CUPE Alberta President D'Arcy Lanovaz made this speech to the Edmonton City Council last week, addressing CUPE's concerns over an upcoming decision that might privatize the city's new recreation centre.
Your worship mayor Mandel, members of Council, Edmontonians.
I
appreciate your allowing me to address this proposed budget today.
There is a lot to be proud of in this document; it takes many steps to
address many of the city's needs during this time of extraordinary
growth.
I'm going to echo the concerns of a few
other speakers today, however, with the segment of the budget that
suggests the Southwest Rec Centre be operated not by the city, but
instead by a private business at a profit.
Not to put too fine a point on it, but this plan has the potential to
be a catastrophe for the people of Edmonton, as deals like it have been
for Canadians from other provinces.
I
realize the demand is increasing in all municipalities for facilities
like recreation centres, arenas, parks, fields and playgrounds that
support public health and community engagement.
Many cities want to build new recreation facilities, and after having
infrastructure costs downloaded on them from every level of government,
they feel that they only way they can "afford" to do this is through
allowing private business in on the deal.
But all over Canada, P3s are actually draining cities' budgets when they end in disaster.
In
Ottawa, two city ice rinks were built through P3's four years ago and
were hailed as examples of how the city might do more with less. This
spring, city management recommended a $1.2 million bail-out
for Capital Sports Group who runs Bell Sensplex, and termination of the
partnership with Serco Facilities Management, operators of Ray Friel
Centre, leaving the city with an additional $12 million debt . The businesses underperformed in several areas, including mismanagement, leaving few options for the city.
In BC, Cranbrook tried a P3 to keep the debt incurred from building a
4250-seat arena off-book. The private partner had problems with
securing financing, meeting construction deadlines, which led to cost
overruns that the City had to absorb. The City's borrowing power was
reduced substantially as a result of the long-term lease. Ownership
changed hands several times and when the project failed the City found
itself with the highest debt level in the province. The tax increase to
residents of Cranbrook alone for this project was 7% and fees increased
considerably from what was charged at the city-owned rinks. The
facility was finally brought in house after several challenging years,
when the City signed a termination agreement on March 7, 2007.
These stories are alarming, and there are dozens more like them, from
every province who has tried the P3 solution to the infrastructure
problem. Citizens pay higher taxes and fees as a result of these deals,
while municipalities inherit massive corporate debt.
It doesn't need to happen like this. Governments have options.
Firstly, the cheapest way to finance any project is through public
borrowing, because municipalities typically have the best credit rating
around and thus have access to the lowest borrowing rates.
Secondly, many new and tried and true mechanisms exist to leverage public funds for infrastructure.
Tax-exempt bonds allow municipalities to borrow funds at lower rates of
interest than they would pay on regular bonds. Crown corporations, like
the Canadian Mortgage and Housing Corporation, wholly owned by the
federal government, can issue bonds and have significant borrowing
power. With sufficient pressure from municipalities, the federal
government could create an infrastructure corporation, structured as a
wholly owned crown corporation similar to CMHC.
Municipal
financing authorities exist in most provinces, which allow
municipalities to benefit from pooling of debt. These can be expanded.
Dedicated infrastructure funds, subsidies from senior levels of
government and innovative solutions like Public Interest Companies
(PICs), are all viable options.
I strongly encourage this council to explore the above alternatives to
privatization of public services. P3s are accompanies by a whole host
of problems, and this council should jump on the chance to solve them
before they start. Otherwise, the [13?] of you aren't having to explain
to Edmontonians four years from now why their taxes are climbing and
they can't afford to take their families to the swimming pool.