One only has to look at the Bechtel attempt to extort massive profits from Bolivia after the wold bank decreed that water there had to be privatized, to view the greed of multinationals.

The suffering and deprivations following Bechtels attempt to screw the local population and actually cut them off from a life source brought out a massive uprising and rebellion after price hikes from 60% to 90% to satisfy corporate greed (http://www.corpwatch.org/article.php?id=6670 )

The only question I would now ask is - "would Australians have the same courage, the same intestitudinal fortuitude to take the same actions Bolivians did?"

I doubt it as most of them are more concerned in keeping within their own little comfort zone and sucking up to the big yankee corporations, than keeping Australia free

I think the issues raised are here can apply to any natural resource, how much of it is there? and what level of usage is sustainable in the long term?

The question is then whether a sustainable level of usage can be best delivered by a private or public organisation. If a public utility could be insulated from political and short term issues, amd the correct goals and measurement of success in acheiving those goals implemented, then I think a public utility should in theory be able to do the job.

Privatisation may also deliver the result, but a private or multinational organisation will never have the long term interests of the community or the environment as it's primary driver, it will always have to be closely regulated to do this.

Privatisation of any publicly owned utility should be seen only as governments providing space at the trough for people interested only in profit. Then there is the question: has a government any right to sell off publicly owned organizations without the permission of the electorate.

In South Australia, certain aspects of the government department, SA Water, have been contracted out to United Water. Control is still in the hands of the state government, and SA Water and Sewerage Accounts legitimately bear the following: “Owned by the South Australian Government for the people of South Australia.” It would be a stupid government that took outsourcing any further, or privatised the water supply, after the electricity sell off by the previous Olsen Liberal government whose ‘promise’ not to sell ETSA immediately before their last term in office was broken as soon as the election was over.

We now have a private company having to make a profit for its Chinese owners, and several ‘retailers’ who are adding to the cost. Under government control, the Electricity Trust of South Australia did the lot. How could the addition of more people looking to make money from the one-generation source be cheaper than the old way?

No way, of course. We now have the highest electricity prices in the country, unwillingness of a foreign company to invest in badly need infrastructure, and more outages.

Why would privatisation of water be any different?

As for regulation – phooey! The first ‘watchdog’ for the power industry is now working for the privatised supplier, arguing against government complaints about the poor service his company provides.

Privatisation is all about greed and shortsighted governments. It is also about the ideological myth that the private sector is more efficient than the public sector in the provision of utilities. It is certainly NOT about consumers.

I hope Mr. Johnston doesn’t get past ‘candidate’ status in the 2007 elections.

Governments should be redeeming utilities they have already experimentally and stupidly sold, not getting rid of more.

Selwyn Johnston

“As John Bastin of the European Bank of Reconstruction and Development has said, "Water is the last infrastructure frontier for private investors".
Australia’s taxpayers must now pay the price of our politicians’ folly and their eagerness to support International Treaties.”

We are already paying obscenely for the folly of politicians actions over the last 30 years. Your a fool if you think you can continue fooling us with the lies regarding privatisation. Every single asset of the people has been sold of to our detriment, hire charges, lower services, more tolls and costs, compulsory banking through stealth. You name it they tell us its good for us, then exactly the opposite happens.

This just part of the process so that 3 companies, run by the same people taking over the world. Then there will be no freedom just slavery all our lives to support people like you Selwyn.

I expect that when the people become aware of this and the consequences, Selwyn, you will be out of a job before you get the chance to get one.

An excellent and informative article.
It is amazing that no-one seems interested in investigating the real effects of privatisation policies.
They are always touted as beneficial, but the record looks very dark.
At leasr two banks and one building society have gone broke in the loosening of regulation that led up to privatisation.
Insurance companies have fallen like nine pins after demutualisation. Transport planning in our cities and between our cities has been rendered impossible through restrictive 'Commercial in Confidence' agreements. Our airports regard themselves as property developers in competition with the CBDs they are supposed to serve. Electricity suppliers consider it their job to maximise power use (understandably) rather than maximise efficiency. Farmers have been sucked into privatising their co-operatives time after time for short term profits which quickly lead to bankruptcy or the sort of thing going on at the A.W.B.
Any proposal to privatise water looks very bad in this context.
Where is our political choice? This is the Labor States co-operating with the Liberal Federal Government.
Perhaps this is an opportunity for the Nationals to flex their muscle.

