August 21, 2013
Association has qualms with Nova Scotia paving program
Nova Scotia's government-run paving program is drawing national criticism for over-running costs and not completing its targets.
The Canadian Taxpayer Federation (CTF) is calling on the government to launch an independent third-party review of its paving and chip seal operations, which is supported by the Canadian Construction Association (CCA).
“If it’s transparent and they include all the costs, it’ll show very quickly and very clearly that the process that they followed was flawed,” said CCA chair Frank Rizzardo.
According to documents obtained by the CTF through the Freedom of Information and Protection of Privacy Act, government road crews cost taxpayers $7,371.97 per kilometre of work completed in salaries, benefits, overtime and expenses, while government business plans predicted it would cost $3,666.59 per km of work.
Government operations hit 61 per cent of its paving targets and 47 per cent for chip seal, says the CTF. Documents show the government did 226.8 km of work (chip seal/asphalt).
It committed in its business plans to doing 456 km.
When initially pricing the work, governments do not usually consider add ons to wage as a cost, such as safety programs, long and short-term illness programs, or pensions, said Rizzardo.
“Governments when they buy assets, they don’t depreciate them over 25 years. They buy them in this budget and then next year they buy something else. The capital expenditure is forgotten once it’s done. The cost of money isn’t in the equation,” he said.
An op-ed piece from N.S. Transportation and Infrastructure Renewal Minister Maurice Smith said the province introduced the mobile asphalt plant and in-house chip seal operation to generate competition and bring asphalt prices down, which he says has been accomplished.
“They’ve wasted taxpayers’ dollars in the capital acquisition of equipment. In fact, they haven’t produced a level playing field in comparing their valuation to the valuation that may be provided by a contractor,” said Rizzardo.
In February, Paul LaFleche, deputy minister of the transportation department, said it would take three to five years for Nova Scotia’s road crew and asphalt plant to be cost-competitive with private paving companies.
Between 2007-10, the average price for asphalt was $59 per tonne, says the op-ed.
After introducing the chip seal operation, asphalt plant and other initiatives, the price paid by taxpayers in 2011-12 dropped to $45 per tonne.
In 2009, there were 230 bids on 90 contracts from the private sector and in 2012, there were 299 bids on 80 contracts, said the government. Rizzardo said the asphalt plant is not pro the amount of asphalt it would take to pay for the plant in any other environment.
“Who pays when the work that is done is not to standard — if the oil fails, if the asphalt binder is insufficient and the project starts to strip? Who redoes it and who pays for it when it’s a public entity that’s doing the work? The taxpayer pays twice, he pays for the work not to get done to spec and then he pays for it to be redone.”
Rizzardo said the province was originally going to use plow trucks to carry seal coat aggregate to the chip spreader but they were incompatible and new trucks were purchased.
The initial thought had also been to use existing staff, though Rizzardo said they hired additional workers.
There are a number of instances across Canada where municipal or provincial governments are carrying out some projects on their own, which Rizzardo says are usually politically motivated.
“When they actually do the fair and transparent view of those services, they find that it isn’t economically viable. They find that their costs are traditionally higher than the private sector,” he said.
“They’re impacting work flow for the private sector and the ability of that private sector to continue investing in new equipment and training and hiring people,” he said.
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