Posts Tagged: privatization

Apr 11

Trash talk: debate is about process, not outcome

Natalie Alcoba covers some of the reaction from councillors following last week’s executive committee meeting about the ongoing plan to privatize waste collection in the city. The meeting was marked by various theatrics. You probably read about them.

Councillor Josh Matlow does a good job of summing up the important parts of this ongoing debate:

“I can tell you that I need to be convinced that it would be a financially responsible move and it would see the savings that staff are suggesting,” said Councillor Josh Matlow, who represents the midtown ward of St. Paul’s.

“We’re hearing the different ideological perspectives but we’re all trying to get to the root of the question, which is are we moving in the direction of privatization because of remaining angst of the strike or is it a fiscally prudent decision that will support quality service or is it a bit of both?”

via Centrist councillors wary of trash proposal | Posted Toronto | National Post.

Privatized garbage pick-up became an inevitability the second Ford’s numbers came in on October 25. Of all the various things the mayor lays claim to have a mandate to do, this one is actually legit. People want this.

I get the ideological objection. I wish people would stop trying to tear union jobs down and instead try to build non-union jobs up. A race to the bottom on labour costs isn’t going to be good for anyone.

But privatized garbage collection doesn’t necessarily represent a titanic shift for this city. We can still be a good, progressive city, even with tendered trash.

Despite persistent needling from right-wingers like Sue-Ann Levy and Frances Nunziata, wading into a deep ideological debate about the modern role of the labour union and Toronto’s recent collective bargaining snafus will only serve to distract from the real issue: that this specific plan is starting to look like a shitty deal for this city.

The process is being rushed through at near-breakneck speed. Despite representing nearly a quarter billion dollars, the final contract won’t be approved by council before its signed. A bad deal signed now will only get worse when the contract comes up for renewal. By then, the city’s negotiating position will have been made weaker by the sale of trucks and collection equipment, making in-sourcing a more costly endeavour. As there are only a few vendors capable of servicing a large city like Toronto in the first place, competition will be limited.

If we are going to go down this road, let’s take the necessary care to do things the right way. Let’s examine our options with proper oversight. Let’s not let the spectre of an expiring labour contract force us into a deal that only looks good in the short-term.

Apr 11

Road to privatized garbage skips past council

With much fanfare — the National Post’s Peter Kuitenbrouwer reports that there was a new! podium! sign! — Chair of Public Works Denzil Minnan-Wong revealed a staff report outlining the proposed process for the privatization of solid waste collection west of Yonge Street.

Solid waste collection is not a big-ticket item. The cost is mostly recovered through user fees. While I am sure some will spin this as a great step forward toward our glorious low-tax utopia, the impact this will have on the city’s overall financial position will be minimal. As a comparison, the $10 million dollars per year the city was to bring in from billboard tax revenues is more substantial.

This is not primarily a financial move. It’s not about customer service, either, as the report concludes (page 9) no difference in customer satisfaction levels between privatized Etobicoke and the rest of the city. This is about punishing the unions and preventing future strikes. And despite some introspective ideological push-back, I’m okay with that, to be honest: if there’s one thing Ford has a legitimate mandate from the people to do, it’s this. I just wish it would be presented more truthfully.

More troubling than the intent behind this is the proposed process. In an effort to have a signed contract in place before the union’s contract expires at the end of this year, the staff report recommends that council delegate approval of the contract to the City’s Bid Committee.

Council will get to debate and approve the overall process for garbage privatization, but they will not — without an amendment to this report — get to debate and approve the final contract itself. The report lays out several reasons why this should be the case, but only one of them makes real sense (page 12):

To ensure that the contracts are awarded and executed in advance of the expiration of existing Collective Agreements. The current Collective Agreements with the TCEU(s) expire December 31, 2011.

Rushing through this process to avoid the spectre of another work stoppage is short-sighted and could cost the city significant amounts of money over the long-term. As the report indicates that the city will sell off some of its equipment (trucks, etc. — the report suggests the city will secure $1.5m in one-time revenue on page 6), this process will be essentially irreversible.

Once we go forward, we can’t go back. This is a critical and high-impact decision-making process that demands more oversight from our elected officials than has been suggested in today’s report.

Apr 11

As Toronto looks to privatize everything “not nailed down…”

Earlier this year, the Toronto Sun’s Sue-Ann Levy quoted Doug Ford on privatization: “We’re going to be outsourcing everything that is not nailed down.” These days, this is what amounts to strategy at City Hall.