Let us be absolutely clear about this: privatization only works if there is competition. Allowing a government service to become a private monopoly is the most destructive and offensive act a government can take against its citizenry. There can be absolutely no moral, ethical or even financial justification for it.

The UK rail system is a classic case. As reported in the Economist a couple of weeks ago, a standard open return fare between London and Manchester (a distance of 298 km, roughly Sydney to Canberra) now costs Stg 202. That's A$480. The reason is that Virgin Rail has the franchise exclusively - privatization without competition.

We are having a similar experience here in Sydney with Macquarie's stranglehold on the Airport. What could possibly compete with it? Another airport? Where? So we now have $13 for forty minutes parking, $4 for a baggage cart, and a $2 fine every time you take a cab.

I am totally in favour of the capitalist model. I have built my own company from scratch, employ people, pay my taxes.

But carving out a "business" from infrastructure and assets that have already been paid for through our taxes, and then holding us to ransom on prices to fill the pockets of some of [insert government minister's name here] mates, makes my blood boil.

It took me some time to work out the point and logic of this article. Correct me if I am wrong, but it seems to be something along the lines of:

1. Privatisation is coming, whether we like it or not;

2. Water quality must be regulated (so that none of us need to take any responsibility for our own welfare);

3. The government must do the regulating (because we all trust the government implicitly);

4. Because the industry must be regulated, we can’t have competition;

5. That only leaves a monopolist, who must be heavily regulated to make sure they don’t gouge consumers and poison us.

Why all the focus on government control and regulation - what’s wrong with opening the market to anyone who wishes to compete, and letting competition regulate quality and prices?

Scaremongering about water quality to support an argument for one or two heavily regulated monopolist suppliers is ridiculous. People are not entirely stupid, and they don’t drop like flies in countries where there is little regulation of water quality. In an open market with many suppliers, those who start supplying poor quality products don't last very long. Word spreads very quickly among customers, who then switch to another supplier, or at least won’t be prepared to pay as much. We should remember that consumers had no such choice in Sydney a few years ago, when virtually the entire city’s water supply became contaminated.

In economic terms, water is a scarce resource. Controlling scarce resources by central planning and decree is feudal. Allocating them through a free market is not only fairer and more efficient, but also mitigates against shortages, and requires minimal regulation - essentially only rules to prevent stealing and deception. Were such a competitive water market operating in Sydney, I’m quite sure we wouldn’t now be forced to wash our cars by hand, or see our gardens die off through lack of water.

Now lets analyze this further. How did this all start. Using macro and micro economic dynamics.

A long time ago, we people joined together to live together in villages that eventually grew to become cities. Air, water and food was free.

Now nothing is free except for air. We pay for water to be piped to our homes, though it is obtained freely.

The free natural resources that we, as a group called 'common people of Australia' own, and we pay a body called 'government' through our taxes to run the country for us and a corporate body called 'Crown' has won the rights to do this (actually it is a monopoly) to whom we pay for its services. We vote in a parliament from among us which makes laws that instructs the Crown how we would like our property called Australia managed.

Now our parliament wants to determine that our water is capable of being 'owned', and so can be sold, and so we loose our rights to put our hands into a river of fresh water to take a mouthful, because that is now stealing.

Keep dreaming those who think this is what us Australians want.

