Billie's remarks are correct in the sense that Govt monopolies preclude duplication of services. Dams, pipes, roads, pavements and sewage are owned by Govts. If they were privately owned, then duplication would be possible.

You don't dislike profits, but you don't want water companies making profits. Well, once again, I must point out that without profits, there will be no incentive for better services. Without profits, you are stuck with ongoing water shortages.

I have no problem with private not-for-profit companies. However, govt-owned and operated 'companies' tend to be less efficient, similarly companies protected by competiton by Govt mandate.

You believe that private monopolies will keep players out and thus maximise profits. I agree, but only if the monopolist can enlist the support of the Govt to keep players out. If, for example, the monopolist leases rather than owns the water infrastructure, and there are no price controls and minimal regulations, then a private 'monopoly' will not charge excessive prices. It can't, because of the risk of losing its lease to a cheaper competitor.

People who buy supermarket water obviously think its a good idea, otherwise wouldn't do it.

There are no doubt lots of innovative ideas out there on how to collect new water and save existing water. But for these ideas to come forward requires incentives, and that requires an end to price-fixing and Govt controls. Yes, that means higher prices in the short-term.

The current socialist system doesn't work, so its time for change.

Sigh. Your arguments get sillier and sillier Ed. You appear determined to ignore all arguments and facts to the contrary and blunder forward with the same lines in face of all evidence to the contrary.

A brief glance at todays "The Australian" provides an example of the perils of commercialising vital utilities. The First Mildura Water Trust are in deep poo. They took money that the government collected from taxpayers for ensuring water for certain farming communities and invested it in the U.S sub-prime mortgage market. Naturally, they have suffered a huge loss and will have to beg the government for more taxpayers money just to run existing infrastructure, let alone invest in new ones.

Commercialising anything changes the decision makers attitude from "We are the custodians of a vital service belonging to the community" to "We are here to maximise returns to our shareholders". The commercialised water trust operators believed that they owned the water and that it was just another commodity like any other. Both are grossly untrue. The saw no problem in risking the water supply of entire communities.

The socialist system is the best placed system to deliver vital utilities and services. This works very well (albeit not perfectly) and has done so for a long time. PPP's and private ownership of these things is, with increasing frequency proving to be a disaster in the pipeline.

The rest of your post is irreverent nonsense, deliberately ignoring facts and arguments.

Billie “Its becoming clear that provision of utlities is a natural monopoly because we can't replicate electricity transmission lines, communications cable, gas lines, water pipes for each seperate provider.”

The common model used for the provision of utilities is to separate the infrastructure/wholesale function from the retail activity. Thus retail suppliers to households are separate to the delivery system (cables and pipes) which can be separate to the resource processor/generator. Each step with potentially different owners/commercial or government participants

This has been applied into Telstra, the old power utilities companies. The transport network has been structured differently, the asset base retained by the government and operated by the operating companies on an outsource basis.

I would note, the separation of wholesale from retail activity has been pursued to prevent monopolistic domination of any market, most particularly observable in telecommunications. I recall Telstra being investigated and its actions challenged by the ACCC in regard to monopolistic abuse from pricing for broadband.

I would further note, the FTC in USA has been engaged in the process of trying to get Microsoft to separate its application software from the operating system because of monopolistic practices used by Microsoft (basically Microsoft’s secrecy surrounding the source code of the MS operating systems, which present a natural barrier to fair competition). This is a legal tussle which has been going on for some time now and which the FTC has been tenacious in pursuing to protect the millions of consumers of software and break what has become a “natural monopoly” for Microsoft.

Whilst we can all point fingers at examples of the apparent shortcomings of private enterprise, because of the obtuse way governments tend to account, the opportunity to inspect the financial arrangements and exploitive use of natural and unnatural monopolies by government is far more difficult to see and thus potentially far more abusive.

I recall when Margaret Thatcher broke the monopoly the rail network operators had on commuters into London, my weekly fare dropped substantially to one third of what it had been under the rail monopoly.

I understand that this is generally the case Col, but is this really the best long-term delivery strategy for the utilities and services that communities would simply cease to function without?

