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Who Will Own Victoria's Big New Sewage Plant?

Unions smell a privatized, $700 million deal.

By Russ Francis 15 Aug 2006 | TheTyee.ca
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Environment Minister Penner: hand on the lever.

It's all but a done deal: the Capital Regional District will start treating its sewage. In a July 21 letter to CRD chairman Alan Lowe, B.C. Environment Minister Barry Penner ordered the CRD to provide him with a fixed schedule for providing sewage treatment by June 30 of next year.

By the end of this year, the regional district is required to come up with an interim progress report.

Tourism operators and environmentalists alike are breathing sighs of relief, now that the province's capital will finally stop taking a dump in the public waters of the Juan de Fuca Strait.

It's been a lengthy battle.

But there's another fight looming, one which may make the first one pale into insignificance.

With hundreds of millions of dollars worth of taxpayers' money at stake, private companies are drooling at the chance of picking up the job of operating the sewage treatment system.

Shadow of arena controversy

"That's the next battle that's coming up," says Victoria Labour Council Secretary-Treasurer Colin Graham. "Should it be public or private?"

It isn't hard to guess which side the labour council -- which has long been advocating for sewage treatment -- is on.

Says Graham: "We will be pushing for it to be public."

Though most of the construction will need to be done by private companies, Graham wants them to be quality, unionized firms.

And while he may have the interest of union members at heart, Graham also has in mind the fact that public-private partnerships (P3s) have been, in general, less than resounding success stories. In particular, Graham is thinking of the Victoria arena mess, in which the City of Victoria signed up a non-union private company in a public-private partnership that ended up costing the city millions of dollars -- mostly due to repeated delays -- more than it was supposed to.

Noting that Lowe chairs the Capital Regional District, Graham says he hopes Lowe has learned from certain "other P3s."

Whopper project

Given that the B.C. Liberal government has ordered the CRD to go ahead, and that part of the hundreds of millions of dollars to pay for it will come from the province, it's little surprise that the betting is that the project will indeed be done as a dreaded P3. Environment Minister Barry Penner has already suggested as much.

In his July 21 letter to Lowe, Penner hinted strongly that he'd like to see the private sector play a big role in one of B.C.'s biggest-ever construction projects.

"To ensure value for taxpayers, I encourage the CRD to consider new technologies and alternative financing and delivery options, including the potential for private sector involvement," Penner told Lowe.

Hint, hint.

When there's a big project around that might be done as a P3, Partnerships B.C. isn't far behind. The Crown corporation was set up by the Liberals to promote and foster P3s, and makes its money by consulting for the projects. It's involved with the Canada Line rapid transit project linking Richmond and Vancouver, seniors' homes on Vancouver Island, and a number of others.

Mike Marasco is the vice president for partnerships development with Partnerships B.C. He says that while the company has not approached the CRD, it likely will before long. "It certainly has the scope and scale for a good PPP," Marasco says about the sewage treatment system. "And given the amount of money that they are going to have to invest, it might be a good idea to bring a private partner in to help mitigate some of the risks related to it, rather than let the taxpayer carry the load."

Questions about savings, transparency

Marasco's claim that P3s inevitably reduce taxpayer risk doesn't go unchallenged. For instance, the secretary-treasurer of the B.C. wing of the Canadian Union of Public Employees, Mark Hancock, says that P3s are typically bad news for taxpayers. "We've yet to see P3s that actually save taxpayers or residents any money," Hancock says.

CUPE has other concerns about having a private company operate the capital's sewage treatment plant.

One is that the process of working out the P3 deal is often very secretive. "A lot of the decisions and discussions are not held in public forums," Hancock says. "They're held behind closed doors."

As well, documents that are normally available to the public via a freedom-of-information request are often protected when a private firm is involved.

Under the Freedom of Information and Protection of Privacy Act's notorious Section 21, records that might harm the business interests of a third party must not be released. In my experience, municipalities use this section all too freely, even when vast amounts of public funds are at stake. And while appeals to the information commissioner's office can result in the release of the records, they often come after the horse has bolted and the deal is done.

CUPE has another reason for being concerned about who owns and operates the treatment plant.

John Burrows, the president of the city of Victoria's CUPE local, is still furious that more than 100 CUPE members, most of them part-time, lost their jobs when Victoria turned over operation of its new arena to a private company.

He notes that CUPE members, from another local, work in the capital's present, limited sewage system.

"It's the work we do," Burrows says. "We would clearly want to be the ones working inside the plant."

$700 million price tag

Present estimates put the cost of the new treatment system at up to $700 million. Since the public's financial stake is so high, those wanting to keep the system in public hands are unlikely to give up easily.

The strong contingent of P3-suspicious New Democrats elected to the legislature from the capital area last year will doubtless be in the thick of the fight.

Maurine Karagianis, for instance, the NDP MLA for Esquimalt-Metchosin, says that the large number of municipalities means that the tendering process will be complex.

"P3s may not even be a successful model," she says. "P3s might close the choices down. I'm a strong believer in keeping some of these infrastructure systems in public hands."

In any case, Karagianis wants the province to stay out of the issue of the system's ownership: "I think that's something that should be left to the region to decide."

NDP Victoria councillor Dean Fortin has long opposed privatization of sewage treatment. "Sewage treatment is like water," Fortin says. "It's too important to have outside the public sector."

That is also a concern CUPE shares.

"Who do you want making decisions about our waste water?" asks Hancock. "Is it public boards or councils, or is it the backrooms of private corporations where profit is the bottom line?"

Veteran B.C. legislative reporter Russ Francis is a regular contributor to The Tyee. Find his other stories here. A shorter version of this story ran in Monday magazine.

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