P3 WATER: REGINA - Barlow opposes P3 in Regina

[Oscar]

Barlow opposes P3 in Regina

[ http://www.canadians.org/blog/barlow-opposes-p3-regina ]

September 12, 2013

Close to 500 people gathered last night for a panel discussion on the upcoming public-private partnership (P3) referendum in Regina.

The Leader-Post reports, “Hosted by Regina Water Watch, a local group with union support that pushed for the referendum, the event featured speakers Maude Barlow, the national chairperson of the Council of Canadians, who has spoken out against the Harper government pushing municipalities into more P3s; Saskatoon-based retired Environment Canada research scientist Marley Waiser; and P3 expert Pierre Hamel, who has studied such projects in other Canadian municipalities for the Federation of Canadian Municipalities. ...Reginans have now been tasked with weighing the divergent views before they head to the polls Sept. 25.”

CJME reported on the media conference prior to last night’s public forum. In that article, Barlow says, “It is absolutely essential that we not hand our water services and our water systems and our actual water supplies over to the private sector around the world. If Regina goes ahead to privatizing its water, I promise you, in five years you’ll be having a debate about how to undo this. It’s happening all over the world where communities have gone the private route [and] they’re sorry.”

That article also notes, “Barlow explained that her opposition is also based on the public good. She said when a public entity has control it’s providing a service and is not-for-profit. When money is charged for the service those dollars go back into infrastructure. In contrast, Barlow insisted that if a private company takes over the plant its only interest would be in making a profit; she believes that would usually be at least 15 per cent.”

The Global News article quotes Barlow stating, “When it’s a private company, they have to make a profit and there are only so many ways you can do this. You have to raise water rates higher than the public rates or you have to cut corners somewhere and you have to lay off the work force. I’ve heard horror stories from around the world where private companies have been able to cut corners.”

Metro News adds that, “Earlier this week, Regina Water Watch released its first video ads, urging residents to Vote Yes in the upcoming referendum. The city has already established a $340,000 budget to fund a Vote No advertising campaign.”

Video of Barlow speaking at the press conference can be seen at

[ http://globalnews.ca/news/834972/panel- ... ent-plant/ ]


For Council of Canadians blogs on this issue, please see

[ http://www.canadians.org/search/node/regina%20p3 ]


The Regina Water Watch campaign web-page is at

[ http://www.reginawaterwatch.ca/ ]

[Oscar]

WHY REGINA’S VOTE TO KEEP WATER PUBLIC MATTERS TO US ALL

BY Jim Harding

For publication in R-Town News September 20, 2013

Next Wednesday September 25, 2013, Regina’s citizens will go to the polls to vote on whether their new wastewater treatment plant will remain public or go private. People across the province and country will be watching closely.

There’s no doubt that Regina needs to upgrade its sewage treatment: heavy metals, nitrogen, phosphorus, ammonia levels that can kill fish and even pharmaceutical residues are being found far downstream. The Qu’Appelle lakes accumulate toxic blue-green algae from Regina’s untreated waste.

LOCAL DEMOCRACY IMPACTED

But much more than water is involved; local democracy is being impacted too. Regina’s civic life has heated up ever since Mayor Fougere and council voted last February to build the new plant as a P3 or public-private partnership. On the surface it looked straightforward: the federal government would provide a grant of 25% of the capital costs which could reduce the costs to the local taxpayer. The mayor and council are sticking to this story in spite of all the accumulating evidence to the contrary.

There’s a lot to learn from other P3’s. Their goal is not so much cost-effectiveness and fiscal responsibility but fulfilling an ideological commitment to privatize public services for profit, which ends up costing us more. Moncton built a P3 water treatment plant in 1998 at a cost of $31 million compared to the $23 million it would have cost had it remained public. Water rates skyrocketed 75% and Moncton’s citizens now pay much higher rates than the Canadian average.

Hamilton, Ontario and Abbottsford, BC have also learned their hard lessons from failed P3s. A recent study of 28 P3 projects in Ontario reported in the Oct. 14, 2012 Globe and Mail found that “public-private partnerships cost an average of 16 percent more than conventional tendered contracts.” This was due to higher borrowing and legal-consulting costs. It’s not surprising that Europeans who spearheaded P3s are now returning to fully public services, called remunicipalization.