Sam

"Privatisation of water"
Scenario 1. Man walks out of house into his garage and finds his car on fire.He grabs the nearest hose and guess what! no water.Man shouts out to his wife"Honey did you pay the water bill"wife reply's "no honey I thought you did".Man calls out"ring the fire brigade"Fire brigade officer in reply to Mrs Jones"It appears madam you havn't paid your fire brigade levee"Mrs Jones "Im sure I have"Fire brigade officer"well when you bring your reciept up to us we'll see what we can do for you"
(Man buys new car)

Scenario 2.Mrs Jones is being throttled by some terrorist(for the red necks)probably a Moslem.Mrs Jones screams out for someone to call the private police force.Man finally gets through to the police.Police officer after logging the details,"You realise sir there will be a surcharge for a call out at this time of night, and the officer concerned will no doubt want his meal break before he attends.And by the way have you got a gun we can borrow.?(Women dies)

Scenario 3. Mrs Jones goes into her local chemist for her husbands medication as he is dieing of cancer.Chemist"Im sorry madam but the supply's we had on hand have been sent to the Congo where we got a real good deal for them,however by next month if you can pay the going rate we may be able to supply you with them.Oh by the way, whilst your here can we interest you in our new line of condoms.(Man dies, not of cancer,but the thought that John Howard may be re-elected).

Some of you posters seem to forget what you have written in reply to other articles.I don't no if I should laugh,or cry.

There is one vital difference between the markets for household water and electricity or gas. Every Urban household except highrise can be fully self sufficient in water by installing the proper sized water tank. In Brisbane the average (240m2) house needs a 13,500 litre tank. It would need only 56mm of rain to fill the tank from empty. Sydney, with 1200mm rainfall would need a smaller tank, circa 10,000 litres while Melbourne would need a larger one. This size tank is only marginally more costly than the 3,000l ones that most people are installing at present.

Recycling grey water to flush toilets will cut average household use by 25% from 255 kilolitres per year to 191KL. And this will still leave some left over for use on gardens etc, and lower total "first use" water to about 140Kl per year. A 13,500l tank costs about $2000 which means the annual interest at 7% is only $140/year. That puts the cost of private water at about $1.00/ KL which is the same as the public water today, without the fixed charge for the meter.

So that operates as a ceiling on the prices a privatised water company can charge. So if there are any merchant bankers out there who think they are going to flog a public water authority on the basis of a future capacity to lift prices, then they had better recheck their professional indemnity insurance, quick smart.

Perseus, you have the germ of an idea there, but there are one or two gotchas that need to be addressed.

The first is whether competition will be possible. After all, the reticulation is largely in place, from reservoir to kitchen tap, and has already been paid for by the taxpayer. Will you allow multiple suppliers to access the same distribution mechanism? Hardly. Could you allow new suppliers to build a parallel system, as telcos have done for much of their networks? Unlikely.

So your "natural cap" of $1.00/KL will not apply, since the water company will retain a monopoly on supply to a finite number of clients - those who physically cannot provide their own tanks (apartment blocks) or cannot afford one.

There is also the problem of "average" rainfall, and average usage. Leaving aside grey water for the moment, 255KL/year in household consumption is 4,900 litres/week, so your proposed tank will last only a couple of weeks.

I would suggest that there would be a significant percentage of the population who wouldn't take the risk. This would - along with the flat-dwellers - be the constituency that would keep the monopolist water supplier's board and CEO on the gravy train.

Once more with feeling: a monopoly is not good for anyone except the monopolist.

I agree in part, Pericles, but households who are inclined to install tanks are also inclined to recycle grey water etc, so they are likely to reduce their needs to only 2,700 litres a week. In fact, as the tank gets lower their water use will decrease further. And that means 5 to 10 weeks without a drop.

And in many communities a secondary market is likely to develop. The aged couple in the large colonial house with a full tank will have many friends as a dry spell continues. As they should.

Furthermore, any house with a large tank can then refill that tank by means of the much more efficient drip feed method rather than the existing 'on demand' method. That is, a cheap, thin polytube of only 5mm diameter can be strung along the broadband cable and refill the tank slowly over night or even a number of days. And this would eliminate most of the overhead costs in urban water supply.

And that is how urban water should operate. The public has an obligation to take all reasonable steps to help themselves before demanding a service from government. That way, the water utility becomes a supplier of last resort, not a monopoly, and certainly not a supplier of first request. Drinking water is a right, washing water is a need but garden water is merely a desire and there is no need for the public to expect the community to supply all of them.

