Chapter 3

Canada: Local insourcing in theface of a national privatisationpush
By Robert Ramsay

The vast majority of public services and infrastructure in Canada are
publicly owned and operated. This is a situation that advocates of the
public sector, including the Canadian Union of Public Employees (CUPE),
are committed to defend. Municipal and provincial governments, driven
by an austerity ideology and the false narrative of risk transfer, continue
to propose privatisation in various forms and across a variety of sectors,
primarily by tying infrastructure funding to private investment.
For example, on 10 September 2019 the province of Ontario’s Conservative
government announced 32 infrastructure projects worth $65 billion CAD
that it will implement through public-private partnerships (PPPs).1 In
this, Ontario is following the lead of the federal Liberal government,
whose Canada Infrastructure Bank, created in 2017, proposes to deliver
infrastructure projects by leveraging public tax dollars for expensive
private financing.2
In addition, we face new forms of privatisation, such as social impact
bonds as detailed below. These models may appear attractive, because
they seem to link private sector financing to socially desirable outcomes.
However, this type of privatisation actually diminishes the effectivenessof social programmes by diverting any savings or surplus into profit forthe private investor, rather than into programme improvements.3 Thesemodels also raise the moral problem of seeking profit from the services
that help the most vulnerable people in our society.

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Increasingly, rigorous studies of PPPs in Canada demonstrate that they
are inferior to projects run by the public sector.4 In 2014, the Ontario
Auditor General reviewed 74 PPP projects and concluded that they cost
taxpayers $8 billion CAD more than if the province had used public
procurement.5 The same report also called into question the premise ofrisk transfer, finding that estimates of its value were highly inflated.
Similarly in 2014, the British Columbia Auditor General reviewed 16 PPP
projects and determined that the province paid approximately twice asmuch for private sector financing as it would have had it borrowed themoney itself.6 An update to the Auditor General’s report conducted by
the Columbia Institute in Vancouver found that between 2003 and 2017
British Columbia paid $3.7 billion CAD more for 17 PPP projects than it
would have if they had used more traditional public procurement.7 Similar
studies in other provinces and at the federal level further support theconclusion that privatisation does not work for Canadians.

CANADA OF CASES 51
TOTAL NUMBER

Remunicipalisation 34
Municipalisation 17

Transport

Waste

Telecommunications

2

7

3

Health care &social services

Water

Education8

2

14
Local government

15

Housing 1
Food and catering 1
Parking 3
Sports and cultural activities 2
Financing and maintenance 6
Other 2Highlights• Since 2017, there have been more than 20 new cases of (re)municipalisationin water, waste, transport, telecommunications and health care sectors.
• The 15 remunicipalisations in local government include housing, parking,security, police station construction and recreation services.
• Interesting remunicipalisation cases include solid waste (Winnipeg,
Manitoba) and waste water (Taber, Alberta and Owen Sound, Ontario).
• Reclaiming public services leads to more economically efficient and better
quality services.

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Canada: Local insourcing in face of national privatisation push

We are happy to report more than 20 new cases of remunicipalisation in
Canada, in addition to the 15 cases from the previous edition of this book.
These cases span sectors, including water, transit, waste, broadband andhealth care. While the examples are diverse, the reasons for bringing
these services back in house remain consistent: the public sector delivers
public services with greater economic efficiency and at a higher quality
than the private sector.

