Victoria’s Sewage Treatment – P3′s Will Cost Us

The Provincial Government has mandated that the Greater Victoria area stop dumping untreated sewage into the ocean, and build treatment plants instead. This is fine, although I wish we had been able to come to that decision on our own. However, since the project will come in over the mandated $20 million  limit, the government has also informed us that a public private partnership must be looked at very seriously as one of our options.

I have a problem with this.

Despite the hard-on governments and world and regional organizations currently have for the unregulated wilds of the free market, there is absolutely no benefit to us, as consumers or as community members, in letting big business into what will be a mandatory essential service. While I don’t like many aspects of the free market philosophy, and certainly don’t

approve of its undiscriminating application over all economic sectors touted by the economic right, the free market in its place can work quite well. It’s place, however, is not here.

The free market is regulated by competition, and in a case like this, where we are giving the company who wins the bid a multi-decade monopoly, there is no competition. It is, in fact, an impossible situation to compete in at all. Imagine: “I think I’ll send my sewage to plant B, I like their rates.” “Well, I just switched from plant A to plant C because plant A was unreliable.” It can’t happen.

It is a prevailing myth that private companies are invariably cheaper and more efficient than their public counterparts.I say myth because this isn’t so. Yes, there are examples where this is the case, but there are also many examples where the opposite is true.

The United States boasts both publicly and privately run sewage treatment plants across the country. An examination of data from over 1000 plants showed that private plants were invariably between 13% and 50% more expensive than public plants, and despite higher rates did not offer better service. For details, click here.

Why is this?

Let’s look at it logically. If you take two plants, offering identical services, with pretty much identical equipment, how do you make one plant cheaper than the other? If you assume identical quality of service, you can’t. Then, factor in financing. A portion of the money needed to build and run large projects like this will be borrowed, because even governments and large corporations dont have spare tens and hundreds of millions lying around.

Governments can borrow money at better interest rates than private companies because they are a lot less risky. Private companies can go under, but even if the people in it changes a government will still be there.

Therefore, governments get around 2-3% better interest rates than private companies do. This may not seem like much, but over the project’s lifetime, that 2-3% means that the private company pays 50-80% more than the government would. How does the company make back that money? Higher rates.

Then, of course, there is profit. If businesses were in it for the people, they wouldn’t be businesses. They’d be charities. Non-profits. Volunteer organizations. They aren’t. No matter what the PR guys say, businesses are in it for the money. They want to make a lot of it, and if they don’t, they either go bankrupt, or they just walk away from a bad investment, leaving us to pick up the pieces. How do they make that money, again granting them the same plant and service quality as that of government providing? Raise the rates.

The provincial government is very heavily in favour of P3′s, and this is partly because it makes their year-end budget look good. The hefty start-up costs of large projects are removed from their books and dumped on someone else’s.  The cost of a project like this, however, doesn’t end with the start-up cost, and in trying to lighten their financial burden, the government is adding to ours.

I don’t want to pay more money so some CEO can add another yacht to his collection. I would far rather keep our community’s sewage system public and have the money I pay go back into the community.

Please, tell your council members to say no to a P3 sewage treatment system.

There are many disadvantages to privatizing our sewage treatment plants. Check back here for more on the subject, and check out the Greater Victoria Water Watch Coalition’s website and the CRD’s wastewater treatment site.

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