Sydney's water crisis and the privatisation push

Bob Briton

In the southern half of Australia the consequences of climate 
change, mismanagement and population pressures are combining to 
produce an alarming shortage of drinking water. Centres once used 
to plentiful supplies of town water with occasional mild 
restrictions on households are now adjusting to tough water 
conserving regimes. Back-to-back drought years have exacerbated 
the worrying situation in some areas.

In Goulburn NSW, residents are suffering under level five 
restrictions involving a limit of 150 litres per person per day. 
A five-minute shower can use half that. Level four restrictions 
apply in Bendigo in Victoria and even the streets of the once 
green national capital look brown and parched. Perth's dam levels 
are down to 32 per cent of maximum capacity and even underground 
sources are running low. Sydney's main Warragamba Dam is at a 
record low of just over 40 per cent. Unless the catchment area 
gets good soaking rains it only has about two and a half years' 
supply left.

Earlier this year state and federal leaders met in the Council of 
Australian Governments. They announced that households (who use 
nine percent of the nation's water) will have to live with 
virtually permanent restrictions while producers of crops like 
cotton and rice (who consume 11.7 per cent and 7.8 per cent of 
Australia's supplies respectively) will be able to carry on 
essentially as they always have. Electricity, gas, mining and 
manufacturing (which use 13 per cent of our water) will also be 
left largely to their own devices.

Households are being softened up to pay significantly more for 
their water. Melbourne now has a two tier charging system -- 70c 
per 1000 litres for light use and $1.30 per 1000 litres for 
heavier use. Attention is being drawn to water-rich Sweden where 
consumers pay $5 for 1000 litres. And whenever governments talk 
about solutions to the water crisis, private investment is 
promoted. Furthermore, governments are under pressure to hurry 
along their plans for privatised water.

Attacked from all sides

Last week the Carr Government announced its scheme to tackle 
Sydney's pressing water problems. Over the next 10 years, it will 
spend $780 million on major infrastructure projects. There will 
be no new dams but $106 million will be spent on new pumps to 
access water lower down in the Warragamba and Avon dams and $680 
million is to be spent on pipes and pumps to bring water from the 
faraway Shoalhaven River to Warragamba Dam. A trial costing $4 
million will determine if bore water could be used to top up 
reservoirs. Another $4 million will be put towards the planning 
and design work for a desalination plant.

The State Government is "pretty confident" that the private 
sector will undertake a $560 million project to recycle "grey 
water" back into the toilets and onto the gardens of new suburbs. 
A similar scheme already exists in Rouse Hill in Sydney's western 
suburbs.

Reaction to the government's plan in the mass media has been 
lukewarm. There is relief that earlier leaked ideas for a huge 
offshore desalination plant or the shipping of water from 
Tasmania should not be necessary. While there has been some 
concern reported about reducing flows down the Shoalhaven River, 
the necessity of using the water is generally accepted. There is 
approval for the decision not to build any new dams because of 
their environmental impact.

Where the government has drawn heavy criticism is its failure to 
invest in the recycling of the city's own storm water and 
sewerage. The ball was set rolling by Ticky Fullerton's City 
Limits report on the ABC's Four Corners program on October 18. 
The piece made the valid observation that Sydney is lagging 
behind other state capitals in recycling these sources. Adelaide, 
it was pointed out, recycles 20 per cent of its waste water while 
Melbourne reuses 15 per cent. Sydney recycles three per cent.

Previous undertakings -- made seven years ago in WaterPlan 21 -- 
to build "water factories" have not been fulfilled and not enough 
has been done to promote the use of rainwater tanks. The reason 
given by Four Corners for this policy defect is that Sydney Water 
(the public water utility) has an interest in selling lots of 
cheap water that conflicts with the public interest for 
guaranteed longer-term supplies and a better environment.

The program fails to note that this conflict arises because 
Sydney Water has been corporatised -- a first step towards 
privatisation. As a corporation its prime aim is to make profits 
which creates an incentive for selling more, not less water.

Milch cows and "bottled electricity"

Last Wednesday's Australian ran with the headline: "State 
monopoly a 'barrier to water solution'". A quote from Jeff Angel 
of the Total Environment Centre sat in the middle of a critical 
article in The Sydney Morning Herald of October 19. "It's 
the same old Sydney Water propaganda, intended to preserve their 
monopoly position", yelled the bold print.