Case l: Winnipeg, Manitoba
Winnipeg solid waste: a political victory for public services
In 2006, the city of Winnipeg privatised its solid waste collection.
Prior to this, it was a municipal utility organised by CUPE. The
privatisation of the service resulted in sub-standard performanceat virtually every level, and over time the municipal labour union
was able to advance a strong political campaign for in-house waste
collection.
After privatisation, the primary solid waste contractors engaged
in a system of subcontracting, sometimes at the level of individual
trucks. This scheme is a way for employers to push employment
and social security costs and risks onto the workers and keep themin a precarious state, so that they can easily be let go by the company.
Not surprisingly, poor working conditions were the norm. The
workers were often precarious labourers hired day-to-day whowere paid in cash and not protected by any occupational health andsafety oversight. In addition, poor service performance was often
reported, including damage to bins and property, garbage pileupsand missed collections.
CUPE Local 500 (representing Winnipeg municipal workers) had

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Canada: Local insourcing in face of national privatisation push

been politically active on this file since 2005. The union’s goal had
been to bring the full service back in house, and they had sustained
consistent outreach to ideologically friendly councillors.
In 2016, the local union invited the chair of Winnipeg City Council’s
Water and Wastewater Management Committee to Ottawa tomeet with staff and the municipal union of that city, which had
successfully contracted in solid waste a few years before with thesupport of the city’s staff and council. The city staff in Ottawa had
demonstrated that in-house service could perform competitively
or better than an outsourced service, both in terms of quality andcost, and the Winnipeg local wanted to apply this lesson to the
problem in Winnipeg.
At the same time, Local 500 took advantage of widespread negative
news coverage of the contractors, such as a 2016 documentary that
exposed how Indigenous youth working as day labourers for thecontractor Emterra were being exploited and underpaid.8 The local
union also commissioned a study from the Canadian Centre for
Policy Alternatives, titled “Trashed,” that documented the poor
working conditions and sub-standard service provided by theprivate contractors.9
The media coverage proved an embarrassment for the city. As aresult, and the union’s diligent outreach efforts, Winnipeg City
Council decided to bring a part of the city’s municipal waste
services back in house as a pilot project beginning in 2020. While
this initial project only involves hiring a small number of city
employees, if the model proves successful there is potential tobring 200 or more waste collection jobs back in house.
This is a significant political victory for CUPE and for Local 500,
having worked tirelessly on this issue for many years, changing

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public opinion and bringing city politicians onside.
The Winnipeg case also raises an important issue – the public sector is the right choice to deliver public services not only
because it is financially competitive, but also because it provides
better and safer jobs.

Case ll: Owen Sound, Ontario
Owen Sound municipal wastewater: the municipality does it better
Veolia Water Canada operated Owen Sound’s wastewater treatment
plant through a series of short-term operating contracts startingin 2004. Prior to 2004, the system had been operated by theprovincial crown agency Ontario Clean Water Agency. In 2012,
when the Veolia contract was coming to an end, the city faced
operational and organisational changes that spurred the municipal
council to re-examine the city’s relationship with Veolia.
A report to city council outlined a plan for the city to take greater
responsibility for the operations of the wastewater treatment
plant, and remodel wastewater operations in general, with a view
towards reducing current operational costs, increasing control
over future operational costs, and improving service coverage andmonitoring.10
In light of this report, in 2012 Owen Sound City Council voted toassume direct operation of the city’s wastewater treatment plant,
hiring two treatment plant operators previously employed by
Veolia Water Canada, and hiring a third wastewater treatment
and collection operator. Under a new five-year, reduced-scope
contract, Veolia Water Canada was responsible for disposing of
biosolids, and would monitor and report on sewer system bypasses
in compliance with Ministry of Environment requirements, as well59

Canada: Local insourcing in face of national privatisation push

as inspecting and rating the condition of the city’s sanitary sewer
infrastructure.
As expected, bringing the bulk of the service back in house has
resulted in greater control. Contract costs dropped from $900,000
CAD per year to $300,000 because of Veolia’s reduced role. A reportto city council estimated net savings of $40,000 CAD in 2013, after
the city assumed control of the plant. The report also noted thatwastewater service was expected to improve, with the additional
operator helping perform needed duties in wastewater collection.
Due to the success of the initial partial remunicipalisation, council
voted on 30 March 2016 not to renew the limited five-year Veolia
contract at expiry in 2017. The city’s 2017 budget included a line
item looking at “alternatives to Veolia system” for sewage bypass
monitoring.11