Thanks, Selwyn Johnston for writing this article, although I am a little disappointed that you have not unequivocally come out against privatisation.

Winston Smith wrote: (http://forum.onlineopinion.com.au/thread.asp?article=4136#30959) "Allocating (water) through a free market is not only fairer and more efficient, but also mitigates against shortages, and requires minimal regulation."

Garbage!

Give us one example where water supply is not a monopoly, whether public or privately.

In the Chapter "Farming and food" of "The Final Energy Crisis" (http://www.population.org.au/misc/furtherreading.htm#bkmckillop), Edward Goldsmith writes,"... wherever (privatisation) happens its price automatically rises. In the Indian state of Orissa, according to Vandana Shiva, water prices have increased tenfold, and are now way beyond the means of small farmers."

In the Netherlands and Uruguay, it is illegal to privatise water (see MS Word document, http://www.population.org.au/misc/furtherreading.htm#bkmckillop).

It's a pity that these laws have not been enacted in Australia. If they had been then 'Labor' State Premiers Iemma and Bracks, together with John Howard, would now be behind bars for their current efforts to privatise the Snowy Hydro-Electric scheme.

My apologies.

The link to the Microsoft Word Document, which discussed the enactment of legislation in the Netherlands and Uruguay to outlaw the privatisation of water should have been http://www.psiru.org/reports/2004-11-W-crim.doc

A Google html-ised version can be found by using the search terms:

Netherlands Uruguay water privatisation

See also "Uruguay Votes YES to ban Water Privatisation" at http://www.indymedia.ie/newswire.php?story_id=67283

An article on how, in April 2005, Belgium has followed the positive examples of Uruguay and the Netherelands can be found at : http://www.eausecours.org/partie%20anglophone/Express-%C3%94/belgium.htm

Wikipedia article on water privatisation at :
http://en.wikipedia.org/wiki/Water_privatization#Anti-water-privatization_campaigns

Selwyn

Thank you for your interesting and timely article.

And thank you to all posters. Very interesting reading.

Cheers
Kay

Kay

Indeed it is all interesting stuff. OLO was a wonderful find for me, three months ago.

.
I am pleased to see that opinion is overwhelmingly against the privatisation of water.

But what is this going to count for? The decision-makers are going to listen to the big companies that have the big millions to pump straight into the government coffers when they ‘buy’ our water.

Those pollies will then use some of that money to do things that will get them re-elected and claim total responsibility for them – ‘nothing to do with the money, just our really good initiatives’.

The opposition is just the same as the incumbent mob. So when it comes to the next election, the voter simply doesn’t have a meaningful choice. With the compulsory preferential system, even if they do put the incumbents and the opposition last and second last, their vote will end up counting for one of them anyway, in the vast majority of cases.

With our system of pseudodemocracy, in fact antidemocracy, dominant public opinion often doesn’t count for boo, especially when there is big money involved…. and how often is that?

Perseus, has the right idea – we should all try to become as self-sufficient with water as possible. But as Pericles points out, this is simply impossible for a lot of us. So we will still need to be tied into a public system.

One of the most fundamental roles of government is to mitigate the profit motive and balance it against the negative effects it has on the greater community. Putting more and more power into the hands of the vested-interest lobbies is not only antidemocratic, it is anti-government, in all its forms. We need to strive for a strong government that is not under the thumb of big business and that is accountable to the people. Until we get that, we can expect the continuation of this privatisation momentum, which will progressively favour the already rich and powerful and suppress the rest of us.

How usless and impotent our Govts have become.They cripple private enterprise nationally with $86 billion in red tape pa.They tax the incentive out work,make it easy to get on welfare and wonder why there is a labour shortage.Due to all these tax burdens there is no money for infrastructure or health.

So strapped for cash,they start selling off public assets that could earn them long term income if managed correctly.But hey,that requires discipline,managerial skills and long therm planning.

