Outsourcing Government Responsibility

Rob Ford and his cadre of conservative councilors (C³) recently held a press conference announcing that they will be privatizing garbage collection in half of the city, from west of Yonge street to Etobicoke.  Obviously, there are a few problems with this.  The first problem is something that Rob Ford has done already in his short time in office, premature proclamation. 


Announcing something before it has even been voted on, as if it's some sort of Mayoral decree sent down upon the masses from on high, does not mean it's happening.  As Councillor Josh Matlow put it on twitter: "Whether supported or not, announcements before voting are never a good thing." It’s just a plan right now from some members of council.  As we saw immediately following the announcement, there are also members of council who oppose the idea. 

         

         Once you get past the folly of announcing something before its guaranteed there is the problem of all of the arguments against the privatization of garbage collection.  Generally, the argument in favour of the plan seems to be, as Rob Granatstein puts it in the Sun, it might not lower the costs to the city, it won’t lower your taxes, and it won’t prevent strikes, but, the garbage collectors were jerks during the last garbage strike and because  the Ontario Waste Management Association (who, according to their website speaks for nearly 300 independent companies in the private sector) private companies could do it for a lower cost.

The article cites Glenn de Baeremaeker’s comparison to the privatization of the 407 “and tolls going up and up” as the “top of (the) scrapheap” as far as arguments go, but, doesn’t bother mentioning why it’s invalid, instead it says he “should be able to mount a strong argument against privatization of some of the city’s garbage collection, if he feels so strongly about it.”  Yes, he should be able to mount other arguments against it, because there are many, but, that doesn’t invalidate the comparison to the 407.  

The article then mentions that Adam Vaughan makes a good point asking, “what happens when it comes time to renew the contract and the city doesn’t have a fleet of garbage trucks? Will the private haulers then try to jack up the price?” The response is “if the city keeps public pickup for half the city — and it will for the foreseeable future, thanks to the jobs-for-life clause many of the workers have — we should be fine for another decade.”  

So then the issue becomes what do we do after the “jobs for life” fat cats retire to their private islands?  Then will we be over a barrel at the mercy of whatever company owns all the garbage trucks in town? Hopefully, we’ll have hired a benevolent company that only wants the best for Toronto and it won’t be a problem, but, more likely, we will have hired a company that now controls the market on a vital service and sees huge dollar signs.  Once committed, these contracts are hard to get out of and governments generally don’t have much say in prices.  Exhibit A is New Orleans,  who is being sued by a garbage collection company for switching companies because the city could not afford the rates agreed to under a previous Mayor.  Exhibit B is right here in Ontario with the aforementioned Highway 407 where the provincial government would like to be able to curb interest rates and toll charges but, “We, as a government, have no control over that, as a result of the (Mike) Harris government's deal,” said former Transportation Minister Jim Bradley in 2009. 

         

          There are other reasons not to privatize. According to CUPE economist Toby Sanger in the Progressive Economics Forum blog:

The facts are that Toronto’s costs of waste collection per tonne are actually lower and often substantially lower than every regional municipality that contracts out its waste collection.   For example Toronto’s costs in 2009 were $72.22 per tonne.  Costs for Mississauga and Brampton as part of the Peel regional municipality were $106.79 per tonne.  Vaughan’s costs were $168.40 per tonne.   The other regional municipalities also had higher costs: Durham at $85.74 per tonne and Halton at  $86.79 per tonne.

These numbers come directly from the Ministry of Municipal Affairs and they give lie to the idea that our public garbage collection is costing us millions of dollars a year as claimed by privatization supporters. Other numbers have been floated, claiming that Toronto’s costs are higher than our municipal neighbours, such as the C.D. Howe Institute’s study (LINK) that everyone seems to be quoting.  There are obviously biases on both sides here, one side is written by the union who will lose jobs and the other side is funded by the industry trade organization that stands to profit from privatization.  However, the CUPE numbers come from a government source and the Howe numbers are based on tailored projections and once again, the study was commissioned by the OWMA.  The worst that can be said for the CUPE numbers is that they were cherry-picked although, it doesn’t look like they are (the municipalities cited are the ones surrounding Toronto.)

Another place to look for what might happen if we privatize is the city of Ottawa who has gone the other way, switching from a private company to a public union for collection.   A recent report shows that “it saved close to $5 million, over four years, by using unionized employees to collect garbage in its downtown core” and has “also attracted fewer complaints from residents than the company that previously covered the area.”

        This is obviously not as cut and dry an issue as it has been made out to be and like the Granatstein article says “the risk is mitigated” because if implemented, Ford’s plan will have to move slowly due to the union contract.  The much derided "jobs for life" stipulation has turned out to be quite serendipitous as according to the Toronto Star  Ford’s team said the job-security contract clauses are the only thing preventing them from contracting out pick-up city-wide.   This could provide an interesting case study on private vs public services, however, the danger is that we get to a point where we don’t have the infrastructure to continue public collection.  If the city doesn’t invest in new trucks etc… eventually the only ones with the trucks will be the private company.  That could be a painful lesson to learn about using public anger to shape government policy.