Ontario township abandons water privatization scheme

By scrapping the plan for a P3 privatization scheme the Township of Mapleton saved between $2 million and $3 million.

Ottawa (07 Aug. 2020) — Last week the Township of Mapleton decided to abandon plans to use a P3 privatization scheme for its water and sewer system. The decision is good news for everyone familiar with the problems caused by privatizing water and sewer services. However, it also raises even more questions about why the Canada Infrastructure Bank is subsidizing the privatization of infrastructure.

P3 privatization scheme cost as much as $3 million more

Mapleton received 3 bids in response to the request for proposal (RFP) for the P3 privatization scheme. One didn’t meet Mapleton’s requirements, one didn’t include the cost of a number of measures that would be needed, and the third was for $20.5 million.

Even allowing for the fact thsy payments for P3 privatization are spread over a long period of time — and that the privatization industry has a long history of manipulating calculations like this to make privatization seem cheaper than it really is — the cost in todays dollars was still between $8.3 million and $9.7 million. In contrast, the estimated cost of public procurement using the capital reserve was only $6.4 million.

By scrapping the plan for a P3 privatization scheme the Township of Mapleton saved between $2 million and $3 million.

P3 scrapped, even though Canada Infrastructure Bank offered low-cost financing

When Mapleton was considering a P3 privatization scheme, the federal government’s Canada Infrastructure Bank offered a debt financing package of up to $20 million that would be available to the private consortium that received the contract for the P3. This was intended to “improve the cost of project financing and attract private capital expertise.” However, even $20 million in financing wasn’t enough to make privatization look good.

Federal government missed opportunity when it set up the Canada Infrastructure Bank

What’s so sad about the Canada Infrastructure Bank using public funds to subsidize P3 privatization schemes is the opportunity that has been missed. Canadian communities do need help paying for much-needed infrastructure. If the Canada Infrastructure Bank were providing low-cost financing for publicly delivered infrastructure it would be performing a valuable role.


NUPGE

The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 390,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. — NUPGE