For Immediate Release
November 7, 2008
Market Crisis a Warning on Perils of
Public Private Partnerships
One of the wake-up calls from the current Wall Street crisis is a warning to Victoria about finding a sound financial solution to the sewage treatment issue says John Luton, a candidate for Victoria City Council and the Capital Regional District Board.
Luton says that Associated Press in Washington is reporting that 3P deals in municipal transportation systems have been insured by companies like AIG that are facing insolvency.
“Transit services in many U.S. cities are cutting services because their private sector partners are demanding accelerated repayments to buffer them against the financial crisis hitting fundholders”, says Luton.
Washington, DC’s metro system is being asked for $43 million this month and other transit operators are in similar straits. The arrangements show that P3 partnerships expose public services to unnecessary risks and unexpected costs that taxpayers shouldn’t have to bear.
“We are about to take on the biggest infrastructure project in the history of the Capital Region with sewage treatment and we need a transparent, accountable arrangement that doesn’t expose us to the risks associated with the volatility of world financial markets,” said Luton. We can’t afford to start building systems and have them shut down mid-stream because some hedge fund in Dallas, New York or Hartford is going bust.”
We can operate our own sewage treatment in keep it in public hands, says Luton, who also says the region should be working on small scale, resource recovery systems to minimize impacts on neighbourhoods and recover revenue from heat and power generation.
“I've often wondered how these private corporations could bankroll multi-billion dollar projects more efficiently than cities - and now we know, they can't”, said Luton. “These companies start playing financial roulette with deals that may be all about hedge funds and margin calls to them, but it's our public services that are on the line. It's not a gamble we should be taking.”
Luton points out that we have safe, cost effective and responsible financing options through BC’s municipal finance authority. Managed well, it is the collective value and experience of municipal governments from across the province and has been a valuable tool in helping municipalities fund the capital projects their citizens need.
“Going the P3 route is like flushing our money down the toilet and the market crisis is pulling the wraps off the swindle”, said Luton.
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