In NSW we have had the worst Govt in living memory.They have failed in every respect of providing basic services and infrastructure.They let the growth of the Public Service spiral out of control,and the cost of redundancies is just too great to sack them.The Govt waste on spin Doctors and consultants is mind numbing.Now they are looking for short term fixes to get themselves out of trouble,like selling the Snowy Mts Scheme just so the debt ledger looks balanced.We are already in serious debt,it is called infrastructure debt and it is serverely hampering our economic growth.Guess what,less economic growth means less taxes.

More short term thinking and lots of long term pain.If they do privatise our water,simply put in a tank since if you live on the Coast,enough water falls on your roof to supply 75% of your annual needs.

In Sydney for many years it was illegal to own a water tank. A water tank is the ultimate form of private water. And now they make it compulsory on all new developments. Apparently if it's not illegal then it has to be compuslory. Governments are so weird!

Water is essential to life. However so is food and nearly 100% of the food we eat is produces by the private sector. I don't hear much call for the nationalisation of farms (except in Zimbabwe).

I am not that bullish on privatising the water supply. There are more important reforms (like tax and welfare cuts). However I am not intrinsically opposed.

First of all, apologies to all for the stray post earlier. The response to Perseus should have read:

I think there are two distinct issues here. One is whether the provision of water should stop being a public service, and become a commercial enterprise, the other is whether we are doing enough to conserve a scarce resource, given there appears to be little incentive to do so in the present environment.

The two are often conflated, in order to put a case that reads "only when we have to pay for it will we value it properly." What is totally ignored in this argument is that it isn't necessary to shove the entire industry into the hands of private enterprise in order to achieve this objective.

Instead, we have a form of institutionalized cowardice, in which the government moves the problem - making the electorally unpopular decision to charge an appropriate rate for the service - into the private sector, rather than risk losing their pensions.

Having avoided the key decisions for decades - whether we need more and better reservoirs, investing in better delivery systems - governments now seek to get themselves off the hook. And anyone who thinks that water will be a) cheaper b) purer or c) less prone to drought restrictions as a result of a move into private ownership, is kidding themselves.

People will make alternative arrangements wherever they can, whether the supply comes from the public or the private sector, should price be a factor.

The basic economics of the supply side won't change whether public or private. But if you have to factor in the cost of a bloated overpaid Board, and the dividends they need to pay out to support the share price, they will.

Pericles,
You may have overlooked one point, while I agree with your last post, there will also be a need to pay a C.E.O. 63 times the average working person to perform the duties than a much less rerumerated General Manager of the 1970's was paid. In fact C.E.O's have enjoyed a 570% increase in remuneration since 1990. Those who think water should not be a public service have $ signs in their eyes.

As mentioned, overheads will not change with privatisation, except for the though having to be made larger, which requires money, where will the money come from, us of course. When I collected my superanuation, the first task was to price solar energy, I nearly had a heart attack, next was to price a rainwater tank, a small stroke followed. On the driest continent on Earth, we have water shortages because we cannot afford to do otherwise, as the ordinary working persons wage is in the process of being forced down.

To my knowledge the last MAJOR Dam built was the Burdekin Dam in North Queensland, which was completed in 1987 by Bob Hawke. This is a disgraceful situation, especially when we have a Government sitting on a $14 billion surplus.

Shonga, what is a disgraceful situation?

Are you really in favour of lots of new big dams?

While travelling in the UK in 1997 and again in 2002 I noticed that there was considerable debate about the supply of water especially to London. Apparently since privatisation the company concerned spent very little on maintenance of the distribution system. Estimates were that about 40% of water was lost annually. The company's proposed solution was that the Government should resume land and build a new dam to increase supply. They had no intention of repairing the infrastructure.

Privatising water supply in Australia will do nothing for infrastructure development or planning. It will only result in higher prices.

Witness the problems in Brisbane at the moment as Sunwater continues to supply water to the Gold Coast despite their published lack of need AND to the Tarong power station despite their possession of their own dam. Both these deals 'contracts' were made when there was a problem but the nature of private contractural arrangements mean that they continue despite the lack of need. Full privatisation as opposed to the current 'corporatisation' will only make these kinds of problems more common. Instead, elected governments should take responsibility and make the decisions the people expect them to make.