Water for arguments sake, may be broken into seperate entities handling different parts of the delivery system but to keep people alive and cities functioning they must work in harmony as a single intigrated system. Any failure by any one of the different providers would become a glaring example of the fact that a chain is only as strong as it's weakest link. The moment any one of them goes belly up, it must immediately be bailed out by government to prevent a real disaster.

I believe that ( in the case of water at least and most likely other things as well) the practice of pretending that a single government monopoly can be broken into numerous commercial enterprises who regard the enormous responsability of providing safe, reliable water for many thousands of people as just a business like any other, to be dangerous in the long run and sowing the seeds of future problems.

Whatever the shortcomings of democratically elected government (and there are plenty) some things are simply much more secure in their hands. Governments often bail out private enterprise but if government ever needs to be bailed out then we really are in trouble.

I don't doubt what you say about train fares when you were in Britain Col, but the privatised British rail system has become a train wreck.

Just how compatible is the profit motive with the provision of critical services and utilites? Not very, I think.

Col you might feel a frisson of virtue when you pay your electricity bill to the electricity company that is actually now owned by Temansek, or one of a number of Chinese conglomorates. "AGL grafted electricity onto existing assets; others like Alinta and Origin have been created from standing starts; other overseas-owned businesses like Powercor, International Power, Truenergy and Singapore Power have added strong Australian arms." http://www.onlineopinion.com.au/view.asp?article=123 I would actually still prefer to pay the old state owned and operated State Electricity Commission.

Since privatisation our electricity bills haven't fallen, the electricity tariffs have been maintained but when the agreement expires later this year Victorian consumers have been told to brace themselves for big increases in electricity prices or so The Age says.

The Restructuring and Privatisation of the UK Electricity Supply — Was it Worth It? Its authors, David Newbery and Michael Pollitt, summarised the winners and losers from 1990 to 1995.

What happened? Privatisation helped accelerate job loss, but the gains in industry productivity that resulted didn’t lead to lower prices. Instead, the shareholders (banks, pension funds, etc) made a fortune as share prices rose by as much as 300% and the government picked up a bit in increased company tax receipts. “Power purchasers”, they observed, “seem to be paying higher prices than they would have under continued public ownership.”

Between 1989-91, domestic electricity tariffs in Britain rose 28% (4% above the inflation rate), despite a 27% fall in coal prices to the electricity companies. If that had been translated directly into consumer prices, they too would have fallen by 8%.

At the same time, price increases have gone along with decreased supply reliability — the predictable result of job-shedding. This has not just resulted in some spectacular system collapses (for example, the week-long blackout of Auckland in February 1998) but also to a rise in short-term blackouts. In Victoria, the frequency of blackouts increased by 32% in the four years after privatisation in 1995 see www.greenleft.org.au/2008/740/38305

Fozz

I assume you believe the Mildura and Gladstone examples demonstrate that a privatised water market would be disastrous. Since both authorities operate in a Govt-controlled (and subsidised) market, it actually reinforces something I said in a previous post "govt-owned and operated 'companies' tend to be less efficient, similarly companies protected by competiton by Govt mandate".

From the same article, further examples of Govt mismanagement:
"The FMIT...is in the same position as dozens of local councils, which stand to lose hundreds of thousands of dollars through investing in collateralised debt obligations through Grange Securities."

You: "Commercialising anything changes the decision makers attitude from "We are the custodians of a vital service belonging to the community" to "We are here to maximise returns to our shareholders"."

In the first place, what does "belong to the community" mean? And in the second place, what is wrong with maximising returns?

"The socialist system is the best placed system to deliver vital utilities and services. This works very well (albeit not perfectly) and has done so for a long time. PPP's and private ownership of these things is, with increasing frequency proving to be a disaster in the pipeline."

The current socialist system has delivered water shortages with 80% of Australians on water restrictions. In a prosperous country like Australia, that is hardly evidence of a system working well.

Now suppose for argument's sake I was to concede that a completely privatised system is impractical. (At least in the current political climate). Would you be prepared to consider the view that water prices in Australia are too low? And that raising the price would create incentives both to reduce waste and increase investment in new infrastructure?