A water market is essentially a private market in which individuals and companies can buy and sell access rights to water resources. They are promoted as a way to encourage conservation and efficiently allocate water between user types – primarily from agriculture to industry, and within agriculture, from low to high-valued crops. However, economists and social scientists caution that they are subject to market failures, including predatory pricing, externalities and under-valuing water’s environmental services. As a consequence, these markets tend to exacerbate social inequity and have negative economic impacts on rural communities. For example, in his 2009 study, researcher Jordi Honey-Rosés found that in California’s Central Valley – where tradable water rights have existed since the 1970s – there are 8 jobs and $170 000 net income lost for each 1000 acre feet of water traded out of agriculture (see: Honey-Rosés, J. 2009. Reviewing the arguments for market based approaches to water distribution: A critical assessment for sustainable water management in Spain. Sustainable Development. 17(6):357-364).

These consequences were not lost on BC residents and response to the Water Act proposal was swift. Almost overnight, the Province’s Living Water Smart Blog  was flooded (no pun intended) with submissions calling for the removal of any form of water privatization.

The province now claims that it is not intending to “privatize” BC’s water, only allow individuals and companies to buy and sell access rights:

“Water is owned by the Crown on behalf of all British Columbians…. This will not change and water will not be privatized under the proposed Water Sustainability Act, which is aimed at ensuring a sustainable future for BC’s water.”

And here we are again, traveling the same fine line walked in debates over public-private partnerships – the debate between ownership and operation. In that debate, we understand that, for all intents and purposes, multi-decade operation contracts are tantamount to privatization. In the case of water markets, we do not have long-term contracts; we have the sale of access rights to private entities. These private entities are then free to sell their rights without government intervention. This effectively removes governance of the use of water from the public sector and thus privatizes the resource.

 British Columbians are not being fooled by this smoke and mirrors trick and opposition to the introduction of water markets threatens to submerge the entire Water Modernization Act process.

 We will have to wait and see whether water markets will find their way into this province. In the meantime there is much to be excited about in the draft Water Sustainability Act, including proposals to protect environmental services and in-stream flows and increased monitoring of groundwater resources. Yet, if this process is truly to create robust and strong water policy for British Columbians, any discussion of privatization should be dropped.

The February Budget documents stated that:

To ensure that health services are protected in the current economic environment, the Ministry of Health Services and health authorities will be required to achieve efficiencies and administrative savings beginning in 2009/10.

For the health authorities these administrative savings came to $25 million annually.  Post-secondary institutions were expected to find $11 million in administrative savings.  School boards were told to cut the administrative fat by $12 million.

Contrast that to the government’s privatization agency, Partnerships BC, which published their administrative expenses in their Service Plan in the September update to the Budget.  It turns out that after an 9% jump in administrative costs in 2008/09, they are still planning for an increase of another 2.8% in 2009/10.  Next year they plan to bump admin costs another 6.5% and the year after that in 2011/12 they plan administrative costs to rise by 2.3% 

That is an increase of administrative costs of 22.3% in four years.

It appears the administration of privatizing government services is much more difficult than the administration of healing the sick and educating our children. 

Or perhaps Partnerships BC is just baffled at how to deal with these ballooning admin costs so let me offer a humble suggestion.  Perhaps they could randomly pick any elementary school principal in the province to advise them.  After all, people who actually deliver services to the public are used to being told to find fat to cut year after year even when they are down to the bone.

A couple of weeks ago I wrote that Brian Day and his followers had launched a lawsuit against the province, alleging that, “in contravention of the value of individual choice,” the Medicare Protection Act restricts or prohibits patients from “accessing the private health care of their choice”. Day & Co. brazenly admit in their Statement of Claim that “Independent surgical facilities receive facility fees for the use of their facilities for the pupose of operations and other procedures”. The fees, according to the Statement, come from all and sundry — health authorities, the workers’ compensation system, other third party payers and patients.

And here I thought that Diane Marleau, a federal health minister from the long ago 1990s said plainly that facility fees “are objectionable because they impede access to medically necessary services” and therefore “violate the [Canada Health] Act“. Silly me.

Now, I’m sure many of you read about the lawsuit in the Vancouver Sun, the Globe and Mail and other media outlets. But I’m equally sure that, for reasons I cannot fathom, you didn’t read about the Government’s response, filed on February 20, in any of these same investigative outlets. I wonder if that’s because, as a Vancouver Sun editorial put it in 2007, when it comes to whether or not a facility might violate the Canada Health Act, “what matters in all of this is no longer the law”, but whether anyone in government cares. “It’s time to focus on what is really important here,” the editorial continued. “Two tier health care is here to stay.”

But I digress.

