Time to take action against water privatisation

Not content with the damage it has done to Auckland, the National-ACT Government is now turning its sights on local government across the board by opening council water up to privatisation. If you want to fight this, read on.

The Local Government Act 2002 Amendment Bill allows private ownership of water infrastructure for up to 35 years.  Much of the initial public debate focused on whether this amounted to privatisation, with the Government arguing that because it wasn’t the permanent disposal of a publicly owned asset then somehow that is not privatisation.

But hey, how long would the contract need to be for it to qualify as privatisation: 50 years? 100?

The changes are designed to encourage public private partnerships (PPPs): long term contracting arrangements in which corporations will often build, own, and operate a waste water plant for example and then sell it back to the Council at the end of the contract.

Labour is against privatisation of water supply. It is a natural monopoly. It makes no economic sense to hand it over to the private sector. What’s more, New Zealanders believe water is a human right and its supply should not be driven by the profit motive.

The Government is 20 years behind the curve with this particular economic fad. Water privatisation via PPPs was all the rage internationally in the 1990s but the tide has turned with a wave of cities around the world bringing water back under public control because of dissatisfaction with over-pricing and under-investment. The latest is Paris where city government was elected last year on a platform of terminating contracts with Veolia and Suez and bringing its water supply back into public hands. Ironic given that the French virtually invented the water PPPs, and its two partially-state owned water companies dominate the international market.

Veolia is the parent company of United Water who already have seven contracts to deliver water services in NZ. Fifteen years ago they picked up the contract to run South Australia’s water supply. Three months into the contract Adelaide was engulfed in “the big pong”, an overpowering sewage smell that took three months to fix. An independent inquiry blamed it on equipment failure and lack of monitoring caused by cost cutting.

The Government argues  PPPs will bring private sector capital that will allow cash-strapped smaller councils to invest in much needed water infrastructure.  But they fail to explain that corporations don’t bring their own money to these deals. Ultimately all the costs of this infrastructure have to be paid through rates (or taxes) or user charges. What’s more the corporation has to make a profit. And the cost of capital for private borrowers is almost always more than the Government pays.

If you want to fight this folly, then join the National Day of Action Against Privatisation, this Saturday: details on facebook, and web. There will be a rally outside a town hall near you.

If you are in Auckland come along to this public meeting Wednesday night this week hosted by Labour and the Greens.  You can download this guide to help you make a submission to the select committee. Deadline June 18.

The Bill has other obnoxious features. It repeals the requirement to consult the community before public services are contracted out or corporatised, reduces the obligations on Councils to consult the community more generally, and imposes an arbitrary list of core services that surprise surprise doesn’t include community well-being (pensioner housing for example), economic development, or protection of the environment.

Update: Good article in Vanity Fair on how Big Water is taking over the world. Hat tip: John Whyte