What is wrong with privatization?

Water is a public trust; it belongs to everyone. But water privatization is sneaking through the back door in the form of public-private partnerships. What does it mean? What can you do?

What are Public Private Partnerships (P3s)?

Under P3 arrangements the private sector plays a key role in financing, designing, building, operating or even owning facilities or infrastructure that are otherwise designed to be public services. While the forms of P3s vary, they can allow private corporations to plan, finance, build, and operate public facilities – usually at a much higher price than if a municipal government were to retain control.

What is wrong with P3s?

When private companies take over a public project, the focus shifts away from the public interest and meeting community needs, to ensuring a profit for the companies’ shareholders.

Quality goes down. Companies cut costs by paying workers less, not offering them benefits or permanent jobs, and reducing health and safety measures. High staff turnover means the quality of services goes down and risks to the community increase.
Higher costs. There are many examples of how P3s cost the public more since interest on loans to the private sector is higher than when the public sector borrows. Many P3s cost tens of millions of dollars before contracts are even signed, and deals are costly and difficult to get out of. Money that should have gone to community water treatment ends up in the hands of lawyers, consultants, and for-profit companies.
Secrecy. The interest of commercial confidentiality overrides policies to protect the public’s right to know about how their money is being spent. Commercial confidentiality means information on contracts and negotiations is often unavailable to the public.
Loss of accountability. Public control and accountability are both compromised because public standards are seen as obstacles to successful business ventures. Even municipal councillors have been kept in the dark about basic information regarding the financing and operation of community water facilities.

Why are governments interested?

Many governments see P3s as a way to invest in infrastructure, without the full expense of the project appearing all at once. These deals allow governments to make announcements about new facilities, without showing the costs for several years.