Tag Archives: Canada

Letter: The other cost of privatizing liquor outlets

Source: Joyce Neufeld, Estavan Mercury, August 17, 2016

The Sask. Party government privatization plans for 40 liquor stores include 36 in rural communities. They generated $32.63M in revenue in 2014. This is a profit that will now go to the private sector and which we, the taxpayers, will have to make up.  What the Wall government does not want made clear are the financial and human costs to our rural communities.  We are told that about 150 employees earning about $6M in total wages, are losing their government jobs. How many will be exercising their seniority and move away from small towns already reeling from the loss of grain elevators, banks, post offices, school and hospital closures? … While most of these communities will, no doubt, lose at least some families, the smaller ones will also end up with abandoned store buildings. There are no guarantees the privateers will use the existing government buildings. Abandoned buildings mean lost property taxes for communities already facing shrinking tax bases. …

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Government booze stores cheaper, safer
Source: Michelle Gawronsky, Winnipeg Free Press, August 10, 2015

Studies of privatization in Alberta have shown privatization has led to higher prices as small businesses are being bought out by large corporations that charge more. Further, there has been a decrease in consumer choice (specialty products that don’t sell in high volumes don’t get shelf space), and an increase in social and policing costs — sales first, safety later. David Campanella and Greg Flanagan’s 2012 study: The economic and social consequences of liquor privatization in Western Canada, takes a closer look at these comparators for British Columbia, Alberta and Saskatchewan. In a price survey of common types and brands of liquor in these jurisdictions, they found B.C.’s private stores consistently averaged the highest price out of all, with private stores in Alberta “close behind.” Publicly owned stores in B.C. had the lowest prices for the items measured, followed by the Saskatchewan Liquor and Gaming Authority. A 2014 Global News study found beer in Alberta’s private stores was significantly more expensive than it was in Manitoba. And a 2014 Beer Store report, Convenience Store Alcohol Would Drive Prices Up, Government Revenue Down, found deregulated alcohol sales in Ontario “would drive up prices, harm communities and lead to hundreds of millions of dollars in lost tax revenue.” What did it say about selection? “There would be no benefit to offset the risks of deregulation. Not on price, or selection.” Ontario’s Beer Stores stock up to 330 brands, while the selection in Alberta is less than half that number.

Alcohol Retailing Deregulation: Implications for Ontario
Source: The Beer Store, February 10, 2014

The issue of alcohol sales in corner stores and gas stations is once again in the news in Ontario. Proponents of deregulated alcohol sales claim that deregulation will lower consumer prices, increase product choice, generate higher government revenues while at the same time improving responsible sales practices. While such claims may sound enticing, a review of the deregulation experiences of other North American jurisdictions shows that this combination of outcomes has never been realized anywhere in practice. In fact, increased availability of alcohol in jurisdictions that have deregulated liquor retailing has been accompanied by significant increases in consumer prices, a general reduction in product selection and lower government alcohol tax revenues. The following paper compares the performance of Ontario’s existing beverage alcohol retail system across a variety of factors to liquor retailing systems that have undergone varying degrees of retail deregulation with a particular focus on Alberta and British Columbia given the robustness of available data on those markets. Factors examined include expected impacts on consumer prices, government revenues, product selection, availability of liquor and responsible sales practices.

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Impaired Judgement: The Economic and Social Consequences of Liquor Privatization in Western Canada
Source: David Campanella and David Flanagan, Canadian Centre for Policy Alternatives, 2012

In Alberta and British Columbia, liquor retail privatization has meant higher liquor prices but lower government revenue. Moreover, the increased availability of alcohol brought on by privatization and its lax regulation contravene recognized methods for protecting public health. In light of Premier Brad Wall’s recent decision to move Saskatchewan towards a hybrid private/public model along the lines of British Columbia, these social and economic consequences of liquor privatization must be front and centre in any debate over the future of public liquor delivery in Saskatchewan.

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The Long-Run Effects of Privatization on Productivity: Evidence from Canada

Source: Anthony E. Boardmana, Aidan R. Viningb, David L. Weimerc, Journal of Policy Modeling, May 10, 2016

Abstract:

From a public policy perspective, the social value of privatization depends on the aggregate efficiency benefits over the long term. However, most privatization studies that examine the efficiency impacts of privatization employ relatively short time frames: usually 3-years before and 3-years after the privatization. In contrast, this study examines the long run effects (up to 24 years) of privatization on productivity based on an examination of major, mostly federal, share-issue privatizations in Canada. We control for factors that might affect productivity apart from privatization by including panels of Always-SOE firms and Always-Private firms, and estimating difference-in-difference models. The major finding is that the productivity of privatized SOEs increases relative to SOEs at a decreasing rate, peaking at 14-16 years. Despite this improvement, the productivity of privatized firms continues to lag that of Always-Private firms. We consider some of the policy implications of these findings.

