The Guardian 18 June, 2008
Water — the new oil
Marion Harper*
We must oppose privatisation of water because water is the essence of life and is not a commodity to be sold like baked beans or toilet rolls in the same way as housing should not be a commodity, or health should not be sold for profit. All these constitute people’s birthright in a moral society.
Unfortunately, capitalist society is not moral, it is where profit reigns supreme and where in this most sophisticated form of capitalism — imperialism — the demand is that we pay for everything we use, except air so far, and I suspect there is somewhere some research going on that will eventually commodify air and privatise it.
Privatisation of every kind has occurred around the world at about the same time. Is this a coincidence? Did national governments all arrive at similar policies just by chance?
I do not believe in coincidence on this scale.
It is my belief that the World Bank and the International Monetary Fund have imposed privatisation and are re-locating profitable government public facilities to the private sector, where huge profits can be made.
Well, because privatisation around the world has resulted in growing impoverishment, ill health, lack of services, enormous increases in prices, and huge private profits, people are opposing it.
Privatisation itself is "on the nose". So governments no longer refer to privatisation for that reason. The new name for the same privatisation that continues unabated is PPPs, otherwise known as Public Private Partnerships — a new name for an old, dishonoured program.
There is no longer such a thing as "free enterprise". Governments heavily subsidise private companies in many ways; indeed, with these subsidies from taxpayers’ money, one could almost argue that such subsidisation amounted to workers in those industries paying their employer to employ them.
PPPs are now being used in everything. They are used in housing and are continuing to be used with housing associations and "affordable housing" in order to avoid government expenditure on public housing.
[Governments] are using PPPs in state education to avoid public expenditure on state school infrastructure, while they expend taxpayers’ money on private and, indeed, for-profit schools.
However, the most appalling privatisation is that of water because water is the very essence of life and we cannot afford for private companies or the World Bank to decide the future of our water.
Recent trends, particularly in developing countries, have been toward water privatisation. Generally, the government enters into a legally enforceable agreement with a foreign multinational corporation.
This corporation then makes all the decisions about the delivery of water.
Water privatisation initiatives are often a condition of the World Bank and the IMF loan money received by developing countries.
Here are some water facts that I obtained from Aid Watch, an environmental non-profit organisation:
Less than half of one per cent of the available water on Earth is fresh water. According to the UN, more than a billion people lack access to safe drinking water and more than 2.4 billion lack adequate sanitation.
More than five million people, most of them children, die each year from illnesses caused by drinking unsafe water.
Global consumption of water is doubling every 20 years, more than twice the rate of human population growth. If current trends persist by 2025, the demand for fresh water is expected to rise to 56 percent above the amount that is currently available which will result in as much as two-thirds of the world’s population unable to access clean water.
The privatisation of the water industry is already a $400 billion-a-year business globally. That makes it one-third larger than global pharmaceuticals, and we all know who makes the decisions about what pharmaceuticals we use and their cost.
In the US alone, private water corporations generate revenues of more than US$80 billon a year, four times the annual sales of Microsoft.
Ten corporate giants are vying for control of the world’s water (water is indeed the new oil). The top three are French companies, followed by US, German and five are of UK origin.
PROBLEMS ASSOCIATED WITH PRIVATISATION
Inequality is increased
It does not affect those who can pay, but those who can’t are forced to choose between necessities such as water, healthcare, education, food.
Trade agreements
When water is treated as a privately owned commodity, it is open to the same conditions as other tradable goods. Governments are signing international trade and investment agreements that supersede national laws, resulting in them losing their ability to protect water sources, even if they wanted to. Corporations have the capital to continue purchasing water, whereas citizens, particularly the poor, may not be able to afford it.
Environment
As soon as a price is put on water, who is going to purchase it for the environment? As corporations are dependent on increased consumption to generate profits they are much more likely to invest in desalination diversion or exporting water as opposed to conservation measures.
Threatens democracy
Democratic and community involvement in water management decisions are essential. World Bank agreements however are considered to be "intellectual property" and therefore the public has no access to terms or details of bank projects that affect their lives.
The IMF and the World Bank are not appropriate institutions to be making decisions about the management of water, as they are not democratically accountable nor are they transparent institutions.
Health risks
Water management and testing companies have concealed information about health risks resulting in widespread illness and in some cases death. Water corporations are primarily interested in profits, not the health of the people.
There is no doubt that water is the oil of the 21st century and transnational companies are rushing to invest in this lucrative business. They plan to buy water rights, buy our publicly owned water systems under the guise of saving governments money: they promote bottled water and sell "bulk" water by transporting from water-rich areas to markets desperate for it. At the same time, these transnationals are lobbying to weaken water quality standards and are pushing for trade agreements that hand over water resources to them.
In the US for example, where some regions are already suffering serious water shortages, corporations like Nestlé are poised to make huge profits from water.
Some of these corporate interests are trying to sell bulk water from the Great Lakes, the world’s largest freshwater system. These Great Lakes have suffered from pollution, lost two-thirds of their extensive wetlands and experienced a catastrophic loss of biological diversity, with only 3 percent of their shoreline suitable for swimming.
Meanwhile, companies like Coca-Cola are selling purified tap water as a healthy option and they now believe that in the long run, selling water will be more profitable than selling coke.
Today, 460 million people around the world are dependent on private water corporations for their daily supply of water compared to 51 in 1990. David Boys, an international expert on water and sewage utilities and a member of the UN Secretary General’s Advisory Board on Water and Sanitation, said that experience has shown that private solutions do not work, yet here in Australia, governments are looking toward privatisation in keeping with the rest of the world.
For example, foreign companies are bidding for Victoria’s desalination deal.
A story in the Herald Sun said a "private firm will reap more than $1.5 billion in taxpayers funds to operate Victoria’s desalination plant, a deal that will ignite debate about who controls the state’s water.
"Foreign companies from Spain, France, Korea, Japan, America and Israel have held talks with the Brumby Government to clinch the controversial operating contract that will run for 25 years.
"The rich contract is expected to include operating fees of more than $60 million per year. The Brumby government has not ruled out a guaranteed usage clause, which could see the taxpayer fork out for an agreed amount of water from the private operator every year, even if it wasn’t needed. Both options leave the government vulnerable to claims it is privatising Victoria’s water."
The operating deal will bring the true cost of the desalination plant, Australia’s largest, to more than 4.5 billion dollars including $3 billion in design and construction costs.
Veolia, the parent company of Connex that operates our trains, has expressed interest in bidding for our desalination plant. (They would need to do a great deal better with desalination than they have with our trains.)
Water Minister Tim Holding said PPPs provided the best value-for-money to the taxpayer, but he provides no evidence of this and figures needed to do so are confidential.
Once upon a time, there was a very simple process for running our country. We needed shelter, health, education, transport, gas, electricity, water and telephone. These were paid for by everyone through taxation according to ability to pay. With the money generated from taxation, governments were expected to provide these services necessary in a democracy.
Today, we need to ask where are our taxes going? What is government doing with our money and did they ask us if we wanted privatisation or PPPs?
The answer of course is "no" and we need to become more demanding of our collective right to decide how our society moves forward.
Politicians are there to serve us, not the transnationals. That is the truth.
*This article is an edited text of a talk given at the Melbourne Unitarian Church on March 30 and Published in The Beacon. Marion Harper is Secretary of the Church.