Auditor general's latest report on cost of two new hospitals "most devastating" yet, critic says

News Category: 
Publication date: 
Fri, 2010-06-11

The Montreal Gazette
June 9, 2010

QUEBEC - The province's auditor general - in this fourth report on the cost of Montreal's two new university teaching hospitals - reiterated Wednesday that building them as public-private partnerships will cost more than the conventional method.

In the National Assembly, Sylvain Simard of the Parti Québécois called the new report "the most devastating," saying the government had "falsified" cost estimates to favour the PPP approach.

Treasury Board President Monique Gagnon-Tremblay replied that there were "no new facts" in this latest report, defending the PPP decision.

"We made the right choice," she said, explaining that the PPP formula transfers risks to the private sector and ensures costs will be contained, in the interest of Quebec taxpayers.

The auditor general, looking only at the proposed McGill University teaching hospital and the research centre for the Université de Montréal hospital, concluded that rather than costing $33.8 million less at PPPs, they will cost $44.2 million more.

The McGill University Health Centre (MUHC) and Centre de recherche de Centre hospitaller de l'Université de Montréal (CRCHUM) contracts, totalling about $2.6 billion, have been awarded.

Negotiations with two bidding consortiums continue for the $2.6-billion CHUM, with a signing expected in January 2011.

And after the government asked the bidding consortiums to lower their costs, the two projects now will cost $108.4 more to build and potentially more to operate, because there was no followup on how the revised construction plans will affect the clinic plans at the hospitals.

Under a public-private partnership, the government chooses a consortium to design, build, finance and operate the hospitals for 30 years.

The consortium is also owner of the hospital for that 30-year period and the government will pay an annual rent.

Under a conventional project, the government remains owner, borrows money and hires contractors to do the work.

"The signing of the PPP contracts for the CRCHUM and MUHC projects, the duration of which is 30 years, was done or will be done without having a vision of the projects as a whole in terms of their global costs and the operating budgets that will be necessary for these new institution," the auditor general concluded.

The report said the Quebec's PPP agency, recently renamed Infrastructures Québec, concluded the PPP method was cheaper by over-estimating the maintenance costs of building them as conventional projects.