Township of Langley Arenas brought back in-house

Source: Canadian Union of Public Employees, April 13, 2016

UPE 403 is proud to announce that after nearly 20 years two arenas in the Township of Langley will once again be operated in-house. The George Preston Recreation Centre and the Aldergrove Community Arena will both be staffed by CUPE 403 members starting July 1, 2016. … Whyte says that community members with a ‘Go Active’ will now be able to use the pass at both the George Preston Recreation Centre and the Aldergrove Community Arena and that the Township is planning to increase programming at the facilities. Residents will now also be able to pay for municipal services such as taxes, dog licenses, and burning permits at George Preston Recreation Centre. Currently the two arenas are operated by private for profit contractor Canadian Recreation Excellence (Rec Ex). Their contract with the Township expires on June 30 and will not be renewed.

Sooke Wastewater Services to be delivered in-house

Source: Canadian Union of Public Employees, April 8, 2016

The District of Sooke has voted unanimously to end their contract with for-profit contractor EPCOR and bring wastewater services in-house. Sooke staff estimate that the District can save approximately $225,000 annually by operating and maintaining the system themselves. There will be a six month transition period and the District will officially take over as of October 1, 2016. … EPCOR has operated and maintained Sooke’s wastewater services since 2006. In 2011, when EPCOR’s five-year contract was expiring, City Council considered pursuing a 21-year contract extension however residents rejected that option and instead Council went with another five-year extension. “This is a prime example of a contract that didn’t deliver the cost savings that were anticipated,” says CUPE BC Secretary-Treasurer Trevor Davies. “In this case Sooke was lucky that the contract was short term as most Public Private Partnerships usually require long term contracts. As other communities consider options for their wastewater services we hope that they will look to what happened in Sooke and consider the many benefits that a publicly owned and operated project offers.”

Piloting social impact bonds in Ontario: the development path and lessons learned

Source: Government of Ontario, November 2015

This report summarizes what the government did and the lessons we learned during a pilot project to develop pay-for-performance ideas that help youth-at-risk, address housing and homelessness and improve employment opportunities for people facing barriers.

New report chronicles 10 years of privatization in Saskatchewan

Source: Saskatchewan Government and General Employee Union, October 8, 2015

The privatization of Saskatchewan’s public services and assets is accelerating, putting the province at odds with a global trend of renewed public ownership, says a new report that tracks 10 years of privatization in Saskatchewan. The Wrong Track: A Decade of Privatization in Saskatchewan, 2004-2015 was released today by the Saskatchewan office of the Canadian Centre for Policy Alternatives. It identifies over 50 examples of privatization in its various forms – including contracting-out of public services, the sale of Crowns and their subsidiaries, and the use of public-private partnerships (P3s.) A pocket timeline, published along with the full report, provides an easy reference for the dozens of privatizations Saskatchewan has seen in recent years. … The report concludes that Saskatchewan is moving in the opposite direction of the wider world, where privatized services and assets are increasingly being brought back under direct public control. In the United States and the U.K., governments are realizing that privatization hasn`t delivered savings or improved service, and are rebuilding their in-house capabilities.

The Wrong Track: A Decade of Privatization in Saskatchewan, 2004 – 2015
Source: Canadian Centre for Policy Analysis

But has privatization become a figurative ‘third rail’ — too hazardous to even touch? The Wrong Track: A Decade of Privatization in Saskatchewan, 2004-2015 – from the Saskatchewan Office of the Canadian Centre for Policy Alternatives – argues that despite all of the political recriminations and admonitions that have been expended on the issue of privatization in the past decade, Saskatchewan has actually witnessed an acceleration of the privatization of public assets and services over the last ten years. The report offers a detailed chronological history of privatization in the province from 2004 to 2015. The report catalogues privatizations in all of their various forms, from the outright sale of Crown corporations and the sale of Crown subsidiaries to public-private partnerships (P3s) and the contracting out of public services to the private sector. Overall, we identify more than 50 instances of privatization in the past decade, the vast majority initiated by the Saskatchewan Party government since its election in 2007.

