Privatising water

Written By: - Date published: 8:30 am, November 11th, 2009 - 20 comments
Categories: auckland supercity, privatisation - Tags: , ,

Although the topic has had a turbulent and confused couple of weeks, it seems that National want to privatise Auckland’s water supply.

Govt contradicts itself on water privatisation
Press Release: Green Party 29 October 2009

Statements from the Government on the issue of water privatisation are confusing and contradictory and give no assurance to the public that private interests won’t soon be profiting from the provision of water, the Green Party said today. Green Party Co-leader and Russel Norman questioned Bill English in the House on the glaring contradiction between his assurance in May that ‘water assets will not be privatised’ as a result of local government restructuring, and Rodney Hide’s announcement yesterday that water infrastructure will be opened up to private ownership.

‘Rodney Hide’s announcement yesterday will allow private sector interests to build, own, and operate water infrastructure for 35 years at a time. That’s longer than the rest of Rodney’s lifetime. If that’s not privatisation, what is?’ Dr Norman said. …

‘This change is similar to reforms that preceded massive water privatisation under the Thatcher government in the United Kingdom 20 years ago. Those reforms are widely acknowledged to have been an abject failure. ‘They resulted in homes having water cut off, people being poisoned by the water supply, and water companies being prosecuted hundreds of times for polluting the water supply.

Contradictory water privatisation decisions
Press Release: New Zealand Labour Party 9 November 2009

John Key must explain whether the Cabinet stands by its decision to allow the new Auckland Council to privatise the city’s water assets, says Labour’s Auckland Issues spokesperson Phil Twyford. ‘On October19 Cabinet agreed to allow Auckland City Council to privatise its water assets and then a week later refused to support a law change enabling this to occur nationwide. ‘Not only does the Prime Minister need to clear up this confusion, but he needs to explain why his Cabinet decided to set Watercare up for privatisation in the face of opposition from key agencies such as the Ministry of Health, and opinion polls that show 85 per cent of Aucklanders oppose privatisation,’ says Phil Twyford.

Brian Rudman applauds the voting down of Hide’s more extreme privatisation proposals, but seems to miss the significance of the extension of the time limit on council water contracts from the present maximum of 15 years to 35 years. Phil Twyford reckons that privatised for 35 years is pretty well privatised, and I have to agree. This all appears to be part of a more general move towards privatising local assets: “The National-ACT Government has decided to repeal the requirement on councils to consult the public before they privatise assets or contract out services, says Labour’s Auckland Issues spokesperson Phil Twyford”. These issues have been picked up by both TVNZ and TV3 (or as ever see No Right Turn).

Water is a fundamental requirement of life and a basic human right. It should not be used to make a profit, and thus inevitably restricted to those who can least afford it (anyone remember this?). In Latin America the people are very much aware of the dangers of the privatisation agenda, there have been protests and actions on a scale described as a “water war“. My guess is that we New Zealanders are just going to shrug and go quietly. Didn’t Key look great on Letterman!

20 comments on “Privatising water”

  1. tsmithfield 1

    “Water is a fundamental requirement of life and a basic human right. It should not be used to make a profit,”

    The same argument could be made for food. Should our food industry be nationalised then?

    • Roger Anderson 1.1

      There is competition in the food industry. Water supply on the other hand is a natural monopoly. The privatisation of water would likely lead to higher prices, antiquated systems, and poor response to consumers. We only have to look as far as telecom for an example of this.

      • Nick 1.1.1

        So why did the Royal Commission into Akld recommend light regulation of Water and a removal of the current monopoly system?

        • Clarke 1.1.1.1

          Because they took an ideological view. Remember, the Royal Commission was set up to assess governance structures, not debate the merits of the putative “efficiencies” of public vs private water supply.

          • Nick 1.1.1.1.1

            You mean they took an ideological view that didn’t agree with yours. That ideological view was espoused by the excellent and highly respected David Shand.

            • Clarke 1.1.1.1.1.1

              Irrespective of David Shand’s excellent credentials, the fact is that the terms of reference (PDF) for the Royal Commission do not include the subject of privatisation. The relevant portion:

              What ownership, governance, and institutional arrangements and funding responsibilities are required to ensure the effective, efficient, and sustainable provision of public infrastructure services

              Note the use of the words “public infrastructure” in that sentence. It seems a very long bow to draw that Shand and the Commissioners would somehow be able to consider full privatisation as aligned with the goals of public infrastructure services. In fact, it would probably require that you put ideology ahead of a literal reading of the ToR – which was my original point.

