Hamilton workers have some neighbourly advice for Toronto: alternative service delivery is a new label for the same old schemes.
From an untendered wastewater contract that keeps changing corporate hands to unfair competition between public and private garbage collection, the citys workers have seen it all, and theyve concluded handing services to the private sector is a fire sale for businesses, no matter what its called.
In 2001, Hamilton city council debated and adopted an alternative service delivery (ASD) policy that opens the door to a services sell-off. Controversial former city manager Doug Lychak, the privateers point man in Hamilton, developed the policy. Lychaks proposal included a power grab that would have given him sole authority to approve any contracts up to $250,000. He also opened the door to employee takeovers of city services.
Forced to resign his position in the fall of 2001, Lychak still sits on the board of directors of privatization pushers the Canadian Council for Public-Private Partnerships. Despite his departure, and in the shadow of failed contracting out and privatization schemes including high-profile sewage treatment plant problems, city council is ploughing ahead.
At the end of the ASD day, the public loses control of public services on the promise of cost savings that never materialize. Its a bad deal for taxpayers, who pay taxes for quality services not to put profit into the pockets of companies that have no commitment to our community, says city worker Gus Oliveira, president of CUPE 5167.
While the ASD policy pays lip service to public interest and better value, Oliveira says the policys focus is very narrow. As it stands, it only leads us down one path privatization. The city is targeting services such as garbage collection, snow clearing, park and cemetery maintenance and community centres. He says the city doesnt value the knowledge of its own workforce, experts on the services they deliver and how to improve them.
Hamilton residents werent consulted about the citys plans. When polled, only one in eight residents knew about the plan. When told what was at stake, a clear majority opposed ASD if it meant handing public services to private corporations. The public gave most city services, including garbage collection, libraries, recreation services and snow clearing, high approval ratings.
Half-baked trash plan
Despite public satisfaction with garbage collection, city council has privatized half of the citys garbage collection, and in four years will compare the results against public sector work in the other half. While there was some contracted out garbage collection before the Hamilton region was amalgamated, most collection was municipal. Oliveira says the division of routes stacks the deck in favour of the private companies, leaving public collectors to contend with more traffic congestion, businesses, alleys and high-density areas of the city.
CUPE analysis found the waste collection plan was hatched without any connection to a broader waste management plan. In addition, the citys own information showed the cost of public garbage collection stacked up well compared to contracted-out operations. The logic driving the creation of new collection zones was the creation of competition between public and private providers, not improving service by using vehicles efficiently and streamlining schedules.
Skewed calculation of public and private waste collection prices ignored the cost of the full waste cycle, including processing and disposal. Isolating the collection costs plays into the hands of the private waste conglomerates, who are eager to low-ball bid on the front end of the cycle in order to gain control of landfills, the oil wells in reverse at the other end.
The unions review concluded that comparing collection costs was an arbitrary and unbalanced approach. Differences in routing, equipment, population densities and the amounts and types of garbage collected are a few obvious factors that are not taken into consideration. The city was also warned to factor in the municipal overhead, administrative and overtime costs associated with overseeing private contractors.
City workers warned that international trade deals might lock in the scheme to privatize by limiting the municipalitys power to bring the work in house after four years.
Snow removal snow job
The city also approved staffs decision to award an $805,000 snow removal contract without tendering, only to find itself in deep. The contractors did not deliver what anyone would reasonably consider to be appropriate service, says Oliveira.
He says the city subsidized the contractors through convenient access to city resources such as equipment and road salt. The contractors failed to clear their routes properly, leaving city staff to do clean-up after finishing their own routes.
In another untendered contract, the city sold $45,000 worth of city lawn cutting equipment for the bargain basement price of $11,000 as part of an employee takeover of grass cutting operations. The push for employee takeovers relies on the now-discredited Indianapolis model of competitive bidding (see sidebar).
The city must also take control of its recycling program, after scandal-plagued Philip Services walked away from the money-losing operation in May. The bailout was the second time Hamilton has been burned. An untendered contract to operate the citys wastewater treatment plant was handed to Philip Services subsidiary Philip Utilities Management Corporation in 1994.
Five years later, Enron subsidiary Azurix bought the bankrupt PUMC. When Azurix didnt return expected profits, the contract changed hands again with the sale of Azurix North America to American Water Works Company which in turn is now owned by German water giant RWE.