WATER TORTURE:
Privatisation leaves us high and dry
- from www.schnews.org.uk
Corporations have to splash out billions every year to persuade us to
buy unneeded crap. But no such problems exist when they have a grip
on more essential, life-sustaining, natural resources, like water.
You don't need to fork out millions for flashy PR men and mount big
dollar advertising splashes to flog H2O. Who has to persuade us to
use water? They've got us over a barrel on that one.
Privatisation was supposed to bring competition, but if a water
company decides to rip you off for the water you use and can't be
bothered to repair cracked pipes, alternatives are in short supply.
Worse still, the water corporations' focus on profits at all cost
makes them unable and unwilling to do anything to meet the current
water shortages, as money that could have gone into maintenance leaks
away into shareholders' pockets.
Here in the UK the government spent most of the last 150 years (and
loads of taxpayer cash) buying up the water companies, convinced that
private corporations are not the best organisations to deliver such
an essential service. All that changed in 1989 when the Thatcher
government flogged off the lot under the 1988 Water Act. And in case
no one was interested in picking up a monopoly or two, the firesale
came with some additional incentives; £5 billion worth of debts owed
by the water authorities would be written off and a £1.6 billion
subsidy would be given up front. Monopoly, debt write-off and a cash
incentive still not enough for you? Well, how about having the
companies at a bargain basement 22% discount too?!
Unsurprisingly pre-tax profits of the 10 water companies then rose by
almost 150% in the first 9 years of privatisation. OFWAT, the
sector's regulatory body, identified three main components of
customers' bills: operating costs, capital charges (for investment
and renewals), and operating profits. Over the period since
privatisation, operating expenditure as a proportion of bills has
shrunk; the capital charges have risen; but operating profits, which
have more than doubled, account for virtually the entire increase in
customers' bills. And the tide shows no signs of turning.
In the week when Thames Water announced that there would be a
hosepipe ban in London, the company's shareholders also enjoyed a 10%
profit. No "cash drought" on the horizon then? Although it's raining
cash for investors it's more like a golden-shower for the less
fortunate customers. Not only has OFWAT agreed to further massive
price hikes, but Thames Water also manages to lose over a third of
the water through the antiquated Victorian pipe system that they just
can't seem to afford to fix (pissing away 1 billion litres a year,
enough to fully supply Birmingham). The company had agreed an
investment plan with the regulator, but then curiously spent £350
million less on it than planned, the equivalent of 10% off every
customer's bill. So where did that 10% end up? Drained away down the
profit plug hole perhaps?
Thames Water, whose 8 million customers will be affected by the ban,
says two unusually dry winters have caused "serious" water shortages.
Had the water companies invested in infrastructure maybe they
wouldn't be losing a third of our water. In the current climate of
"eco-awareness", the UK fails miserably in terms of utilising our
rainwater. Only a desultory 5% finds its way into our water supply.
Our suppliers whinge and moan about shortcomings in the weather, but
can't be bothered to dip into their piggy banks to bale us out -
maybe saving it all for a rainy day.
Thames Water did, however, last year feel flush enough to throw a
£2.2 million pay-packet at their top four directors. All in, the
German owned company's liquid profits came in at a cool £385.5
million. Londoners must have experienced that sinking feeling, as
they suffered a 21% increase in their water bills. WATER PALAVER
And how likely is it that things will improve now that things are
hotting up for all of us climate-wise? Being able to plant your
vegetables out a month earlier than usual is not the only symptom of
global warming and climate change; the country's water supply is
evaporating at such a rate that hosepipe bans, showering instead of
jumping in the bath and putting a brick in your cistern may not be
enough to prevent us from getting a lot thirstier yet. With more cars
on the road and planes in the sky carbon dioxide emissions will only
keep on rising. But don't worry - the free market will save us.
The idiocy of water privatisation has become a global pandemic (would
that be Evian Flu perhaps?) Africans have long been without a proper
water supply, but private companies (who picked up local water
companies at bargain basement prices during a spate of privatisation
in the 1990s) have still been flooding customers with higher bills.
According to a report by the University of Witwatersrand, 22,000
people in Johannesburg are disconnected from water supplies each
month because they can't afford to pay steeply rising water bills.
The problem affects the whole country - in a population of 44
million, 10 million South Africans have had their supplies cut. The
result? 43,000 deaths from diarrhea last year, and an outbreak of
cholera affecting 135,000.
"I would say they are criminals" says Pascal Kerneis from the
influential lobby organisation European Services Forum. No, not the
water companies, obviously! He reckons campaigners against water
privatisation are just plain stupid not to think that water is best
delivered by corporations. Pascal and his cronies lead the drive to
include water in the 5th chapter of the General Agreement on Trade
and Services (GATS). The European Union has also been pushing hard to
include water at recent WTO talks, which are host to the negotiations
for a range of GATS agreements aiming to carve up the planet for the
general consumption of profit-hungry multinationals. Sustained
pressure from a range of activist and citizens' groups has recently
succeeded in getting the WTO to drop the water proposal from the
current GATS discussions, but it's surely only a matter of time
before the constant drip, drip of corporate lobbying erodes common
sense.
The GATS agreement would have been another way in for the
corporations - who can currently only hope to persuade unwilling
governments to flog off their public infrastructures through the
'conditions' which are attached to any International Monetary Fund or
World Bank loans. Whilst this recent victory has made it harder for
the corporations, many people in the hottest parts of the planet
still can't afford to pay their bill. This week, The Fourth World
Water Forum takes place in Mexico City, and will look at how anti-
privatisation activities are breaking the corporate grip on our water
supplies. Find out more at www.comda.org.mx or get to grips with GATS
by visiting www.corporateeurope.org/water/gatswater2006.pdf - and pay
a visit to the Public Services International Research Unit's briefing
papers on water privatisation across the globe, including the UK at
www.psiru.org
