate of the office of the auditor general,” he said at the time. Even McNeil couldn’t top 150 per cent certainty.
The AG’s parting kiss-and-makeup P3 gift came nicely wrapped in “reasonable” and “appropriate,” but when you open the box and look inside there’s not much there. Pickup didn’t pass judgment on the actual plan, which is controversial – questionable land purchases, misbegotten parking garages and professional infighting about what cancer care facilities should go where.
His 36-page report is limited to auditing the “processes used to select a project delivery model.” He found that the government “thoroughly assessed possible project delivery options” and “completed comprehensive financial analysis to compare costs and risks of a traditional project delivery approach to P3.” But Pickup did not include any details of the analysis, and his backing of the P3 seems very iffy.
There are a couple of paragraphs (1.10 and 1.11) in the report where the speculative nature of the endorsement stands out. To paraphrase, 1.10 acknowledges that the up-front project costs of P3 are higher, but over the long-term P3 can deliver greater value due to the concept of risk transfer. P3 could allow the province to transfer to a private partner the risk of delay or cost overrun.
But, as paragraph 1.11 states, that depends “on government negotiating a strong contract to achieve the desired risk transfer and providing appropriate oversight throughout the contract to enforce terms.” (On the oversight issue, the report reveals that the government has been falling down on the job so far failing to “maintain appropriate documentation of its oversight of the consultant that completed the Business Case.”)
To sum up, the benefits are speculative and will require tough negotiating and consistent oversight to achieve. But the higher up-front costs of P3 are a fact.The A-G’s report is therefor unlikely to change the minds of those opposed to P3 schemes. But it made news because over the years auditors-general have usually panned P3 ventures as costly and inefficient. By departing from the consensus, Pickup handed the government a feather it can stick in its cap.
The same cannot be said for a different type of public private partnership that popped up in the news this week – a snag in the ongoing and expensive effort by the provincial government to work with the telecommunications industry to expand its high-speed internet service into rural areas.
In another unexpected twist, musician J.P. Cormier gave two months notice of a class action suit against the province over its failure to provide high-speed internet to the people of rural Nova Scotia. Cormier told media that “atrocious” service is jeopardizing his ability to make a living from his home and studio in the Musquodoboit Valley community of Cooks Brook.
I have argued that making internet service available to all Canadians is the responsibility of the telecommunications industry and the federal government, which grabbed regulatory authority over that industry from the provinces back in the 1980s. Instead of spending in the neighbourhood of $200 million in provincial money to subsidize highly-profitable, federally-regulated companies, the province should be pushing the feds and the industry to take responsibility for serving all customers at reasonable rates.
But J.P. Cormier’s suit suggests that even generous subsidies from the province can’t convince Nova Scotia’s telecomm industry partners to get on with the job. According to Cormier, Bell and Eastlink service is available within four kilometres of his property, but the two telecomm giants won’t extend the service because of the tendering system used by the province, through Develop Nova Scotia, to choose its partners. Hence the threat of a suit against the province instead of the more likely culprits, the telecomms and the federal government.
Improved internet for the Cooks Brook area was not part of the first large batch 0f approvals announced last February – $100 million in projects, with 45 percent of the money coming from the province. Develop Nova Scotia says the area may be included in the next round of approvals expected later this summer.
While it would be fascinating to see this case argued in court, it’s more likely we are witnessing a well-orchestrated campaign to influence the provincial government’s decision-making. In the meantime, the episode illustrates for Nova Scotia taxpayers the truth of the adage that “no good deed shall go unpunished.”
 The Report also went into the impact of COVID-19 on financial markets, availability of supplies and construction costs, suggesting that Nova Scotians may want to ask how the pandemic will “impact the business case and what is being done to assess its impact on the project?” Good question, indeed.