Education bureaucrats defend P3 schools

Nova Scotia's controversial partnership with private developers contracted to build more than two dozen schools in the province came under scrutiny Thursday after the auditor general revealed last month that the contracts are costing taxpayers tens of millions of dollars.

Deputy Minister of Education Rosalind Penfound defended the agreements the province made a decade ago with three private developers at a meeting of the legislature's all-party public accounts committee.

"To a certain extent, it's apples and oranges to look at what the developer contracts with the boards for and what the operating portion of the lease provided for. You have to look at the totality of the agreement," she said.

The contracts were struck in 1999 as a way of allowing the deficit-laden province to build new schools without having to go further into debt. The province agreed to spend $890 million over 20 years to rent 31 public schools from the developers.

At the time, the public-private partnerships, known as P3s, helped politicians keep spending off the books, but Auditor General Jacques Lapointe found that in two cases, developers subcontracted some of their responsibilities back to school boards at an extra cost of $52 million.

Bureaucrats told the committee that that figure includes all sorts of cost, but that's an argument Lapointe rejects.

"It's very bad management," he said outside the committee meeting Thursday. "We don't know what that consists of — how much of it is operating cost, how much of it is rent, how much of it is profit, and just inflation factors."

Provisions of contracts opaque

One thing is clear from the auditor general's report: no one in government has a handle on the myriad of contracts that make up the P3 program.

For example, the Strait Regional School Board only learned that it was owed $700,000 by a developer when the auditor general discovered it.

Penfound said her hands are tied.

"The P3 contracts don't allow us the ability to audit some of the provisions of the contract," the deputy minister said. "So, that significantly hampers some of the monitoring that we can do."

The lack of transparency surrounding the leases and contracts was Lapointe's most serious finding.

"We couldn't find the precise contracts and all the details of them," the auditor general said. "They have no corporate memory, and a lot of it, they simply don't know what they should be paying, they don't know what the contracts are.

In his audit last month, Lapointe pronounced the P3 schools program a failure on all fronts.

"In this matter, the Department of Education is failing its duty to taxpayers, as well as to large numbers of the very students it purports to serve," he wrote.