Pushing back against the privatization of public water services

(Originally posted on Rabble.ca)

By Daniel Cayley-Daoust

Water and wastewater services have long been considered an essential public service in Canada. With few exceptions, these services have remained under the explicit management and ownership of municipal governments. The federal government, however, wants to allow the private sector to operate new water and wastewater facilities in the form of private-public partnerships (P3s). The priorities set out for the 2012 and 2013 application process of Public-Private Partnerships Canada (PPP Canada) and a water and wastewater sector study published on the crown corporation's website confirms the interest of the federal government in the P3 model for the water services industry.

It is no secret that the Canadian government wants to increase the private sector's role in managing services that are traditionally public in nature as a declared way to save taxpayers money. P3s are but one of the tools the federal government is using to promote an agenda of privatization.

In the last few years we have seen it cut the federal workforce while increasingly relying on private consultants to fill voids, it has deregulated health and environment norms in favour of industry, cut federal public services and privatized sectors of the federal government such as part of Atomic Energy of Canada Limited and the Fire Protection Program.

This past November, the Canadian Transportation Minister Lisa Raitt delivered the keynote address at the annual conference of the Canadian Council for Public-Private Partnerships, a Canadian member-based network that promotes private-public partnerships. In her speech she stated that "public-private partnerships are a really important part of our government's plan, and we know that the private sector has the ability, and that these projects have the ability, to keep costs down." This wholehearted reliance on the private sector by the federal government is bad news for public services and is especially troublesome for people in Canada.

The fall 2013 budget demonstrates just how important P3s and privatization are to the federal government.

First, the budget included the renewal of the P3 Canada Fund for $1.25 billion over five years. Secondly, the budget enacted a screening process for all infrastructure projects valued at over $100 million that receive federal funding under the New Building Canada Fund in order to test their viability as Public Private Partnerships.

The Infrastructure Canada website introduces this measure by saying that "[t]he new plan will encourage greater involvement of the private sector in the provision of public infrastructure and ensure better value for taxpayers." This measure is similar to provisions implemented for all federal infrastructure projects in the 2011 Budget and the mandatory 50 million dollar screen for infrastructure projects in B.C. (which was raised from 20 million to 50 million in 2008).

This highlights how federal infrastructure funding is increasingly tied to P3s. In addition, the federal government's financial commitments to fund infrastructure in Canada are inadequate to meet the growing needs. In 2007, the Federation of Canadian Municipalities estimated there was an overall infrastructure funding deficit in Canada of $123 billion, $31 billion specifically in the water and wastewater sector.

Compounding this reality, new federal wastewater regulations were announced in July 2012 that will require approximately 25 per cent of municipalities to upgrade between 850 and 1000 wastewater treatment plants over the next 25 years. Since this announcement, no new money has been announced specifically for municipalities that need to meet the first deadline for upgrades set for 2020. Subsequent upgrading deadlines will be set for 2030 and 2040 for some municipalities based on the type of water treatment system they have in place.

Contrary to the discourse from the federal government, P3s are not the silver bullet that will solve the infrastructure funding deficit in Canada. P3s contribute to the privatization of essential services. P3s take away good stable jobs and replace them with more precarious, often non-unionized jobs, are far less transparent, riskier and more complex than traditional procurement models. Only private companies stand to benefit from the P3 model. So, why is there an insistence on pursuing this non-solution?

The federal obsession for the so-called "efficiency" of the private sector is, in essence, a gradual privatization of public services. The gold standard of P3s for the federal government is the Design-Build- Finance-Maintain-Operate model, which effectively privatizes most parts of the municipal service, aside from the ownership of the building and a small portion of the planning and oversight.

Yet, pitfalls and shortcomings of private-public partnerships and privatization have been amply demonstrated over the last few decades in Canada, the United Kingdom and in many other regions of the world. In Canada, Hamilton is the prime example of privatization gone bad. Over ten years, four different companies successively managed the city's water services before the city retook control of its water services.

In the end, municipalities that contemplate private public partnerships must remember that, as it happened with referendums in Regina and Abbotsford, involving the public in making decisions of this magnitude is important. These two cases of resistance are crucial to broaden the debate around this issue. Furthermore, municipalities must do due diligence to ensure that the entire process is fully transparent and must ask themselves if they truly wish to relinquish control of public services to private companies for periods often exceeding 30 years.

Despite living in times where infrastructure funding is hard to come by, a resolution was passed at the Federation of Canadian Municipalities this summer urging the government to untie federal infrastructure funding from the P3 model. This should be seen as an opportunity for municipalities to work collectively to demand more autonomy in setting their own priorities for infrastructure development.

In these tough and increasingly uncertain times, we could all use good and stable jobs, and more democratic processes. Residents and municipalities need to step up to the plate and push back against the privatization of public water services.

Daniel Cayley-Daoust is a Public Education and Outreach Coordinator with the Polaris Institute.


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