THE REGINA P3

Calculations of the proposed Regina P3 plan suggest it could cost much more than a public project and completely nullify any fiscal advantages to seeking the federal grant. Remember that Harper is offering a strings-attached grant; the city must privatize waste water treatment to get it.
And this federal grant also comes from the taxpayer. Harper is using public money to entice Regina to privatize its new wastewater treatment plant into a for-profit market and the local taxpayer would be left to subsidize the extra costs. This is what we’d get from Harper’s ideological bullying.

Regina’s mayor and council simply didn’t do their homework and the city has turned to secrecy, manipulation and disinformation to try to ram through their P3 proposal. The city has refused to make the complete consulting report done by Deloitte available to the public, showing how public oversight gets sacrificed once you move towards privatization. The city then tried to discredit the public petition from 24,000 residents calling for a referendum. The attempt to disqualify 3,000 people because they didn’t put the year 2013 beside their signature was a big smack in the face of local democracy. “What other year could it be?”, residents rightly asked? So on July 22, 2013 when city council chambers were jammed- packed with residents calling for a referendum, the council was pretty much shamed into voting to go ahead. But the deception continues; the city is still inventing numbers to try to frighten the electorate into voting for the higher costing P3 project.

PRIVATE FINANCING

Independent economist High Mackenzie conducted a “Financial Analysis of the City of Regina Wastewater Treatment Plant Expansion and Upgrade.” He concluded that the private partner would be responsible for $103 million of the $224 million project. The borrowing costs for the private company would be about 2% higher than for the City (say 6% compared to 4%) and legal-consulting costs would also be much higher. Most vital, the profit rate has to be factored in. Assuming 80% of the capital would be borrowed and a 10% return on equity, the private costs would skyrocket to $164 million, over $60 million more than if the City controlled the whole project. If the profit rate were 15% the extra cost to taxpayers would be closer to $80 million.

The mayor and council haven’t been clear that all these costs, including covering the profit of the private operator, ultimately go to the taxpayer. As the Deloitte summary report says: “In no model…does the private sector fund the project; all costs are ultimately born by City of Regina utility ratepayers…and the federal government.”

FUDGING STATISTICS

During the referendum campaign underway Regina mayor and council continue to claim that their P3 project will save money. Their ads claim that if the public votes to “keep water public” the City will lose $58.5 in federal funding. On their publicly-paid-for billboards it says this would add $276 dollars a year for each household’s sewer and water.

They are fudging their numbers to try to save face and scare the voter into supporting privatization. The city is ignoring the lessons about higher costs from P3s elsewhere; they are ignoring the higher borrowing costs and the costs of the profit rate. And just where did they get the figure of an extra $276 a year for sewer and water? They seem to have taken the maximum federal grant of $58.5 million and then arbitrarily added another $21 million that they claim will be saved by having the same company design and construct the plant. Then they divided the total of $80 million by the number of households over a four year period.

FROM BAD TO WORSE

The City has gone so far down the road of manipulation and dmisinformation that we likely shouldn’t expect much else. The $21 million in supposed projected savings would equally apply to a public project if it used the same company to design and build. And why did they use a four-year term for a proposed 30 year P3 contract? Was this simply a way to get a big enough figure to get the public’s attention?

Meanwhile the mayor seems confused about the numbers. In the September 10, 2013 Regina Leader Post he said “Over the course of a 30-year contract, we’ll save just under $80 million…That translates into $276 a year saving for the average property owner…” Other city sources however say that the $276 figure comes from calculating only over a 4-year period. Furthermore it is city council and not the mayor and his handlers that set the sewer and water rate and this number hasn’t even gone to council.

There are many Regina residents with cottages along the Qu’Appelle lakes downstream from Regina’s untreated sewage calling for a new treatment plant. Continual monitoring and phasing in of new sewage treatment technology will be required to steadily restore lake water quality and eco-system health. This will take an integrated plan. A P3 water treatment plant will have a very different bottom line.

Meanwhile promoting the privatization of water is already costing the Regina taxpayer. The mayor admitted on August 14, 2013 on CJME that the city’s pro-P3 campaign is “estimated to reach at least $340,000.” There is something fundamentally wrong here; much more than water quality is now involved. We’ll see next week whether Regina’s voting taxpayers have been staying informed and turn out in large enough numbers to tell their mayor and council to stop the nonsense and get back to the drawing board.

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Jim Harding PhD
Retired Professor of Environmental and Justice Studies
www.crowsnestecology.wordpress.com