The Snowy River Alliance (http://www.snowyriveralliance.com.au) received some coverage on Radio National this morning. They are one group which is opposed to the privatisation of the Snowy River Hydro scheme. If you wish to help, then get in touch.

--

I am with both SHONGA and with Ludwig on the question of dams. The failure of our Governments to invest properly in infrastructure, thanks to the stifling influence of 'small government' economic (so-called) rationalist ideology, should be considered a first order political scandal.

However, we should only build infrastructure which does not cause significant further harm to our environment and which does add to the overall sustainability of our society.

The overall record of dams does not appear to be very good, so we need to think very very carefully before we build any more.

As an example, I have heard that the Mekong Delta has largely been ruined thanks to some dams built further up the river using some expertise from Australia's own Snowy Hydro Authority. As a result of the loss of water flow, fish stocks are no longer available, so the local people now have to, instead, damage the forests to keep themselves fed. (I still need to obtain further confirmation of this particular story, but there are countless similar stories of the effects of damming projects from other parts of the Third World. For some corroborating information, see http://www.hawaii.edu/hga/gaw01/workshop/Mekongdam.html and http://www.searin.org/Th/Mekong/Mek_dam_nE3.htm)

---

Arjay, I agree with much of what you have written about the NSW Government, but this is not the place to push your ideological barrow against social welfare and public servants.

If the NSW public service is indeed so bloated why was it so hard for so many other people in their 40's to obtain employment there? It was put to me by a current middle manager in the Qld public service that she, herself, would not be able to be employed so restrictive have job opportunities become.

On the question of social welfare, this has been discussed in threads in response to articles by Professor Peter Saunders of the CIS :
http://forum.onlineopinion.com.au/thread.asp?article=3556#8784 and http://forum.onlineopinion.com.au/thread.asp?article=3737#12173.

Pericles, you raised some interesting issues. We need to distinguish between the public's 'right' to have clean (potable) drinking water and kitchen water, their 'need' for clean but not necessarily potable showering water, and their 'desire' for garden water and pool water. It has been assumed that these should all be delivered through the one pipe and on an as-needed 'just in time' basis. And this assumption has then demanded that even garden water must be potable.

At the same time, we have treated the whole lot as an entitlement to a public service without any sort of means test or, more importantly, without any requirement to take reasonable and practical steps to help ourselves before the hand goes out. Almost every other element of government expenditure has a requirement that we try to help ourselves first as our duty to the community. The work test for the dole is a good example. If we are not actively trying to help ourself by seeking a job, then the dole is not paid.

And it seems clear that we should apply the same standards to the supply of water. The ultimate safety net should be an allocation of all reasonable requirements for potable drinking and kitchen water on an as-of-right basis.

But after that we have both needs and desires that could be met by reasonable and practical steps to help ourselves. And these would vary depending on circumstances. Residents of highrise buildings clearly have limited scope to help themselves while detached urban houses have a great deal more options.

The economics of this can also be influenced by differential pricing so the portion of supply for the 'need' for showers would be priced higher than the potable drinking water but lower than the 'desired' water for the garden

While I have to date resisted commenting on individual postings by correspondents, however for the purpose of correcting some misconceived opinions, please allow me to state categorically that I have spent considerable time enunciating the perils of privatisation.

For those interested in my long established and well-known views on the privatisation issue, please view the following links, which highlight my unequivocal unambiguous, indisputable, undeniable, and obvious opposition to privatisation…

THE END POINT OF PRIVATISATION (http://www.johnston-independent.com/privatisation_endpoint.html#endpoint)

FREE TRADE - The Truth and The Myths (http://www.johnston-independent.com/free_trade.html#index)

WATER - AUSTRALIA'S FUTURE (http://www.johnston-independent.com/water.html#w)

I would like to thank all correspondents for their input, even though some were way off the mark and others bordered on hysteria… although all of which livened the importance of this crucial issue to those who use water for personal survival.

Respectfully

Selwyn Johnston