Case lll: Taber, Alberta
Taber water: privatisation does not pay
In 2007, the Town of Taber signed a 20-year contract with forprofit corporation EPCOR to finance and execute upgrades to thetown’s wastewater and storm water infrastructure, as well as
operate and maintain the town’s water and wastewater systems.
At the time, CUPE was a vocal opponent of the privatisation andcampaigned against it. CUPE Local 2038 represents workers in
the municipality and it went on to represent the EPCOR workers,
negotiating a separate collective agreement for them.
In November 2015, EPCOR tabled a proposal to change the termsof its contract, increasing its fees by 68 per cent. Subsequentdiscussions between the town and EPCOR led to an ultimatum,
reported in the media as follows: “[EPCOR] presented the town

60Canada: Local insourcing in face of national privatisation pushwith two options, using the dispute resolution process set out inthe agreement to arbitrate the fee increase issue, or negotiate an
end to the agreement.12 ”
EPCOR’s position prompted the town to initiate a study of the water
and wastewater operations, which, according to media reports,13
confirmed that the town could provide the same or better level ofservice as EPCOR, at approximately the same cost.
On 15 August 2016, the town council voted to accept a proposal
from EPCOR to negotiate a termination of the contract.14 Later thatyear, the town voted to refinance a $5.5 million CAD loan held by
EPCOR. The funds were part of the original contract and were used
to pay for upgrades to the town’s wastewater treatment plant andstorm water system. As background for a bylaw authorising theborrowing, town staff reported that refinancing the loan would
reduce the interest rate from 6.5 per cent to 2.275 per cent, saving
approximately $1.4 million CAD in interest over the 10-year loan
period and completing the upgrades at a lower cost.
Ten EPCOR staff transferred over to become Town of Taber staff,
representing a 10 per cent increase in the town’s workforce. The
workers are now back under the main CUPE 2038 certificate andcollective agreement. The town and CUPE reached a new collective
agreement in October 2018.
By taking this important public service back in house, the town
has avoided the extra costs that would have been passed on to residents through rate hikes. According to media reports, there wereno payouts or penalties associated with cancelling the contract.15
Furthermore, the town’s 2018-20 budget maintained current fee
rates.

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New fights
Canada Infrastructure Bank
Recent estimates of Canada’s national infrastructure deficit range from$50 billion CAD at the low end to over $500 billion at the high end.16
This underfunding reflects decades of austerity from multiple levels ofgovernment, and the resulting deterioration of Canada’s infrastructure
stock has refocused the attention of governments on this increasingly
urgent problem.
In 2015, the new Liberal government put infrastructure funding at thecentre of its agenda, by making significant commitments of federal
dollars and by changing funding ratios and requirements. At the sametime, the Liberals promised to create a public infrastructure bank thatwould provide financing to provinces, territories and municipalities
at low borrowing rates. Canadians from across the political spectrum
applauded this historic commitment.
Rather than follow through on the commitment to low-cost financing,however, the Liberal government’s Canada Infrastructure Bank (CIB),
once created, made privatisation and private sector financing a centralprinciple of its operations. The CIB’s stated mandate was to finance large,
revenue-generating infrastructure projects by attracting up to four dollars
of private investment for every dollar invested by the government. CIB
projects would be, therefore, PPPs facilitated by the federal governmentand backed by federal money.
Early analyses of this structure suggested that private financing would
double the cost of projects, compared to public financing.17 Still, large
financial firms and pension plans on the hunt for productive domestic
investment opportunities were quick to praise this model.

