Publications & Resources

Legislative Action: Open letter on proposed Ontario water conservation charge

Dear friends of water,

On April 3, the Ontario Liberal government announced a new charge on companies taking water from the Great Lakes Basin. The announcement was made in conjunction with the proposed Safeguarding and Securing Ontario’s Water Act (SSOWA).

The fee is dubbed a ‘cost recovery regulatory charge’ aimed at having commercial and industrial water users contribute to the cost of water management in Ontario.

In reality, the Ontario government’s recent ‘Charges Proposal’ explicitly states that the ‘charges’ are “not a tax” (pg. 1) but rather “cost based pricing to encourage water conservation” (p.16)

Please consider the following 9 points and share your own concerns with government officials at the address below.

1. Pricing privatizes water:

We strongly recommend that ‘charges’ in the context of water use regulation be explicitly defined as a public tax.

Companies which use and profit from water should pay taxes on the profits which they gain from the use of a public resource like water. This should include, from the beginning, hydro, nuclear, pulp and paper, petroleum, chemical, iron and steel, and other sectors as well as bottlers and companies that run municipal water systems. Industries which were exempted in earlier permit to take water (PTTW) regulation should now be required to report water takings[1].

Putting a price tag on water contributes to the commodification of water which is meant to be a part of the ‘commons.’ It is incompatible with historic principles of water as a public trust, an ecological commons, a human right, and a sacred source of life.

2. Conflicts of interest in watershed planning:

The public tax should be directed only to support fully public entities. It should not support an amalgam of public and private entities such as is proposed for the makeup of the water Source Protection Committees (SPCs).

SPCs are proposed within Ontario’s upcoming Clean Water Act as watershed-based committees tasked with evaluating and managing watersheds. They are one of the intended recipients of this proposed charge.

While the ‘Charges Proposal’ refers to the SPCs as 'the community', in fact not all members are actually part of the community. According to the government of Ontario’s new draft regulation on SPCs, at least one third of the committee is composed of industrial and commercial profiteers who may, and usually do, reside elsewhere. Hence, there is an inherent conflict of interest between their private business interests and sustainable watershed management. Instead, corporations profiting from water use should submit audited reports of their water-takings (including final destinations of all withdrawals) to SPCs, but should not hold seats on watershed planning committees.[2]

3.Ineffective charge:

The “conservation charge” rate proposed, $3.71 per million litres of water, is not high enough to reduce the growth in operations of highly consumptive industries. As such, it does not achieve the stated goals of the proposal itself.

For example, $3.71/million litres of water amounts to less than 0.000004 cents on each litre of bottled water produced in Ontario. Given that consumers pay from $0.50 – 3 for a 1 litre bottle of water, the imposition of 1/2500th of a cent on each bottle will do nothing to regulate the water takings of the bottled water industry, let alone deter its expansion. The bottled water industry not only transports water out of local and regional watersheds and the Great Lakes Basin, but has other negative environmental impacts. The production of plastic bottles pollutes the environment. Sixty-five percent of plastic bottles in Ontario are burnt (giving off greenhouse gas emissions) or end up in landfills where their chemical components leach down into groundwater. Also, the transportation of bottled water and other water based ‘products’, results in carbon emissions.

Bottled water consumption also leads to negative social and economic impacts. Residents are persuaded to buy bottled water, thousands of times more expensive than municipal tap water and falsely marketed as healthier and safer. This process undermines our public water systems.

Despite the government’s recognition of the increasing demand for water in Ontario, the proposed charge will not meaningfully contribute to its stated goal of “conservation, protection and sustainable use of water for the environmental, social and economic benefits of the people of Ontario” (pg. 4).

4.Charge avoidance:

The water conservation charge proposal allows for rate reductions. Companies or industries which plea economic hardship, are eligible for lower rates. Another justification for rate reduction is the implementation of water conservation and efficiency measures.

What’s missing from the government’s proposal, in our view, are ‘liability charges’ to users who diminish the quality and quantity of water[3].

5. Classification by consumption:

The government plans to release the rate for medium and low consumptive users after the first phase of implementation. Given the stated rationale that prices are intended to reduce consumptive use, it is likely that lower consumptive users will be charged even less than the proposed $3.71/ million litres.

The classification of some industries as mid or low consumptive users is questionable. Hydroelectric dams across the province remove major volumes of water from local watersheds. Yet the current proposal suggests that these mega-projects, which drain and divert entire lake and river systems, have minimal environmental impact.

A tax on corporate profits that increases along the entire spectrum of environmentally-destructive water projects would be more effective in reducing excessive exploitation of water.

6. Management of water use data:

According to the Conservation Charge proposal, by 2008 all permit holders will be required to monitor (or estimate) and report their water takings[4].

Reports and estimates from industry are often unreliable, and as such should never be used as a measure for managing a critical public resource like water. Governments who hand compliance monitoring over to industry are abdicating their responsibility to uphold the public trust in water.

