Just two years after popular opposition stopped a half billion dollar P3 in the lower B.C. mainland — a huge water filtration plant — another public private “partnership” has been stopped dead in its tracks. This time it was a rapid transit project that would have been the largest P3 in Canadian history.

It was called the RAV (Richmond-Airport-Vancouver) and it would have sunk over $1.7 billion into a single rapid transit line from outlying Richmond and the Airport to downtown Vancouver. (Opponents wore RAVolting buttons.) It was an enormously expensive project from the start, fraught with the high possibility of cost overruns due to major tunnelling, and getting more expensive by the day as other mega-projects and the insatiable demand for steel and cement in China rapidly drove up the cost of construction materials.

While the cost factor was key to the defeat of this project, the decision by the Greater Vancouver Transit Authority (also known as TransLink) board was equally a rejection of the heavy-handed ideological and political intervention of the two senior levels of government and their pressure to accept a P3 approach to the project. One of the issues was the inherent secrecy of a P3 — board members were in the possession of numbers that showed how large a cost overrun was already, but due to confidentiality rules imposed by the private nature of the contract, they could not tell the public or even their own municipal councils (the board is made up of mayors and councillors of lower mainland municipalities).

The issue of the vulnerability of such projects to trade agreements was also a factor in the defeat of the RAV Line. People mobilized to appear at the board meeting repeatedly brought up the fact that more and more corporations involved in such contracts are using NAFTA and numerous bi-lateral investment agreements to solve contractual disputes which almost inevitably arise in these long-term contracts (the RAV contract was for 30 years). A contract between Waste Management Inc. of the U.S. and the Mexican city of Acapulco was structured almost exactly the same as the RAV in that it promised a certain minimal customer base. Waste Management is now suing Mexico for $60 million.

But perhaps the most important part of the decision was its rejection of the blatant bullying from the provincial government of Gordon Campbell. Campbell and his deputy minister, Ken Dobell, (who was a former TransLink boss and had initiated this project as far back as 1999) had made the P3 an absolute condition for the province’s $300 million contribution to the project. The “my way or the highway” approach of the Liberal government is by now its standard operating procedure but this time it didn’t work.

The RAV line has been controversial from the very outset and was tied into the public fight over whether Vancouver should host the 2010 Olympics. While it was not officially part of the Olympic bid, it was a key factor in the hype around promoting Vancouver (and Whistler) as the host city. The Olympic hype — and the money that followed it from the province and Ottawa — ended up completely distorting the regionâe(TM)s transportation plan. The growth in the region is not in Richmond but in the north-east sector which had been scheduled to be the next in line for rapid transit. In the end the representatives from the north-east region voted unanimously against the RAV as they realized the cost overruns would be a black hole for transit money for years to come.

While most board members stated they were not opposed to the P3 per se, this particular P3 rubbed many the wrong way as critics had exposed many flaws in the process. This included a dubious “public sector comparator” the term used to describe the study done to compare the cost of doing it publicly versus doing it with a P3. The study used a model now thoroughly discredited by auditors-general in Britain and Australia. The alleged value of P3s is that they transfer risk from the public to the private sector but in this case even official studies suggested the “risk transfer” was minimal. Promises by Ravco — the company already established to implement the P3 project — that the private contractor would assume any cost-overruns were not credible. The “promise” was to be taken on faith until the project’s final contract was in place.

The federal government was not as heavy handed in its approach to the P3 aspect of the project, but there is no question that they were hoping for the P3 to go ahead. Prime Minister Paul Martin is totally committed to the P3 form of privatization and even has a legislative assistant, MP John McKay, dedicated to promoting them. In an interview with the National Post last February 9, McKay essentially declared that all federal money for infrastructure programs would be put through a P3 filter: “The choice is P3 or nothing and Canadians are going to have to face the issue: Why does a public entity have to own the hospital? ….The sewer, water, all of that stuff can all be P3ed. Why does the government have to run a sewage system?”

In addition, Industry Canada actively promotes P3s — advising corporations to get a “champion” to fight for them — preferably a mayor of a municipality.

The rejection of the P3 is seen in the lower mainland as a victory for local democracy — and a reinforcement of the notion that local government may be the only truly accessible government in the country. While the level of government with the least formal power, it proves that political activism applied here can actually stop the corporate juggernaut more easily than at the provincial or federal level.

The rejection of the RAV line is a huge setback for Bay Street and large transnationals as well as for the Paul Martin government. Had it gone through there is little doubt that the Martin Liberals would have used it in the future as a precedent to impose a similar funding model on other municipalities. Now, with two major rejections from one of the biggest municipal authorities in the country, many local governments may be motivated to ask just what is wrong with these so-called “partnerships.” Answering that question might be all it takes to put these corporate boondoggles on the defensive for good.

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Murray Dobbin

Murray Dobbin was rabble.ca's Senior Contributing Editor. He was a journalist, broadcaster, author and social activist for over 40 years. A board member and researcher with the Canadian Centre for Policy...