The contracts for dozens of P3 schools built in the late 1990s were manipulated to hide the true cost of the buildings, Nova Scotia auditor general Jacques Lapointe said yesterday.
Last month’s auditor general’s report showed developers were taking contracts from the province and subcontracting them back to the municipality, but keeping $52 million over 20 years to act as the middleman.
Deputy Education Minister Rosalind Penfound told the public accounts committee yesterday the $52-million gap was to cover developer risk, since they own the buildings.
A separate fund for capital risk already exists, but Penfound said it wasn’t big enough to cover all costs.
Penfound said when you add the operating contracts and all the other funds together, it’s enough to cover developer costs.
Lapointe was more blunt.
“The original cost of the building was manipulated deliberately, as the deputy alluded to, manipulated by the government at the time in order to keep the cost of these buildings off the books,” he said yesterday. “The result is that the annual payments are now distorted and we don’t know what it consists of. How much of it is operating cost, how much of it is rent, and how much of it is profit?”
Penfound confirmed capital costs were worked into the contract. She said there’s no way to audit private companies or know their true costs.
Lapointe said the 20-year contracts for 31 P3 schools makes a value for money estimate impossible. “If you don’t know what the cost of your operating is, you don’t know if you’re getting what you pay for,” he said. “You have no way to measure.”