What we require is adequate public funding for collecting valid, reliable and comprehensive data on ground and surface water quality and quantity[5]. This collection must be performed by public staff to ensure accountability.

7. Reporting deals:

The current ‘Charges Proposal’ suggests that commercial and industrial users of municipal water should report the volume of their water takings.

Currently Coca-Cola Enterprises, the Pepsi Bottling Group and other bottling companies take water directly from municipal water systems and sell it for high profit margins. The volumes of their takings are not available, yet the information is necessary to assess the environmental impact of these companies.

Companies to date have not released detailed information on water takings, and cities like Brampton, where bottled water plants are located, have refused to provide this information to the public. This data could be required through a clarification of PTTW Reg. 387, and be available to the public through the Environmental Bill of Rights Registry.

By no means, however, should the transparency of this information, which is a public right, be conditioned upon public acceptance of the pricing regime outlined in this current ‘Charges Proposal’.

8. Downloading to municipal taxpayers:

There is concern within municipalities that the province is backing out of long-term funding of water management and leaving it up to new regional bodies.

Without sufficient ongoing public funds, the water Source Protection Committees (SPCs) will be dependent on funding from the same corporations whose water diversions they are tasked to limit through water charges. Companies will invariably download their charges to consumers. SPCs and regional boards will also find it necessary to pay for water management by increasing residential rates and taxes. In all cases, it is the residents of Ontario who bear the financial and environmental burden.

A tax on all industrial and commercial profits from use of water should go directly to authorized public bodies to do basic hydrogeological research and municipal public water delivery (who are burdened with the high costs of updating water systems and renewing ageing infrastructure).

9. Water infrastructure privatization:

The proposal states that it does not seek to impose a significant financial burden on companies, meaning that it was never truly intended as a deterrent to water use. Which begs the question, “What were these charges introduced for, then?”

The charges were specifically designed to pay for staff and related data management tasks. The ‘Source Protection’ staff, ironically, would thus benefit from greater water transfers and diversions under the Charges Proposal, as their budgets would grow with increasing revenues from charges.

‘Cost recovery’ in this framework is part of a larger privatization model for water. The concept allows private corporations to profit from public resources and tax-payer subsidized watershed infrastructure (paid primarily through residents’ municipal, and provincial and federal taxes).

‘Cost recovery’ is a user pay system presented as a means for municipalities to cover the costs of providing water to residents and managing watersheds. Hence, if municipal residents want water, they have to pay sufficiently high rates to cover all costs incurred by SPCs and other bodies.

Many major global, private water service corporations like Veolia and Suez are vigorously pushing P-3s through their subsidiaries in North America, including a number of Ontario cities and municipalities. Consolidated regional management, harmonized for easy global control, established with a pricing regime that ensures profits, are financially attractive prizes that corporate lobbyists work to establish. With its ‘Charges Proposal,’ the Ontario government is setting the stage for the privatization of water management and services in this Province.

Share your concerns:

Given the concerns noted above, and the alternatives, we conclude that the Water Conservation Charges proposal is a major step down the wrong road.

We suggest instead that the government implement a tax on the profits, of corporations who use water, and only within the context of a fully public water management and delivery system.

Please consider sharing your concerns with government officials right away!

May 3, the deadline for comment on the SSOWA, which is the first Act to name water ‘charges’;

May 12 is the deadline for comments related to the privatization of seats on the Source Protection Committees;

June 1 is the deadline for comments on the Charges Proposal.

By splitting up the various elements of water privatization, the provincial government makes it difficult for the public to assess and respond appropriately.

The sooner we express our views, the better.

Comments can be submitted to:

Chris Lompart, Manager/A
Ontario Ministry of the Environment
Land and Water Policy Branch
135 St. Clair Avenue West, 6th Floor
Toronto, ON M4V 1P5
Fax: 416-326-0461
Email: chris.lompart@ontario.ca

Please be sure to include your name and address, and cite EBR# 010-0162.

Thank you for your efforts.

Sincerely,

Leigh Thomson
Verda Cook
Polaris Institute

[1] Through an amendment to Reg. 387.
[2] The Ontario government additionally released its first set of draft regulations on the SPCs on April 12th. In those draft regulations, the government not only recommends the quasi-private model for these committees, but also allows industrial and commercial private interests on those committees to develop their own conflict of interest rules. The province has abdicated responsibility for governance. Rather, conflict of interest rules should be established by democratically elected public bodies.
[3] Through transfers and diversions of water from local and regional watersheds and the Basin, harm to aquifers, reduction of surface water levels, and diminishment of the quality and quantity of water for residents' use.
[4] Through the monitoring and reporting requirements in the existing Reg. 387
[5] Data should include public hydrogeological field work across local sub-watersheds (including public monitoring of all industrial and commercial takings, compliance auditing, and assessment by fully public bodies).