The point was made that not all the income from supplying water 
is reinvested in the utility. In fact last year Sydney Water 
contributed $100 million of its operating surplus to NSW 
Treasury. The situation in other states is similar. As Ticky 
Fullerton pointed out on the ABC, dividends to state governments 
in WA, SA, Victoria and NSW add up to around $600 million a year.

The argument is that with these sorts of "profits", a corporate 
mentality creeps into the planning of the water utilities, a 
mindset that is made worse by their monopoly status.

In reality, it was the corporatisation that introduced the 
corporate mentality. Pro-business representatives were appointed 
to the utility's board and the drive for profits unleashed. In 
the past, before the rash of privatisations, profits from public 
enterprises were an important source of government revenue that 
could be poured back into the community. Surely this was a far 
superior situation to what is being advocated now, where most of 
the profits are to be pocketed by a small number of the people 
through private ownership.

Given the present corporatised arrangements, why would profit-
driven Sydney Water be concerned with recycling -- unless it 
provided a new source of profit and did not eat into existing 
profit generation?

It is doing very nicely out of piping the current, diminishing 
sources of drinking water.

Critics of the government have even been encouraging the 
authorities to recycle sewerage water for drinking water. 
Opposition utilities spokesman Brad Hazzard has been seen 
drinking from a bottle of NEWater, a product from Singapore made 
from recycled sewerage. He dismisses the Premier's suggestion 
that there would be too much resistance in the community to the 
idea and continues to blame Sydney Water's defence of its 
monopoly for the lack of nerve.

Another reason given for Sydney's poor record for recycling water 
is that any possible solutions to deal with stormwater would 
become mired in bureaucracy. No single authority deals with it. 
Sydney Water does business with the various councils and the 
Waterways Authority.

Until recently, Premier Carr has been dismissive of ideas to top 
up Sydney's supplies with desalinated water. He called it 
"bottled electricity", referring to the large amounts of energy 
required to separate drinkable water from the briny residue. But 
now he is singing a different tune and spending money to come up 
with a new, less energy-hungry design. This is since Perth's 
decision to build a plant.

Four Corners suggests that somebody must have reminded Bob 
Carr that the state also has a monopoly on the sale of 
electricity. Indeed, the Minister responsible for the water 
utility and electricity production are the same person -- Frank 
Sartor. This, it is claimed, is a clear "conflict of interest" 
and the real reason why desalination is getting the nod.

The real agenda

So what did Ticky Fullerton and the newspaper columnists suggest 
should be done about these problems besetting water management in 
Sydney?

Private enterprise is their answer. Let the private corporations 
themselves move in and run the show.

As for Four Corners, its piece appeared at times to be an 
infomercial for one of the companies seeking approval for a 
"water factory" to recycle the partially treated sewerage now 
being piped into the waters off Manly Beach. Company director 
John Van der Merwe was a David taking on the State Goliath with 
only the approval of the pro-privatisation National Competition 
Council to comfort him.

Concerns about a corporate mindset at Mr Van der Merwe's company 
were glossed over in the presentation. The secrecy and 
environmental consequences of profit-driven utilities were 
similarly ignored. The disunity shown as being a problem in the 
present setup would, apparently, cease to be a problem if all the 
components were private enterprises producing the maximum 
possible private profits.

The article in The Australian attacking Sydney Water's 
monopoly agreed that its function should be chopped up and 
privatised. It quoted Dr Coombes of Newcastle University: "We 
have to let the private industry in. We might have to highly 
regulate them, but we have to have incentive for innovation." It 
is not hard to imagine a quotation from an academic at some 
future time arguing that regulation of private water services has 
to be abandoned or eased so that the market can work its magic.

Clearly a push is on to break up Sydney Water and open up the 
area to competition. As the big transnationals move in and take 
over the bits and pieces, accountability and quality will be 
jettisoned. Over time, competition will lead to collapses, 
takeovers and mergers. The public monopoly will become a foreign 
owned private monopoly for whom the provision of water is only a 
vehicle for profit generation.

The arguments suggesting more public control and better services 
through the selling off of public assets must be exposed. The 
water crisis demands more planning and the exclusion of the 
private profit motive.