On May 18 of this year, the city of Winnipeg’s Executive Policy Committee voted on a resolution to approve a market sounding and analysis into the delivery of a public-private partnership for delivering the upgrades of the North End Sewage Treatment Plant (NEWCC) focusing on biosolids and nutrient removal facilities.
The Private-Public Partnership (P3) Market Sounding Report and eventual partnership are required by the provincial government as a condition of receiving much-coveted Investing in Canada Infrastructure Program (ICIP) Funding from the federal government. The single source contract was approved by a 4-3 council vote awarding Deloitte LLP up to $400,000 plus taxes.
The concern was that the expenditure was unnecessary since the Public Service report found “the DBFOM is the most complex of P3 arrangements, that requires the private sector to be involved in the capital upgrades, and financing thereof, but also the long term operating and maintenance of the NEWPCC.” This type of P3 would essentially be privatization of the entire sewage treatment system in the City of Winnipeg.
It has been fully twelve years since a privatizing move of this nature was attempted. The service did go through with a public-private partnership before, but thanks to the massive uprising of negative press, and political pressure, we managed to restrict a lot of the attention of the company it was partnered with.
But now it looks as if that fight has not ended.
The common theme is that when it comes to major work on infrastructure, whether it’s planning transit, designing hospitals, building roads, building bridges, or managing a water and waste service, P3s are generally a bad idea putting a service in the hands of a corporation or conglomerate whose prime incentive, ultimately, is the shareholders and not the public good!
Concerns of note
P3s cost more
When it comes to borrowing money, municipalities can always borrow money more cheaply than any private outfit. The Private Partner can pay higher interests, sometimes as much as three times the rate of interest. So usually the costs will be shifted to the public via user fees and/or higher pay rates.
The city of Winnipeg, for example, could have borrowed at a rate of 9.5 percent over twenty years to finance the Charleswood Bridge, versus the 11.5 percent borrowed by the private contractor DBF. Anticipating financial advantages in the contract, the city instead ended up paying fees which rose to $1.3 million overall above the $9.88 million the bridge would have cost.
Loss of jobs and efficiency
For all the talk of benefiting from corporation secrets to maximize your competitive edge, one of the most commonplace ways of saving money is by hiring fewer union staff and hiring non-union labour. For example, the Fredericton-Moncton Highway, built through public-private financing and construction, laid off a lot of unionized labour and built toll booths lacking insulation and heating. Pressure mounted on the province to install them and pay half the tolls that the workers themselves were required to pay. Public pressure eventually forced the province to cease collection of tolls in March, 2000, replacing them on a system with shadow tolls based on an electronic count of vehicles. This money ended up as being declared a debt on the capital lease.
Environmental costs
When it comes to water and waste, an environmental catastrophe can be devastating to the local public as opposed to a mere financial penalty for a private contractor who often will find ways to delay a swift penalty anyway. There is therefore an incentive to operate at a higher risk to the environment, again, to save money.
In January of 1996, a major spill from a sewage plant under the control of the private contractor Philip Utilities Management Corporation (PMUC) resulted in 180 million litres spilling into the Hamilton Harbour and then flooding 115 houses and businesses in the Stoney Creek area. Even though this deal made PMUC accountable, it was not prompt about paying its share. Meanwhile, the city in effect still retains some of that risk as accountable to the public.
Lack of transparency and accountability
The negotiation and procurement of contracts with these private partners are hidden from the public, and the final contract takes away public control of services, possibly for decades. That is a hefty price to pay for the perceived advantages such as the transfer of financial risk–especially when it turns out that taxpayers still take on the risk with increased costs and loss of jobs.
The privacy that business companies enjoy is a deft decoy around accountability. In Winnipeg, with regard to the P3 set up with partner Veolia, the Council of Canadians Winnipeg Chapter sent a Freedom of Information and Protection of Privacy Act request in order to find details about the business plan and details about the award of the contract to Veolia. The access to these records was refused essentially because of the claim that “disclosure (is) harmful to a third party’s business interests.”
The Council of Canadians, together with CUPE and other prominent voices, didn’t quite stop the deal with Veolia, but through intense pressure were able to hold them down to a less formidable allegiance, at least until now.
The slippery head of this privatizing beast is now rising up again from the still financial waters of our depleted budgetary shores. Winnipeggers everywhere need to start protecting our long term interests against a corporatizing behemoth and their ideologically backward servants in office.
The Executive Policy Committee meeting of May 18, 2021 (Agenda Item 13 in Reports)
Some points in the debate:
The first speaker in the debate used Manitoba schools as an example. Pallister’s own report found that using the traditional funding model for the construction of three schools one additional school could be built at less expense than the P3 model. The speaker also mentioned the Auditor General report from ON & BC, and experiences in SK showing that P3 costs are higher.
The second speaker referenced Hamilton, Victoria, Halifax, and Edmonton and the process of returning P3s back to the public utilities. The Auditor-General report cited costs of $8 billion in Ontario and, in BC, two times more than the traditional model.
Agenda, minutes, full disposition
Reports: 13. Single Source Negotiation for Professional Consulting Services to Undertake a Private-Public Partnership Market Sounding and Analysis for the North End Sewage Treatment Plant Upgrades – Biosolids and Nutrient Removal Facilities Project – Materials Management Reference No. 386-2021
Contributor: Michael Welch, freelance writer and broadcaster based in Winnipeg,