Skip to main content

Get the F out of infrastructure

The 'F' in question is, of course, 'Finance'. As in the Design, Build, and Finance (“DBF”) of public infrastructure projects by the private sector (as is common nowadays for Ontario hospital projects).

Europe is wobbling towards another financial crisis as the banks begin to show signs that they are afraid to lend to each other. Governments are already spending billions to prop up banks in one way or another, but a trillion dollars or more may be needed, some suggest. The Economist has called for "simultaneous injections of capital into the region’s banks" as soon as possible.

As with the last go around (just three years ago) no one knows which businesses will make good on their promises, and which will fail. That drives up the cost to finance infrastructure through private finance relative to public finance. As a result, a financial crisis will drive up the costs of public private partnerships (P3s) -- aka "DBF" projects.

Of all the attempts to escape this problem, the simplest, removing private finance (the F) from the infrastructure deals, is pooh-poohed by the financial industry. Instead, they come up with more and more elaborate schemes to try to save P3s (and keep their profits flowing).

A pity: we cannot afford private finance of public infrastructure at the best of times. And definitely not if we fall back into a financial crisis.


Comments

  1. I was thinking this was a trenchant demand for expanded inrastructure...

    ReplyDelete
  2. It's a different demand Kevin, but trenchant nevertheless!

    ReplyDelete

Post a Comment

Popular posts from this blog

More spending on new hospitals and new beds? Nope

Hospital funding:  There is something off about the provincial government's Budget claims on hospital capital funding (funding to build and renovate hospital beds and facilities).    For what it is worth (which is not that much, given the long time frame the government cites), the province claims it will increase hospital capital spending over the next 10 years from $11 billion to $20 billion – or on average to about $2 billion per year.   But, this is just a notional increase from the previous announcement of future hospital capital spending.  Moreover, even if we did take this as a serious promise and not just a wisp of smoke, the government's own reports shows they have actually funded hospital infrastructure about $3 billion a year over the 2011/12-2015/16 period. So this “increase” is really a decrease from past actual spending. Even last year's (2016-17) hospital capital funding increase was reported in this Budget at $2.3 billion - i.e. about 15% more th

Ford government fails to respond to 72% increase in COVID inpatient days, deepening the capacity crisis

COVID infections continue to drive up hospital costs and inpatient hospitalizations in Ontario. For the most recent fiscal year (April 1, 2022- March 31, 2023) hospital stays related to COVID cost $1.221 billion, according to new CIHI data.   This is about 4% of total hospital spending, creating a very significant new cost pressure beyond the usual pressures of population growth, aging, inflation, and rising utilization.   Costs for COVID related hospitalizations increased 22.2% in Ontario in 2022/23 from the previous fiscal year, rising from $999 million to $1.221 billion.  That rise is particularly notable as the OMICRON spike of late 2021 and early 2022 had passed by the the 2022/23 fiscal year.   The $222 million increase in COVID hospitalization costs came in the same year as the Ford government cut special COVID funding and, in fact, cut total hospital funding by $156 million.     In total, there were 60,653 COVID hospitalizations in Ontario in 2022/3, up from 47,543 in 2021/2. 

Paramedic Services in Canada: Structure, Privatization, Unionization and other issues

Governance and Funding :  While police and fire services are usually municipal services, Emergency Medical Services (EMS) are typically controlled by provincial governments.  In Ontario, regional municipal governments have responsibility for delivering and funding EMS.  But even in Ontario the province plays a key role, strictly regulating EMS, providing funding for 50% of the approved land ambulance costs, and paying 100% of the approved costs for air ambulance, dispatch, base hospitals, First Nation EMS, and for territories without municipal government. Delivery :  Like police and fire services, EMS is predominantly a publicly provided service in Canada.   But businesses have now made some significant in-roads into EMS, primarily  Medavie,  a private corporation based in the Maritimes that describes itself as not-for-profit.  Medavie goes back over 70 years, with its roots in health insurance.  It still operates Medavie Blue Cross with 1,900 employees.  It now a