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Tax-favoured competition from the City of Edmonton


Edmonton Waste Management Centre of Excellence.

Edmonton Waste Management Centre of Excellence.

There’s an old saying that governments should “steer and not row.”

This saying comes to mind as I contemplate the City of Edmonton, Alberta and a company called Waste RE-Solutions — whose company website describes itself as a “a private Canadian corporation owned by the City of Edmonton.”

Say what? A private company? Owned by taxpayers? Hmm.

Waste RE-Solutions is a business that, from its website, seems to primarily be a consulting firm in the waste and waste diversion area. A close look suggests it’s a marketing vehicle for a technology that Edmonton has helped incubate, that being the so-called Enerkem waste-to-fuel or waste-to-chemical business.

Enerkem is one of a short list of “partners/technology providers” listed on the website. The others include Greys (a paper recycler), Vecoplan (industrial shredders), GEEP (electronics recycling) and the Edmonton Waste Management Centre of Excellence. All of these add bench strength, no doubt, to the Waste RE-Solutions consultancy, but it’s really Enerkem that’s the crown jewel — an attractive “high tech” business whose plants Edmonton could potentially sell to other cities around the world.

Now don’t get me wrong. I think public-private partnerships can work sometimes, and I’m not the most intolerant person of the idea that a city should sometimes help a new local venture, giving it tax breaks, for instance, or providing some cheap land, or sending waste to its bench-scale facility for processing on a test basis (with more later if things work out). It’s fine with me if governments have some role in helping incubate new solutions to waste and other things, that can then be marketed elsewhere.

But it bothers me when they cross a certain line and go whole hog into business, using tax dollars to compete with other private sector firms.

How must it feel to be, say, a consultant at Golder Associates, or any of the other private waste and consulting engineering firms, finding out that a city-owned outfit has launched a company to compete with you for the provision of services in every aspect of waste management? The Waste RE-Solutions lists no less than 15 areas of primary expertise, including everything from “planning and feasibility studies” to “integrated systems optimization,” “data management” and “technology assessments and procurement.”

Edmonton, of all cities, should be cautious about large investments in waste-to-energy plants and markets that may or may not materialize. It’s just a hop-skip-and-a-jump up the mountains to the notorious Swan Hills waste treatment plant, which cost taxpayers hundreds of millions of dollars in one of the biggest boondoggles in Alberta history. That plant was built to destroy hazardous wastes that never showed up (at least, not in volumes big enough to make the plant profitable.)

So now we turn to the current situation in Edmonton, where Waste RE-Solutions is poised to receive millions in new money for marketing. And without any detail about how that money will be spent.

Edmonton City Council is currently deliberating on a proposed budget which will have the average Edmonton home owner paying $110 more in taxes, with a $3.35 increase each month in waste management costs. City officials say it’s because of population growth, but that’s a hard pill to swallow for taxpayers when the same document includes $3.9 million in new money towards the marketing of Waste RE-Solutions.

This line item large raises quite a few questions that should be answered before the December 12 budget deadline. Councillors should explain why taxpayers should be on the hook for the city subsidizing the marketing efforts of a private company along with three private sector partners, that’s not only competing with the rest of the private sector but should, at this point, be self-sufficient.

I guess that’s how it goes when you’re in the public sector, but operate what you call a “private Canadian corporation.” It’s all just money, right? Who cares that it comes from taxpayers and not private capital venture firms? Who needs their discipline? (Maybe these guys need to watch a few episodes of Dragons Den, methinks.)

When Waste RE-Solutions was created, the goal was to sell Edmonton’s expertise in waste management to municipalities around the world with a budget of $1.1-million in money from taxpayers.

Roy Neehall, the company’s general manager, said in the Metro newspaper recently that he believes the continued funding would allow the company to sign deals with customers and start paying back the city’s investment. But… isn’t that what the initial $1.1 million was for?  Does it really make sense to continue to publicly fund a company so they can begin to pay back the public funds they have already spent?

Maybe it does, but the public really has no way of knowing the details since the budget document includes very little detail as to what this money will specifically be used for, nor have we been provided a detailed explanation as to where the initial $1.1 million went.

All we have at the moment is a brief description and a total amount.

Members of the public were invited recently to present their views on the budget; unfortunately this wasn’t on anyone’s radar, which is understandable given it hasn’t been highlighted by anyone in government.

Now that councillors are deliberating, it’s time they started asking (and answering) questions about what has been spent and why they believe it’s necessary to spend almost $4 million new dollars.

Councillor Mike Nickel is one person who’s concerned.

“Edmonton is experienced with managed competition and balancing waste collection between the public and private sector,” Nickel says. “The public sector competition elevates the performance of the private sector and keeps prices down, and the private competition forces the public sector to be more competitive.”

“Edmonton has also received millions of dollars each year from its investment in local waterworks,” he continues, “but that’s more of a ‘natural monopoly.’

“Waste technology and markets is a more risky proposition for which I’d like to see the business plan. This is perhaps something best turned over to the private sector.”

Readers interested in more background can read the Metro coverage here:

http://metronews.ca/news/edmonton/1215157/city-of-edmonton-plan-to-sell-waste-expertise-needs-more-cash/

The story about the seed money for Waste Re Solutions is here:

http://www.theglobeandmail.com/news/national/edmonton-looks-for-cash-in-its-trash/article7073602/

And the story about city budgets is here:

http://globalnews.ca/news/1688402/budget-talk-city-hall-hosting-public-meeting/