Victoria limits private financing and operation of sewage treatment facilities

April 9, 2010

On March 31, the board of Victoria’s Capital Regional District (CRD) approved a business plan for the funding and procurement of  new sewage treatment facilities. Unfortunately, the board decided that most – if not all – of the facilities will be publicly financed and operated.

Facilities in three locations (McLoughlin Point, Clover Point, and Saanich East) along with pipes, pumps, and outfalls will be designed and built using a traditional public approach. Another facility (West Shore) and some components of an energy centre may be procured publicly, or may be designed, built, financed, and operated by a private partner.

Even a limited public-private partnership is by no means certain. The chair of the Core Area Liquid Waste Management Committee (the body that recommended the business plan to the CRD board) called public procurement “a viable option for the entire wastewater system.” And opposition to any private financing or operations remains fierce. The Canadian Union of Public Employees and the Council of Canadians have brought their money and powerful organizing tools to the battle, collecting signatures on petitions and packing public meetings with noisy protesters.

In the other corner are the provincial and federal governments – both anticipated funders of the $961-million project – which have encouraged greater private-sector involvement. Indeed, the province made consideration of a public-private partnership a condition of its funding. The CRD can now tell the province that it has considered private involvement and largely rejected it. Whether the province will accept that argument is unknown.

It will be a shame if Victoria forgoes private financing and operations for most or all of the new facilities. Materials put out by the CRD highlight some of the benefits that public-private partnerships could bring. Carefully constructed contracts could enable the region to transfer many risks to the private sector, and thereby provide greater price certainty. They could focus on performance and outputs, rather than specific technologies, and thereby encourage innovation and efficiencies. Having the same party design, build, and operate a facility could reduce life-cycle costs. Contracts clearly spelling out responsibilities for performance could clarify accountability. And relationships with established water service providers could create better career opportunities for personnel.

Three years ago, when Victoria was in the early stages of planning a sewage system, I spoke to the Greater Victoria Chamber of Commerce. I questioned Victorians’ apparent confidence in public service provision, and challenged what I called “the myth of public-sector accountability.” Then I turned my attention to the ways in which the private sector can serve the public interest. I argued that: private investors can bring much-needed capital to municipalities; they can bring efficiencies, making limited funds go further; they can bring expertise and innovation; and the arrangements governing private investments or operations can bring far greater accountability than any we see in the public sector. To read the talk, The Future of Water and Wastewater in British Columbia: The Case for Public-Private Partnerships, please click here.

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