The Guardian 26 September, 2007

Water on tap or a flood of profits?

Anna Pha

Water is essential to all life on earth, for day-to-day survival, for households, agriculture, industry, nature and the environment. Access to clean drinking water is a basic human right. We need to conserve it, use it wisely and ensure its fair distribution for use by the people of the world.


To big business water is a capitalist’s dream: it is becoming scarcer at the same time as demand is increasing. The scope to charge sky-high prices and reap massive profits is almost beyond belief. There is just one catch — in Australia most of the water provided to the public and agriculture is in public hands. Big business does not have control of water allocation or pricing.

The finance sector — including some superannuation funds as well as investment banks — is pushing for its privatisation. So too are some of the major infrastructure transnational corporations. As the recent unsuccessful moves by state and federal governments to sell off the Snowy Hydro scheme illustrate, any government privatising water faces strong public opposition.

This has not deterred the Howard Coalition Government from planning to privatise the nation’s water. It has affected the timing of announcements — not before the federal elections — and its tactics.

The first step in this privatisation agenda (shared by a number of state governments) was the corporatisation of water infrastructure and provision. Agreement on this was reached in 1994 by the Council of Australian Governments (COAG) in its Water Reform Framework: the aim being "full cost recovery" and the treatment of water as any other commodity to be bought and sold on a market.

One of the major aims behind the Federal Government’s national water plan is to grab control of water so that it can be privatised.

Citigroup, Garry Weaven from the superannuation funds management industry, the Business Council of Australia and other big business interests are pushing hard for its privatisation. The financial institutions are awash with cash and looking for new sources of money-making investment.

The Business Council of Australia laments that water usage is based on government allocations, water restrictions, etc, and not determined by the markets. "If we … allowed market pricing and the laws of demand and supply to operate as they do in every other market, there would be no talk of shortages or the need to curb economic growth", the BCA said in a recent statement advocating water privatisation.

Powerful mining companies, smelters, energy generators and other big industrial users of water are competing with cotton and rice growers, with communities and others for scarce water in drought conditions.

To them it is a crime that the agricultural sector has access to such large volumes of water at unbelievably low prices. According to Professor Paul Kerin from Melbourne university, some irrigators pay as little as $45 per megalitre for water, and some householders as much as $1,600.

The privateers argue that water is not being employed where its "highest value" is. That is, water is not being distributed to where it could be sold for the highest price. Privatise it and let the markets determine allocation!

To understand what leaving it to the markets and allocating water where the "highest value" is, take a look at the oil markets. Oil prices have gone through the roof, speculative activity is rife. South Australians have had some experience with rising electricity charges, although the worst is still to come when existing price cap regulations are lifted. They do not deny that households would be paying much higher prices for water.

World Bank privatisation programs in Third World countries have had disastrous consequences, with the poor being denied access to clean drinking water because they did not have the money to pay the higher prices. The result is disease and countless avoidable deaths.

There are very serious problems with the allocation of water, and these need to be urgently addressed by a central body. Privatisation will not solve these problems. It will only exacerbate them.

Water is integral to human life and nature, not an economic commodity to be bought and sold where the highest profits can be made. In the interests of the people and the environment it is better to have water on tap than super profits on tap with all the human and environmental devastation that would entail.

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