By Paul Weinberg
TORONTO, Mar 28 2002 (IPS)

Canada has so far resisted privatising public services on the scale of countries such as Great Britain, but there are signs that profit-makers are hungrily eyeing the huge rewards to be made, say union and NGO observers.

“The public sector is the last frontier,” says John Anderson, a communications officer for the Toronto based Centre for Social Justice. The government of the province of Ontario, for instance, recently announced it is selling Hydro One, the body that manages the province’s electricity transmission network.

Ironically, even the pension fund for retired Ontario employees has set up a subsidiary whose sole purpose is to invest in municipal government services that are either privatised or managed by a private operator, known as a public-private partnership or P3.

Technically, the City of Hamilton, an hour drive southwest of Toronto along the highway to the United States, still owns its water and sewage systems. But since 1994, three different private operators in succession have managed them.

The firms include Azurix North America, a division of Azurix Corp, fined about $133,333 last summer by Ontario for releasing inadequately treated sewage into creeks that flow into Lake Ontario.

Azurix North America, whose parent is a division of U.S. based energy trading giant, Enron Corp., was then sold to American Water Works Co., which now runs Hamilton’s water and sewage systems.

The Canadian Union of Public Employees (CUPE) says P3s short-change citizens. In most municipalities, residents can go to city hall and directly pressure their elected politicians to improve the quality of their drinking water or other services, says Ron Crawley, a senior researcher at CUPE’s Ottawa office.

But if the water department is turned into a separate arms length agency managed by a private operator and an appointed board of directors, direct accountability is severed.

CUPE, which represents municipal workers across Canada, is battling to gain more control over the $24-billion Ontario Municipal Employees Retirement System (OMERS) pension fund, which is making decisions contrary to the interests of union members, says Sid Ryan, head of the union’s Ontario division.

The fund’s subsidiary, Borealis Funds Management Ltd., looks for possible P3 business opportunities in roads, highways, schools, transit, water, waste disposal and power utilities.

Although two CUPE members sit on the OMERS governing board, critics say effective power lies with OMERS chief executive officer Dale Richmond, who is often described as the brainchild behind Borealis. The company has now been spun off into a separate venture capital vehicle, with OMERS and the Canada Pension Plan each owning about 26 per cent.

Ryan calls Richmond “an autocrat” who ignores CUPE concerns that P3s both displace union members and undermine public services. “In the last two years, I’ve been engaged in an pitched battle with the OMERS board to try and get control of our pension plan,” says Ryan.

It doesn’t help that ultimate authority for public sector pensions in Ontario lies with the provincial government, which happens to endorse P3 style investments, he adds.

OMERS leaders “are very powerful players who would never accept that a board of trustees direct them”, says Isla Carmichael, a senior research officer at the Ontario Public Service Employees Union, who has studied workers who try to gain more say over their pension plans.

Day to day, the inexperienced OMERS trustees generally defer to the policy direction set by the full time financial managers under Richmond, says Carmichael.

Richmond declined to be interviewed for this article.

Borealis has partnered with the City of Toronto in Enwave District Energy Ltd. (formerly municipally-owned Toronto District Heating Corp.) which sells heating services to downtown Toronto office buildings.

Toronto city councillor David Miller praises the arrangement. “It is run through a public entity, but they managed to find a way to get [Borealis’] money flowing into it,” he says. “You have public accountability, some protection for the employees. Privatisation is sometimes an effort to pay people less.”

But Kevin Skerrett, another national senior research officer at CUPE, disagrees. Enwave is still a private company ôsqueezing a rate of return as high as 10 to 15 per cent” from a public asset, he says.

OMERS board members should be thinking of the people whose money they are investing, instead of focusing solely on returns, says Don MacLeod, president of the 15,000-member Municipal Retirees Organisation of Ontario. The board, supported by the Ontario government, recently declined to use OMERS earnings to substantially improve retiree benefits.

With women on average receiving between four thousand and four thousand six hundred Canadian dollars a year and men getting about 10 thousand dollars yearly in pension benefits, some municipal retirees “could be” regularly turning to food banks to feed themselves, says MacLeod.

Once named to the OMERS board, representatives “forget they are going to grow old and be retirees themselves, he adds.

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