By RUSS FRANCIS
Aug 15 2007 Monday Magazine

When the Supreme Court of Canada released its ruling on the B.C. Liberals' notorious Bill 29 on June 8, much of the attention was, quite properly, focused on the decision's effects on the health care workers concerned.

After all, it was they whose contracts the legislation tore up, at great financial and other costs to the workers.

But there's another potentially damaging consequence to the ruling, one that calls into question a cornerstone of the Liberal approach to health and seniors' care. To hear some say it, public private partnerships (P3s) are a great way to design, build and operate public facilities, supposedly saving costs while providing an efficient service. The public gets the facility, while the private contractor carries the risk.

(Whatever you do: Do not mention the Victoria arena!)

The government has yet to announce what it will do in response to the court ruling; it has until June 2008 to comply. However, since the court invalidated sections of Bill 29, the so-called health and social services delivery improvement act, it's a pretty safe bet that legislation will need to be changed.

What has this got to do with P3s?

Well, any firm doing business with the government typically gets a written promise that if Victoria changes the rules during the life of the contract; the company is entitled to compensation.

In other words, the firm does not carry all of the risks associated with a project. If a relevant law is changed, whether required to do so by a Supreme Court decision or not, taxpayers may have to cough up.

A case in point is the $355 million Abbotsford regional hospital and cancer centre, now under construction. It is hailed by the government as a great success story for P3s. (Though it's a view far from universally shared.) Nonetheless, that success-if that's what it is-may no longer be assured, given the court decision.

If legislative changes force an increase in wages for the support staff, that and subsequent health P3s might look somewhat less appealing.

This summer, when the government released the public accounts for the year ended March 31, 2007, it revealed in a "subsequent events" footnote that "no liabilities have been established as a result of this [Supreme Court] decision and the future financial impact, if any, of this ruling cannot be determined."

Speaking after the July 11 release of the public accounts, a finance ministry official said the government had yet to decide whether there might be an effect on existing contracts from the decision.

Despite this, the government is charging ahead with even more P3s. Or are they?

According to Partnerships BC, the Crown Corporation charged with pushing P3s, there are now three projects at the "procurement" stage-meaning they're in the formal process of hunting around for contractors.

All of them are health care facilities. They include a 500-bed patient care centre at Victoria's Royal Jubilee hospital, a joint project at the Kelowna General and Vernon Jubilee hospitals, and a 150,000 square foot outpatient facility at Surrey Memorial hospital.

For each, construction is supposed to start in 2008. Not to put too fine a point on it, but that's just over four months away. Yet none of the three projects has yet issued a "request for proposals," needed months before a contract is actually signed. (For each of the three, these requests for proposals are supposed to be done by "Summer 2007.")

To the naïve outsider, it might look as though the three projects are being slow tracked. Could it have anything to do with the Supreme Court ruling?

Hospital Employees' Union spokesman Mike Old says the ruling will have an effect on P3s. "There's no question that the Bill 29 ruling has thrown a wrench in the government's plans to privatize health care infrastructure and services," he says.

NDP health critic Adrian Dix agrees the court ruling could affect P3s-which typically depend on sub-contracting support work for low wages.

"The system of sub-contracting that's been set up is failing," Dix says, adding that Labour shortages were already causing problems for health P3s. "The whole system is based on Bill 29."

Last week, a Partnerships BC spokeswoman referred all comment on the court ruling to the health ministry.

Two weeks ago, health minister George Abbott announced the government was going to consult the unions regarding the decision. This week, a ministry official says those discussions are expected to be completed in the "next little while."

Where does this leave the three health P3s?

The official says no comments will be made on the status of the Royal Jubilee and other projects until after the consultations with the health unions are done, adding the government is going to be "respectful" of the court's decision.

That's nice. We should all respect the court.

Let's not forget that the government anticipates P3s will only grow in importance when it comes to new capital structures. For instance, there is little question that Victoria's massive sewage treatment system will be done as a P3.

And virtually any other new project involving $20 million or more in provincial funding is sure to be a P3 as long as the Liberals are in power.

So one can surmise the nation's top court isn't terribly popular these days in the West Annex of the legislative buildings.

I can imagine more than one person in the premier's office, upon hearing of the ruling last June, uttering a pair of words. The first would have been "Oh." The second, a word that starts with "s." M