Tuesday, December 9, 2014

How to diddle the tax-payer in the name of efficiency

I got to know John Lammer when we both worked as welder-fitters at the Dresser plant in Cambridge. We were building oil rigs and overhead cranes for a company that went on to become a part of Dick Cheney's Haliburton empire.

I was there because I'd just got out of rehab after a spell of youthful indiscretion spent flying a little too close to the sun. John was there trying to make a few bucks to pay the bills on his burgeoning real estate empire at a time when interest rates had spiked to ludicrous levels.

John was already a fairly well-established real estate guy by then. He'd had a couple of successful redevelopment projects under his belt, including the conversion of the old Raymond sewing machine factory in Guelph. On paper, he was already a millionaire. In real life, he was sweating his balls off at Dresser desperately trying to save his business.

John was a short plump dude given to sweating easily. Fortunately, he was able to sweat it out. Not only did he save his business, but he went on to become the pre-eminent guy in the restoration of the old limestone buildings that dotted the downtowns of Guelph and Cambridge. Derelict 100 year old factories called out to John to be turned into apartments and offices. It was a calling that was to make him a millionaire many times over.

Our paths would cross from time to time, and our conversations would eventually wind up in arguments about how inefficient government was, and how the private sector did everything better.

There was a non-profit housing development going up in Guelph, where Bear Alignment used to be, and John was just apoplectic after the Guelph Mercury published the estimated costs for the apartments being put up.

"I could build that for half the money!"

I'd be like, hey John, calm down... how can you blame the government? Look at the signs on the hoardings... the planners are private sector, the consultants are private sector, the foundation guys and the steel guys and the cement guys are all private sector contractors! How do you blame the government?

In fact, if John himself had put up that building, he'd have to add his own profit margin into the mix. Just because the government is putting up "non-profit housing" doesn't mean that nobody is making a profit. For a lot of the private sector contractors, non-profit housing was the most profitable stuff they ever touched!

This walk down memory lane was triggered by a story in the Toronto Star today.. Seems Ontario's auditor general has discovered that us tax-payers are on the hook for an extra 8 billions because of the government's reliance on P3 deals. Those are "Public-Private-Partnerships" in case you don't remember.

The reason we have them is because governments fell for the pitch that the private sector was more efficient. Seems private sector efficiency is costing us billions!

At the same time, when you look at a fiasco like the MaRs calamity, you can see where John had a point. That boondoggle has over a hundred staff managing one mostly vacant property. John would have run that place with one secretary and a guy in charge of maintenance.

And it would be fully leased up.

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