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Critical studies of PPPs, including by the federal and numerous provincial
auditors general, suggest that they are regularly plagued by increased
project costs, high user fees and a lack of transparency. The CIB makes
this bad model worse by allowing the private sector to submit unsolicited
proposals to the Bank, thereby allowing important decisions about
infrastructure investment to be guided by the profit imperative of theprivate sector, rather than by a real assessment of need and the public
good.
The CIB’s first announced project was the Réseau express métropolitain
light rail network currently under construction in Montréal, Québec. This
PPP rail line is owned by a subsidiary of the Caisse de dépôt et placement duQuébec, the second largest pension fund in Canada. This project is a primeexample of the lack of transparency surrounding CIB investments, and it
has been rightly criticised by civil society groups for its anticipated impact
on the environment, fares, current ridership levels, and future costs for
operation and maintenance. Despite this criticism, the CIB has recently
touted other PPP transportation infrastructure, such as the for-profit toll
highway 407 north of Toronto, as good models for future investment.
As of September 2019, the CIB had announced only a handful of otherprojects, mostly in the transit, water and electricity sectors.18 However,there is significant potential for the CIB to fundamentally alter the waythat critical infrastructure is financed and operated in Canada.
Social impact bonds
Social impact bonds are a new form of privatisation gaining ground in
Canada. They primarily affect areas such as social services, education andhealth care. This model allows investors to profit from public services.
Investors provide up-front financing for public programmes like healthpromotion and disease prevention, childcare or ending homelessness. If
certain outcomes are achieved, the government pays back investors forthe initial programme cost, plus a profit.

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Canada: Local insourcing in face of national privatisation pushSocial impact bonds use private lending to provide a social and public
good, while also generating a profit for investors. The problem with thistype of financing is that it runs the risk of prioritising investor returns
over service delivery.
Social impact bonds are gaining traction in Canada. The governments ofManitoba, Saskatchewan and Ontario, as well as the federal government,
are exploring this new model. The federal government’s 2018 Falleconomic update announced $755 million CAD over 10 years in seedfunding for “social financing” to charities, non-profit groups and otherorganisations serving a social purpose.19 An additional $50 million over
two years will be used to increase access to and knowledge of social
finance by social purpose organisations.
CUPE is concerned that the federal government’s plans to encourage
private lending to social and community groups will open the door to
privatisation of vital services. It is important that workers, service users
and service providers work together to stop this new form of profiteering,and push for well-funded, strong public services.20

Conclusion
Public sector unions are on the front line of the fight against privatisation.
CUPE and our counterparts have worked hard for many years to highlightthe harm that privatisation does to the public sector, to public services
and to the people who depend on those services. At its 2017 national
convention, the Canadian Labour Congress passed a resolution calling for
an investigation and report on new forms of privatisation, an example ofthe continued importance that this issue holds for the labour movementin Canada. We will continue to work to reverse the privatisation of public
services, in all its forms.

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At the same time, CUPE and our counterparts in the labour movement
want to articulate a pro-public vision for the future, and not merely
criticise the disproven narratives of past privatisation and austerity
agendas. Therefore, it is important for us to advance principles that will
ensure fully funded and robust public services such as fair taxation and the
expansion of public revenues, direct government funding of infrastructure,municipal financing authorities, public-public partnerships,21 and theclosure of state-sponsored PPP agencies. Democratic, public control ofthe public purse is essential to this vision. Our public services do not exist
for the enrichment of the private sector, but for the enrichment of ourlives.
ABOUT THE AUTHOR

Robert Ramsay is Senior Research Officer at
CUPE, the Canadian Union of Public Employees.
Robert holds a degree in Human Geography
from the University of Toronto, and a degree in
Communications, Culture, and Technology from
Georgetown University. Before being appointed
Senior Research Officer, Robert worked as a
Professional Officer at the Canadian Association of
University Teachers. He has held various roles in the
Photo: Denny Alexander

labour movement for over 15 years.

Endnotes
1

Ministry of Infrastructure (2019) “Market Update 2019,” Government of Ontario, 10 September. https://news.ontario.ca/moi/en/2019/09/government-launches-2019-ontario-p3-market-update.html (retrieved 10 September 2019).

