Taking over sewer systems is often the first step toward privatizing water,
since the two are so closely linked. Around the world both are targets for
privatization by a handful of transnational corporations, including Terasen.
One reason often put forward for privatization of sewer and water systems is
a lack of public funding for the purpose. And it is tempting for politicians
to put available funds into projects more politically profitable than water
and sewage systems. But a private system will cost citizens more in the long
run; financing is more costly for private operators and a guaranteed profit
will be skimmed off every litre delivered or drained.
So what are the advantages of a privatized system, whether or not it
operates under the "public-private partnership" (PPP) label?
Let's look at the record, because Colwood is not the first Canadian
municipality to be wooed by water corporations. Halifax almost signed a huge
sewage contract and the Greater Vancouver Regional District came close to
having the U.S. giant Bechtel build and operate a $100-million water
filtration plant. Hamilton actually did enter an agreement for privatized
sewage services.
What happened? In Halifax the corporation with which the city was dealing
constructed the contract in a way that ensured all risks would be borne by
the citizens, while a healthy rate of return on its investment would be
guaranteed to the company. That's a common sort of arrangement in the water
and sewer business; fortunately Halifax city council realized what was going
on just in time and backed out of the deal.
Ownership of Hamilton's privatized sewage system changed hands so often it
was sometimes unclear who owned it. A huge sewage spill into the harbour
helped convince the city to reclaim the system into public ownership.
In the Lower Mainland, a public furor forced the GVRD to back out of the
deal with Bechtel when it became apparent that, under the rules of NAFTA, if
the privatization turned out badly there would be no way out of it without
enormous payments to the corporation to compensate it for loss of profits it
expected to make.
In Moncton, public protest against a proposed privatization of the water
system was so strong that eventually the mayor supporting the public-private
partnership had to admit defeat. The system still belongs to the people of
Moncton.
Outside Canada experience with water and sewer privatization has been even
more graphic. The Suez corporation took over the water system of Atlanta,
Ga., with the promise that it would create an "international showcase" for
public-private partnerships. But in 2002 the system had five boil-water
alerts, many fire hydrants were useless for months at a time and leaking
water mains went unrepaired for weeks.
The company laid off 25 per cent of waterworks staff while demanding that
the city pay it millions of additional dollars. Atlanta gave Suez 90 days to
fix all these problems. It didn't, so Atlanta cancelled the contract and the
system once again belongs to the people of the city.
When water services were privatized in the United Kingdom in 1989 consumer
water bills soared as much as 141 per cent in the following decade. Billions
of dollars of government subsidies went to water companies even while they
were laying off thousands of public-sector workers. The conservative
newspaper Daily Mail wrote "Britain's top 10 water companies have been able
to use their position as monopoly suppliers to pull off the greatest act of
licensed robbery in our history."
Politicians may imagine that life will be simpler if they turn their water
or sewage systems over to a corporation rather than getting on with
resolving the issues themselves. But this can be a costly illusion.
In addition to paying more in the long run citizens lose control of basic
elements of their infrastructure and even of their most precious resource if
water services are privatized.
A corporation operating a water or sewer system will maximize profits for
distant shareholders, who are unlikely to be motivated by concern for the
long-term sustainability of our water and sewer systems or for the ecology
of this region.
Richard Bocking has written extensively on water resource issues, including
two books, Canada's Water: For Sale? and Mighty River: A Portrait of the
Fraser. He has produced several films on water resource issues for the CBC.