On privatizing water, and the SAS in Afghanistan

Local Government Minister Rodney Hide continues to pursue his vocation in life, of turning public assets into profit centres for the private sector. The amendment to local government legislation that Hide is currently pushing through Parliament will allow councils to contract out water services for a commercially feasible 35 years.

Water will thereby become a commodity from which monopoly profits can be extracted – and Hide has made it clear that councils will be responsible for the pricing policy contained in those contracts. So, the same councils that allegedly lack the capacity to build and finance their own infrastructure will be left to their own devices to negotiate public/private partnership contracts with the sort of multinationals that dominate the trade in water, worldwide. Yep, that sounds like a level playing field. In the sense of Chelsea playing the local weekend pub team upon it.

Once again, Hide has taken a policy that has failed ratepayers, taxpayers and consumers everywhere else, and is presenting it as a new idea that will promote efficiency. Well, local authorities in Paris – which, as Labour MP Phil Twyford pointed out on RNZ this morning is the home of water privatisation – has just bought back its water supply. Because after years of public private partnerships in water, Paris had learned that it would be more efficient, and less costly to do the job itself.

At present, water is distributed by Lyonnaise des Eaux on the left bank, and the Compagnie des Eaux de Paris on the right bank, while a separate company in which local authorities are the principal shareholders is responsible for water supply…

‘The current system does not allow maximum efficiency, nor is it possible to monitor or manage it effectively,’ says Ms [Anne] Le Strat [ the current CEO of the city’s water supply company.] The city expects to save at least 30 million euros.

In an excellent article in the NZ Herald in January, Maria McMillan had predicted the development we are now seeing, and how it would unfold.

Typically with PPPs involving water, McMillan pointed out, the public sector maintains long-term ownership and responsibility for the infrastructure, but contracts out the management and supply of water to private companies.

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…. etc etc

So this is the kind of system that our local councils – desperate for money – will now be pressured to introduce. Yet, to state the bleedingly obvious, private water companies are not charities. They will be seeking to maximize profits from the monopoly control of this essential asset. The losers will be the ratepayers, taxpayers and ordinary consumers who will be forced to pay higher and higher prices for the water they need for drinking, washing and cooking, within a declining service (for declining water quality) that they will have no power to change or to improve – because their council will have locked them into 35 year contracts. Eventually, the public will have to buy its way out of those contracts.

Water pricing, water quality and water access are far too important to be surrendered to market forces. The only time for action is now. With local body elections due this year, voters have to ensure that the only people elected are those who will make an iron clad commitment NOT to enter these extortionary PPP contracts over water supply and management. In the meantime, we will have to listen to Hide – who has consistently and publicly derided the whole notion of water quality standards – advocating water metering because water, he says, is such a precious commodity. Precious as a profit centre, he means.


Key and Afghanistan

So now our SAS troops will not now be coming home from Afghanistan in 2011, after all. The decision to extend the SAS deployment not only indicates how easily John Key is impressed by a man in uniform. It is also quite a good example of how this government eases its way onto politically risky decision paths. When Key was leading up to the SAS decision last year, we heard a lot about how that deployment wouldn’t happen unless there was a sound exit strategy, and clearly defined goals. When I asked him at a post-Cabinet press conference that if those goals were not completed by 2011, would he consider extending the deployment? No, he wouldn’t. The SAS would be coming home in 2011.

Except, they aren’t. The government has concluded that voters don’t seem to mind, and no-one among the SAS has as yet – touch wood –been killed. So the principled decision has been taken that having gotten away with the political risk of this deployment so far, the government will keep on with it. The government has concluded that either the public has forgotten the former assurances to the contrary, or never cared much about them anyway.

And those clearly defined goals? The exit strategy? To hear Key explain why we are in Afghanistan is like watching him put all the possible reasons into the Cuisinart blender located in his cerebral cortex – to combat Al Qaeda, to defeat the Taliban, to prevent further Bali bombings, to build a peaceful democracy in Afghanistan, to train the Afghan forces to look after security – and whizzing them all together into one nonsensical blur. It’s not a reason, it’s a smoothie.

In reality, none of the reasons/ingredients stack up. Osama Bin Laden’s jihadist programme – that 9/11 would provoke a response that would radicalize the Islamic masses and topple the West’s client regimes – has plainly failed. The capacity of Al Qaeda to project internationally has been all but neutralized. None of the several Taliban factions, having lost control of Afghanistan for a decade thanks to Bin Laden’s fantasies, are showing no inclination to welcome al Qaeda back in again. Meanwhile, the Afghan forces are no match for their Taliban opponents and never will be, unaided. Finally, surely Key can’t be serious when he says we’re there to create a peaceful democracy in Afghanistan – that job would require our forces being in Afghanistan for decades to come.

The simple reality is that the West can contain any Al Qaeda-like global terrorism threats more easily – and far more cheaply in terms of human lives and billions of dollars – from outside Afghanistan, than from within it. The reasons the Americans are still there have more to do with the political cost of pulling out, than with any valid reasons for staying in. For Barack Obama, those political costs of admitting failure are real. For Key, they’re merely play acting with the grown-ups. Essentially, Key is putting our forces in there to help buy Obama time to get out of there. That wasn’t a sufficient reason for getting us involved militarily last year, and now, Key seems to have made the commitment open-ended.

Well, to assume that the West must continue to be in Afghanistan is to be as deluded as the domino theorists were in Vietnam. Unfortunately, what it may well take is for New Zealand troops to begin to get killed there, because only then would our government have to confront the real costs and benefits of involvement. Even then, the political calculus would include being seen to cut and run at the first sight of blood. Key would be in the very same fix then, as Obama is now.


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