We need to elevate the discussion.

The New York Times has a “Room For Debate” feature on their opinion page today. It starts off by noting that New York City recently saved 41 million dollars by in-sourcing their technology services:

Stephen Goldsmith, the deputy mayor of New York, recently said that its time to get rid of costly private contractors and have city employees handle more of the citys technology services. Mr. Goldsmith, known as “the prince of privatization” when he was mayor of Indianapolis in the 1990s, said he found $41 million in immediate savings by taking the work of the citys data center and wireless network back in-house.

via Is Privatization a Bad Deal for Cities and States? – Room for Debate –

What follows is a variety of points from a variety of people, most of which seemingly add up to this: privatization isn’t magic, can cost more and deliver worse service, and we in Toronto need to look at these things cautiously. (On the flip side, there’s a column by the Reason Foundation’s Leonard Gilroy, parts of which match up verbatim with the Ford Nation script.)

I’m going to excerpt a few items from the feature, as I’m pretty sure this kind of thing will come in handy over the next year. Plus I’m not sure when this feature will get swallowed by a paywall of doom.

Mildred Warner, professor at Cornell University, who has been tracking the issue of privatization-versus-public-delivery through the International City County Management Association (ICMA) surveys:

I.C.M.A. also tracks the reasons why local governments bring back in-house previously privatized work. The reasons are problems with service quality (61 percent), lack of cost savings (52 percent), improvements in public delivery (34 percent), problems with monitoring (17 percent) and political support to bring the work back in house (17 percent). It turns out citizens prefer local services to be locally controlled and publicly delivered.

Rigorous quantitative analysis of every published study from around the world of water delivery and garbage collection (the two most commonly privatized services at the local government level) finds no statistical support for cost savings under privatization.

via The Pendulum Swings Again – Room for Debate –

Nicole Gelinas, contributing editor to the Manhattan Institute’s City Journal:

In general, too, whenever cities and states sell or lease a big asset to the private sector to reap some short-term cash to cover budget deficits, as Chicago did with its parking meters, taxpayers get a bad deal. Bidders know when a government is desperate for money. They stand ready to enable government officials to enter into decades-long contracts, which only magnifies the effect of any mistakes in calculating potential profits and costs.

via Not a Cure for Incompetence – Room for Debate –

Elliott Sclar, professor of Urban Planning at Columbia:

We would do far better if we started with the recognition that the public sector is a highly complex and socially vital operation staffed by hundreds of thousands of highly trained professionals. Like all organizations, public ones require competent management and continuing investments in improving operating capacity. Utopian schemes to contract away these problems through privatization efforts is a form of magical thinking, which leaves taxpayers to pay for the mistakes.

via When Ideology Drives Decisions – Room for Debate –

Steve Tadelia, professor of economics at Berkeley:

Politicians like simple messages. Conservatives like to say that “privatization provides good services at low costs,” while many liberals will claim that “privatization reduces quality and costs jobs.” Both can be right or wrong, depending on the particulars of the service involved. The trouble is that political agendas seldom align with the cost-benefit analysis required for good privatization policy decisions. The tough part is strategically choosing the right projects and services for privatization that have a good chance of avoiding outsourcing’s pitfalls.

via Corporations Make the Same Mistakes – Room for Debate –

But, really, why even stop to think about this stuff? Let’s just plow through and get it done. Damn the torpedoes: let’s see everything not nailed down get screwed.

Hat tip to greenleaf on the Urban Toronto forums for bringing this to my attention.

Mar 11

The problems with privatized services

Tomasz Bugajski at BlogTO has a great little interview with Councillor Gord Perks today, discussing the construction on Roncesvalles and the associated delays and headaches. Perks’ comments strike an important chord considering we’re a city that seems very likely to head down a road toward increased privatization:

Because of the history of the way road work is done in the city of Toronto we’re bound by a couple of problems. One is that it’s a privatized service, so these are not municipal employees and we can’t just tell them “you’re falling behind, bring in five more guys, and get the work done.” That’s one problem with privatized services, you can’t control their day to day decisions.

The second problem is because of a long history of people to the right of centre arguing that everything costs too much. We are required to take the lowest bid on a contract, so it doesn’t matter what your history is on completing other work for the City of Toronto, so if you’re a licensed, competent, legal bidder, we’re sort of required by law to take you as the guy who wins the bid.

via What went wrong on Roncesvalles?.

The belief that ‘privatization’ is some kind of magic that can lead to better services for lower cost is dangerous. There’s always a downside.