2

See Canada Infrastructure Bank website (www.cib-bic.ca). Also see Infrastructure Canada
overview (30 May 2019). https://www.infrastructure.gc.ca/CIB-BIC/index-eng.html#about (retrieved 11 January 2020).

3

NUPGE (2016) ‘60% of Social Impact Bond funds spent on overhead and profits’, 9 March.
https://nupge.ca/content/60-social-impact-bond-funds-spent-overhead-and-profits (retrieved 10
Septmeber 2019).

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4

CUPE (2015) ‘What provincial auditors have said about P3s’, Fact Sheet, 15 June. https://cupe.
ca/fact-sheet-what-provincial-auditors-have-said-about-p3s (retrieved 23 September 2019)5

Morrow, A. (2014) ‘Government-managed projects could save Ontario money: Auditor General’, The Globe & Mail, 9 December. The relevant chapter of the Auditor General’s report isavailable on the website (www.auditor.on.ca), 9 December 2014. http://www.auditor.on.ca/en/
content/annualreports/arreports/en14/305en14.pdf (retrieved 23 September 2019).

6

Reynolds, K. (2014) ‘New BC Auditor General report finds public private partnerships double
the cost of borrowing’, Policy Note, 30 October. https://www.policynote.ca/new-bc-auditor-general-report-finds-public-private-partnerships-double-the-cost-of-borrowing/ (retrieved 19 July2019).

7

Reynolds, K. (2018) ‘Public-Private Partnerships in British Columbia, Update 2018’, Columbia
Institute. https://columbiainstitute.eco/research/public-private-partnerships-in-bc-update-2018/(retrieved 4 February 2020).

8

APTN (2015) ‘Hurting for Work’, APTN Investigates, news documentary, 30 October. Film canbe viewed at: https://aptnnews.ca/2015/10/30/hurting-for-work/ (retrieved 17 September 2019).

9

Smirl, E. (2018) ‘Trashed: How outsourcing solid waste collection kicks workers to the curb’,
CCPA Manitoba, 6 February.

10

See Owen Sound council documents,3 December 2012. https://owensound.civicweb.net/filepro/documents/31598?preview=32952 (retrieved 24 September 2019).

11

See Owen Sound council documents, 30 March 2017. https://owensound.civicweb.net/filepro/
documents/search?exact=recommendation%202121.2&page=1&preview=76234 (retrieved 24 September 2019).

12

Busch, T. (2016) “Town parting ways with EPCOR,” The Taber Times, 7 September.

13

For example, Smith, G. (2017) “Taber, EPCOR end operating agreement for water systems,”
Lethbridge News Now, February 1.

14

Busch, T. (2016) ‘Town parting ways with EPCOR’, The Taber Times, 7 September.

15

Komadina, S. (2017) ‘Town of Taber takes over water and sewage services from EPCOR’, Global
News, 2 February.

16

A number of organisations monitor this data. CanInfra tracks the estimates at: https://www.
caninfra.ca/insights-6 (retrieved 2 February 2020).

17

Sanger, T. (2017) ‘Creating a Canadian infrastructure bank in the public interest’, CanadianCentre for Policy Alternatives (CCPA), 20 March.

18

For a list of Canada Infrastructure Bank current projects, see https://cib-bic.ca/en/projects/.

19

Government of Canada (2018) “Investing in Middle Class Jobs: Fall Economic Statement
2018,” 21 November. https://www.budget.gc.ca/fes-eea/2018/docs/statement-enonce/chap02-en.
html#s1 (retrieved 24 September 2019). The Social Finance Fund is introduced in Chapter 2 ofthat publication.

20

See, for example, the exhaustive work that the National Union of Public and General
Employees (NUPGE) has done on social impact bonds: https://nupge.ca/issues/social-impact-bonds.

21

For example, see Chapter 11 of this book, ‘Knowledge creation and sharing throughpublic-public partnership in the water sector’.

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