Bharat Chandramouli’s Presentation to the CRD CALWMC

2010 March 16, by Chapter Council

March 10, 2010

I thank the committee for giving the public an opportunity to speak on this very important issue. As a recent visitor to Coast Salish territory, I am happy to see that the greater Victoria region is installing secondary sewage treatment to deal with our ever increasing volumes of waste. As an environmental scientist, I am interested in the future direction of the CRD’s water and waste management plans. I am concerned about the possible privatisation of local infrastructure. I want our infrastructure to be locally owned, controlled and operated so accountability and jobs stay within the community. The provision of water and sewage is universally regarded as basic infrastructure where local control is vital. P3s only make sense from a risk management perspective when a government is unable, or not considered trustworthy enough to carry out natural government monopoly functions. I can only hope that our trust in our governments’ abilities to perform these basic functions has not eroded this far.

Sewage treatment is a well established and mature field where expertise is easily available, and it meshes well with the water provision infrastructure which is already municipally controlled. It makes little sense to spin the sewage off to a private entity. Costs will increase due to the extra layer of complexity, and due to the returns to the shareholders the companies need to provide. Governments traditionally have lower borrowing costs and superior bargaining abilities. Why waste that kind of power? Upper/middle management jobs may not be available to local people, so there is no jobs benefit or job diversity from privatization. There is lowered accountability as well. While P3s claim to shift risk away from governments, studies show that this risk shifting has not actually worked in practice. Non-local companies can leave if things go wrong, municipalities cannot. Non local companies can declare bankruptcy and shed all accountability if things go wrong, we cannot.

I urge you to look at work produced by Aidan R. Vining of Simon Fraser University and Anthony E. Boardman of the University of British Columbia as a valuable counterpoint to estimates coming out of the Conference Board of Canada and Partnerships BC (see attachment). They find that official cost benefit analyses showing the supposed benefits of P3s are fundamentally flawed because they do not take any of the social costs, transaction costs or externalities into account. They conclude that P3s only work from a financial perspective when they are designed to closely mimic traditional design-build-transfer or build-transfer contracts. Why waste time and effort trying to make this shoe fit when it clearly does not?

When we run the plant, we have the power to be flexible, to optimize the operations and modify them to suit our changing needs. We get to decide how much data we want to release, or what kind of research we want to support, what kind of relationship we have with the local community, and what kind of behavioural changes we would like to encourage to reduce waste. When we run the plant. our success does not depend on any one company’s business practice or technology bias. We get to incorporate best practices to operate a sewage treatment facility that works for us, not the other way around. Public ownership is the conservative choice!

In conclusion, I oppose privatisation of the water and sewage infrastructure for the following reasons:

  • Increased costs
  • Decreased accountability
  • Loss of job diversity
  • Decreased efficiency due to increased complexity

Thank you very much for your time.

Bharat Chandramouli, Ph. D