Wednesday, March 1, 2000                                
The Halifax Herald Limited                                  

Halifax Harbour cleanup opponents all wet

By Brian Lee Crowley

OH, THE SHAME of it all. A private consortium might come to Halifax, fix the humiliating centuries-old dumping of raw sewage in our harbour, and do so for less than HRM’s estimates for doing the job in-house. What can those fools on municipal council be thinking? Don’t they realize that the corporations involved may – frenzied Hitchcockian violin music here, please – make a profit? As Marlon Brando gasped in Apocalypse Now, “The horror, the horror.”

Well, there are fools on stage in this comic opera, but it’s not the majority on council. The fools are those who are trying, at the 11th hour, to scuttle an arduous and well-designed process to bring some of the world’s finest managerial and technical expertise here to fix our collective incontinence at a sensible price.

But, alas, being a fool is no guarantee of failure. The three private-sector consortia that have qualified to bid on this project are being spooked by signs of council timidity in the face of scare tactics and special pleading by public-sector unions. If this deal falls apart, not only will the harbour stay filthy for another decade, but Halifax will have sullied its reputation as a trustworthy business partner.

None of the objections against this deal hold water. The Halifax Harbour Solutions Project is no water “privatization.” On the contrary, HRM will maintain its control of the water utility and the existing and proposed collection system and treatment plants. HRM will continue to set pollution-control rates, technical standards, air, emission and noise standards and all other major aspects of the project. The Utility and Review Board will still set the water rates.

Moreover, the winning consortium will have to guarantee a fixed fee for operation of the treatment plants. If HRM finances the plants, they are turned over to the municipality on completion, and then run under contract by the consortium. If the private partner finances the construction, they get to operate the plants for 30 years, after which they are returned to HRM. That’s public ownership and control with the added discipline of fixed costs agreed in advance in a fiercely competitive bidding process. Any profit is not over and above what it costs to manage water in the bad old public-monopoly way. Rather, it’s the reward the private sector earns for meeting the standards HRM lays down and staying within tough financial constraints.

The list of cities that have benefited from such contracts is now as long as the MacDonald Bridge. Edmonton, Indianapolis, Milwaukee, Haldimand-Norfolk, Dartmouth and Moncton have all used such innovative water partnerships with the private sector to achieve significant cost savings, faster construction times and low up-front investment costs for the taxpayer. Average cost savings range from 20 to 35 per cent from availing ourselves of competitively chosen private-sector expertise in waste water control or garbage collection or a host of other local government services.

Opponents like to single out Hamilton, which had teething problems with its water deal, but they’ve got that story wrong, too. The council of that Ontario city made a bad choice of contractor to start, but then switched companies; and it has been smooth sailing ever since. In fact, Hamilton shows a great strength of contracting out, not a weakness: if a private contractor fails to meet their contractual obligations, you can get rid of them. When the public-sector monopolists screw up, it’s the taxpayers who foot the bill.

Is the HRM process genuinely open and competitive? It certainly seems so. This process has been before council for debate and vote no fewer than seven times since March 1997. Of the original eight expressions of interest, HRM has now narrowed the field to three highly qualified consortia, which await the detailed Request for Proposals.

These three groups have invested considerable time and money in preparing to bid on a project that HRM has repeatedly promised will go ahead. If now we back away, or reduce substantially the scope of the project available to the bidders, we will have signalled to them and the world that Halifax is truly bush league, that global companies with experience, expertise and other opportunities to pursue might as well not apply. This process will collapse, and next time we give a harbour cleanup party, likely no one will come. And we’ll have no one to blame but ourselves.

Brian Lee Crowley is president of the Atlantic Institute for Market Studies.
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Copyright (c) 2000 The Halifax Herald Limited