        • Draco T Bastard 1.1.1.2

          Because they’re stupid.

        • Roger Anderson 1.1.1.3

          Because they failed to understand the following reality about natural monopolies and water:

          A natural monopoly is a monopoly that exists because the cost of producing the product (i.e., a good or a service) is lower due to economies of scale if there is just a single producer than if there are several competing producers. The most commonly cited examples of natural monopolies are utilities such as railroads, pipelines, electric power transmission systems and water supply systems. Such industries are characterized by very large costs for their infrastructure (i.e., which are fixed costs), and it is thus often inefficient (i.e., detrimental to the economy as a whole) to have more than a single firm in a region because of the high cost of duplicating the facilities (e.g., parallel pipelines or parallel sets of electric wires to every home and business).

    • prism 1.2

      Food is of various types and there are numerous substitutes for those types, water is singular, essential and therefore capable of having the price ratcheted up for a commodity that could be sold in adulterated, deteriorated form. As for nationalisation of food, there has to be collective interest in its production and distribution.
      I remember a photo of starving, stick-like people in an African country. They had a drought, which was made worse by a contract to supply grain I think, to the British Army. The contract was fulfilled, but at the cost of many people’s suffering and death. NZ likes to export food too, and would be likely to put the poorest on short rations in a similar case.

    • So Bored 1.3

      Hi TS, more “objectivism” I see, now lets maximise my own enjoyment of life in a rational way, investing in anything tradable…..even if this may dehydrate somebody else causing much unhappiness.

      You may not be (in fact probably are not) aware that the silliness of privatising water was tried in La Paz quite recently, the unhappy dehydrated types took to the streets intent on minimising the privatisers happiness.

      Poor old Ayn and her objectivist acolytes never quite got the cause and effect cycle, karma, yin / yang or that type of thing. My rule is simpler, if it pisses somebody off expect fireworks.

  2. @tsmithfield: if some of the food security debates are shown to be correct, that may indeed be a possibility. Short-term profit motives may well not meet long-term food security requirements. It is prescient of you to propose the notion.

  3. randal 3

    well the thing is National and its loony right want to privatise everything.
    their mindset is that every human being on the planet is fair prey for anyone else who has the power to lean on them.
    now they have the power they intend to do just that so they can enjoy the accumulated profits that will accrue to them and then they can waste it buying houses in the south of france.
    time to call a spade a spade.
    it might be POLICY but it has an objective and that is to screw as many people into some form of subjection and depency as possible.

  4. Clarke 4

    “Today, the signature of modern capitalism neither benign competition, nor class struggle, nor an inclusive middle-class utopia. Instead, predation has become the dominant feature – a system wherein the rich have come to feast on the decaying systems built for the middle class.

    “The predatory class is not the whole of the wealthy; it may be opposed by many others of similar wealth. But it is the defining feature, the leading force. And its agents are in full control of the government under which we live.”

    – J.K. Galbraith

    • So Bored 4.1

      JK was onto it, funny thing is that he mirrors Adam Smith, who in the Wealth of Nations (much quoted by free marketeers) made the point strongly that if you put two competing capitalists in a room they would conspire and collude to raise prices in the market unless regulated….JKs addition is that they have corrupted the regulaters.

    • prism 4.2

      Strong stuff. What year and what prompted Galbraith to say that?

      • Clarke 4.2.1

        Galbraith was writing in 2006 about the Bush administration, and the quote comes from an op-ed article in Mother Jones. I highly recommend the entire article, as it seems very relevant to the John Key government:

        For in a predatory regime, nothing is done for public reasons. Indeed, the men in charge do not recognize that “public purposes’ exist. They have friends, and enemies, and as for the rest—we’re the prey.

        There’s no benefit that will come out of privatising water – it is transparent and cynical predation at its worst.

        • So Bored 4.2.1.1

          Thanks for the link, must say the late JK Galbraith will be as much missed for his dry and witty language as much as for his wisdom, he is always a pleasure to read. Not sure but think he coined the phrase “conventional wisdom”.

          • Clarke 4.2.1.1.1

            The quote is actually from the son, rather than the father – made more confusing by that wonderful American predilection for naming the child after the parent, as if names were nothing more than some cross-generational branding exercise!

  5. So Bored 5

    A brand of economists…maybe a dynasty!

  6. prism 6

    Some son, some father!

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