Provincially owned telecom firm sold at loss of almost $61 million

Source: Richard J. Brennan, Toronto Star, September 29, 2015

The Liberal government is under fire for selling off a provincially owned telecommunications company at a $61 million loss. … Ontera, which provides local and long distance telephone, data and Internet service throughout northeastern Ontario, was sold to Bell Aliant for $6.3 million — less than the $6.5 million the province paid consultants, lawyers and others advising the government on the sale. Newly released documents from a Public Accounts report states “a loss on disposal of shares of Ontera” of almost $61 million and that the “the government provided a one-time contribution of $52,092,000 to support the sale” of the Crown corporation. … Fedeli said given how the government “bungled” the sale of a smaller asset like Ontera, then “how are they are going to be trusted to sell Hydro One, a much bigger company,” referring to the Liberal government’s plan to sell off 60 per cent of the transmission utility. In struggling to explain the deal, Gravelle said the decision was made to cut the province’s losses. Details of the money-losing deal were outlined in public accounts documents released Monday. Ontera was the communications division of Ontario Northland Transportation Commission (ONTC), which, among other things, used to run a heavily subsidized passenger train service until the Liberals shut it down. It currently provides bus service, rail freight and refurbishment and land development.

Queen’s Park chases used car buyers who were undercharged taxes

Source: Richard J. Brennan, Toronto Star, September 30, 2015

The Ontario government is chasing motorists who purchased used vehicles in the spring and didn’t pay enough tax — ranging from $100 to $500 for most — through no fault of their own. The government says because of a computer error by CarProof, some 6,500 motorists who purchased used vehicles between May 1 and 27 were charged less retail sales tax than actually owed, totalling $2.4 million. CarProof is a private company that provides a history on used vehicles and assigns values to them. … In the legislature, New Democrat MPP Catherine Fife blamed the government’s “appetite for privatization” for the “costly computer error” and said it’s unfair to leave car purchasers “on the hook.” Sousa’s office stated that as soon as ServiceOntario became aware of this error in late May it notified the finance ministry and “our government immediately took the necessary steps to resolve the situation,” adding the finance ministry, along with government services and transportation, has put in a review process to ensure the error is not repeated. Sousa’s office explained the glitch was caused by formatting issues “which caused the system to generate the incorrect value for the sold used cars when the file was uploaded into government systems.” …

CUPE raises concerns about privatizing hospital services

Source: Jacques Poitras, CBS News Canada, September 18, 2015

The Canadian Union of Public Employees released a scathing report on Friday listing problems that have come up in facilities where three leading food and cleaning companies have operated. The so-called “Big Three” companies are Sodex of France, Aramark of the United States and Compass Group of the United Kingdom. Norma Robinson, the president of CUPE Local 1252, predicts poorer quality food and “deaths from hospital-based infections” if any of the companies is chosen. … The department hopes to wrap up negotiations with the company that would providing the privatized services in the fall, he said. … Health Minister Victor Boudreau said in April the province had already picked a company and was negotiating a contract. He didn’t identify the company. Boudreau said at the time it would lead to “significant savings” in the health budget and that there would be “an impact” on the number of food and cleaning service jobs. It’s part of the Gallant Liberals’ overall push to reduce spending to grapple with a projected $470.6-million deficit, a figure that includes a $150-million contingency cushion.

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Privatization in Health Care: Pay More, Get Less
Source: Canadian Union of Public Employees, Local 1252, September 18, 2015

The New Brunswick Council of Hospital Unions – CUPE Local 1252 which represents hospital workers, released a report today that portrays a poor picture of the situation that prevailed in hospitals and other institutions where food and cleaning services have been privatized. … “Our research into the three companies being considered to take over those services, Sodexo, Aramark and Compass, shows a very troubling picture of the quality of the services provided. All over the world, all three competitors have shown very poor track records when it comes to cleaning and food preparation. The latest being in Ontario’s Niagara Health Region where the Hospital Board ended that relationship with Aramark after a major outbreak of C. difficile that caused the death of 37 patients.”

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Corporate profile: U.S.-based CH2M Hill a potential water P3 bidder

Source: Canadian Union of Public Employees, July 23, 2015

A new profile of American engineering and construction corporation CH2M Hill highlights a potential bidder in Canadian water and wastewater privatization deals. The profile is one of several published jointly by CUPE and the Polaris Institute. The Public risks, private profits series shines a spotlight on water and wastewater services corporations who may bid on Canadian P3s. The profiles provide overviews of corporate structures and governance, lobby activity, past and present P3 contracts, and background on legal troubles or controversies. The companies being profiled are diverse, ranging from international corporations to smaller Canadian-based financers and contractors. All have been identified by federal P3 promotion agency PPP Canada as likely bidders on Canadian water and wastewater P3s. The Public risks, private profits series is an important tool for communities challenging P3s. Pressure to privatize is mounting, with federal crown corporation PPP Canada targeting municipal water and wastewater systems, and the Conservative government’s Building Canada Fund forcing all infrastructure projects worth $100 million or more to be screened for P3 suitability.

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