Maria McMillan: Send Hide's water bill down plughole

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Maria McMillan predicts rising costs and a decline in service under privatisation.

Many countries and cities are bringing privately run water operations back into public control. Photo / Paul Estcourt
Many countries and cities are bringing privately run water operations back into public control. Photo / Paul Estcourt

By the end of this year, New Zealand's water could be privatised.

Legislation, due for its first reading when Parliament resumes in February, would allow councils to contract out water and wastewater to private companies for 35 years. Worse, it would allow private companies to own and control water supply.

The legislation is part of a package of reforms to local government authored by Rodney Hide, supposedly to get councils to focus on core services and to increase local government efficiency and accountability.

But Hide is throwing, well, the bathwater out with the bathwater. There is nothing more basic than water and wastewater services.

They are necessary for life, a natural monopoly, and fundamental to the social and physical well-being of the community. It makes no sense, economically or ethically, to allow private companies to control water.

Globally the privatisation of water has led to massive increases in the amount households are charged for the water they need to drink, cook and wash with. Residents lose input into decision-making about water as well as information about water supply.

Not only have many councils and governments had to deal with a community of people struggling to pay their water bills but they also faced budget overruns, sloppy service, erosion of environmental standards, public health crises and corruption.

National and Act are playing down the significance of the proposed legislation by denying it amounts to privatisation. The transfer of control and ownership of water from public to private hands is clearly privatisation.

And, in global discussions, privatisation is used to describe precisely the sort of long-term contracts or public-private partnerships (PPPs) these laws would allow.

Typically in water partnerships the public sector maintains long-term ownership of and responsibility for infrastructure and contracts out aspects of management and supply.

Private companies can carve off for themselves the profitable parts of water supply like major building projects and supplying and billing residents. Meanwhile their public partners bear the costs of expensive long-term maintenance and monitoring systems.

Public-private partnerships in water supply, more politically palatable than the outright selling of infrastructure, have allowed the emergence of what some claim to be the most profitable industry in the world. Dominated by just a handful of corporations, the two largest players in the private water industry, Veolia and Suez, between them rake in US$118 billion ($159 billion) annually.

After extensive research into the use of such partnerships a research unit attached to Greenwich University has found no evidence that the private sector is more efficient than the public sector in delivering water. Meanwhile, a 2007 analysis of 1000 US water utilities by independent watchdog Food and Water Watch, found private companies delivered poorer service and charged water users between 13 and 50 per cent more than their public equivalents.

And in the 17 years after privatisation of Britain's water in 1989, the average water bill increased by 245 per cent, a rise of 39 per cent above the rate of inflation.

Adelaide residents experienced the fallout of water privatisation as the "big pong". In 1997, 15 months after the state government contracted out management of water supply and wastewater to United Water, the city was engulfed by a stench causing residents to complain of nausea, mood swings, sinus problems and asthma.

An independent investigation found the problem to be inadequate monitoring and failure of equipment under the company's watch.

If the New Zealand legislation is passed, many of our cash-strapped councils might consider contracting out water for the full 35 years - an easy and attractive option. But companies that win such long-term contracts will have an unhealthy advantage.

They will be the sole provider of an essential service and will not face competition for the duration of the contract. Overseas many local and central governments have been locked into unsatisfactory contracts and have had to accept demands from companies for more money and reduced service or risk major interruptions to water supply.

Terminating contracts has meant paying off companies. And the switch from public to private delivery means residents have lost the ability to vote out those in control if they are unhappy with quality or cost.

The global water industry will be delighted by the proposals to introduce the sort of legislation here that has served others so poorly. Many countries embittered by the experience of mixing profit and water are purging water sectors of private companies.

An online initiative, the Water Remunicipalisation Tracker, notes dozens of instances where countries and cities are bringing privately run water systems back into public control. Access to New Zealand's water sector would be a shot in the arm to an industry finding it difficult to maintain illusions of efficiency and effectiveness.

If properly understood the proposed legislation will send shivers down the back of all but the most zealous ideologues. Privatisation will increase poverty and decrease accountability.

It will hurt New Zealanders as it has hurt people in other countries. Further it will breach the long-standing and widely held view that water is a common good, a human right and that it belongs in public hands.

Water should be controlled by our communities for our communities. The proposed bill should not pass its first reading.

* Maria McMillan is a member of Right to Water, a community group working against user-pays in and privatisation of residential water supply in New Zealand.

- NZ Herald

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