In its Statement, the government dismisses most of the points raised by Day & Co., and asserts that “there is no freestanding constitutional right to health care”. Heaven forbid. But the most interesting thing about the Statement is not the government’s defence of medicare, but rather the Counterclaims against the five Plaintiff Clinics and the Specialist Referral Centre (collectively dubbed the “Extra Billing Clinics”). The SRC expedites access to specialists (for a fee, of course). Here, in handy point form, are the key allegations in the Counterclaim:

1. That Cambie Surgery (Day’s outfit) and the SRC have refused to provide information or allow audit inspectors on the premises so that the Medical Services Commission can determine whether these two companies have violated the Medicare Protection Act. The goverment has asked for an injunction “restraining Cambie and SRC from hindering, molesting or interfering” with inspectors who are trying to carry out the audit.

2. That Cambie and the SRC charged patients for services listed on invoices as “surgery”, “overnight”, “administration fee surgery”, “facility fee”, “consultation/assessment”, “surgeon’s fee”, “anaesthetic fee”, “escort services” (escort services?), and “prepayment for surgery”. These services are either fully covered under MSP or, if charges are allowed, the charges exeeded the amount permitted. The government has asked for interim and permanent injunctions restraining Cambie and the SRC from violating medicare laws.

3. That the Extra Billing Clinics, jointly and individually, “have themselves been engaged in unlawful billing practices…and also have aided, abetted, assisted, and facilitated the unlawful billing practices of others who practised in the Exra Billing Clinics or who arranged payment through or with the participation of those facilities”.

4. The government also alleges that patients were required to sign “Acknowledgement Forms” which falsely informed patients that the services for which they were being charged were not covered under the Medical Services Plan and committed patients to forego reimbursement from MSP or any other public agency. The waivers also forced patients to agree not to file any complaint with any government body regarding the circumstances of the benefits provided by the Extra Billing Clinics. Patients also undertook” not to disclose any information to any government regarding the particulars of the beneficiary’s surgery”, including costs. If the patient does disclose, the waiver “purports to require the beneficiaries to indemnify the Extra Billing Clihic for damages and costs arising from [the] disclosure”.

Wow, if all of this is true — and if, contrary to the editorial assertion in the Sun, the law does indeed matter, these folks have really got themselves in deep doo-doo.

One side of the debate says they’re swell. They save money for taxpayers, they come in on budget and they transfer risk from governments to companies. But other people say details are kept secret from the public and that in fact they cost taxpayers lot more.

Today the Canadian Union of Public Employees released a report that looks at these questions and offers some credible conclusions. (Full disclosure here – I work for CUPE in my day job) .

CUPE engaged two prominent forensic accountants – Ron Parks and Rosanne Terhart of Blair Mackay Mynett Valuations Inc. – to examine financial information on P3s. Both have more than 20 years experience in accounting, auditing and forensic accounting investigations. Parks is perhaps the best known accountant in the province.

The information they worked with came from two years of work through Freedom of Information legislation. Even with that, it was only possible to get information on four projects: the Canada Line, the Sea-to-Sky Highway, the Diamond Centre at Vancouver General Hospital and the Abbotsford Hospital.

Parks and Terhart came to some tough conclusions:

• “The cost of P3′s exceeds traditional procurement methodology for the projects referred to”
• “The methodology used by Partnerships BC to compare the P3 projects to the public sector comparator is biased in favour of the P3 projects.”
• Critical information was denied under FOI requests. “In our view this suggests a general lack of transparency and public accountability.”

These findings have huge implications, especially because P3s tie the public to 35 year contracts. And they are especially timely in light of recent news reports that P3 financiers for projects like the Port Mann Bridge are in big trouble.

But like a diamond, or more appropriately in this case, a cubic zirconium, there are many facets. The government makes many claims about P3′s. These claims are questionable and I will discuss some in later posts.

In 2006 the Canadian Council for Public Private Partnerships gave BC’s Golden Ears Bridge project its Gold Award for Project Financing. Part of the reason for the prize was that privately financed borrowing for the project achieved a triple-A credit rating. That meant lower borrowing costs for the project. The triple-A rating was achieved because private companies that insure bonds had guaranteed the borrowed money would be repaid. This was the first such guarantee for a P3 in Canada.

But a full year ago the Globe and Mail reported those bond insurers were in big trouble. It turns they were guaranteeing residential mortgage deals in the US as well as P3’s. We all know how well that worked out.

Rating agencies downgraded the bond insurers. Their stock prices collapsed. The cost of borrowing went up for private financiers. By autumn P3 financiers were having trouble raising money in the marketplace. Things just got worse from there. So much for the Gold Award for financing.