PRIVATISATION
OF WATER
A briefing note for campaigners
Background
Water actually
belongs to the State, so the privatisation of water actually
means that the treatment, sanitation and distribution
processes are outsourced by the Government to a private sector
corporation. A related issue is that of water trading, which
refers to buying and selling water licences or entitlements.
Both issues are covered in this note.
Values
This
campaign focus is based on values of concern for our
neighbour, especially those who
are poor, and also
on the value of preserving the integrity of creation – a
value threatened by the profligate overuse of cheap water. |
1.
Privatisation of water services is part of a trend.
Australian Governments began to sell off public trading enterprises
(PTE)
to the private sector, starting with the sale of the Commonwealth
Bank, in 1991. Financial services, transport, communications
and utilities such as gas, water and electricity, are the mostly
widely privatised sectors. Governments have raised huge sums
as a result, most of which has been used to retire government
debt.
Privatisation
of essential services can create problems. Government providing
these services, have no responsibility
other than to
meet the needs of its citizens. Private corporations however,
need to return a profit for their shareholders. In order to
do this, they will often seek to reduce costs or to charge
more
for the service provided.
There
is growing evidence that this practice has some negative effects,
especially on low-income
consumers. Studies in areas
where water distribution has already been privatised, both
in Australia and the UK, have found that low-income consumers
often
take drastic measures to minimise costs and ensure they can
pay the bill. These measures include reducing usage of water – for
example by not showering every day, going without food, or
missing out on children’s clothing or shoes.
2.
Water markets: The creation of water markets and
the buying and selling of water rights and licences is a
feature of
the rural water scene. Water rights have actually been
traded
in
Australia for more than 20 years. Now, however, the trend
has gained pace. Water entitlements can be traded in a
manner similar
to real estate. In 1994 The Council of Australian Governments
(CoAG) initiated wide-ranging reforms in the water industry.
In addition, the National Competition Council has pushed
for an expansion of water markets. Now, States can receive
substantial
payments from the Commonwealth for developing water markets
in accordance with National Competition Policy.
Advantages
of water markets: Water markets tend push up the
price of water entitlements, and this in turn can result
in licence-holders
using water more efficiently and reducing waste. Reduced
water use means a reduction in the water that returns
to rivers and
aquifers after irrigation, which is often polluted with
pesticides
and fertilisers. It also means increased river flows.
In addition, governments or other bodies can purchase water
entitlements
from existing holders and return this water to the rivers.
Water markets
also tend to encourage farmers to extract the highest
value
from water, for example by changing to a higher value
crop.
Disadvantages
of water markets: The reason put forward for the development
of water markets is that the value
of water
will
find expression in the price paid for it. But this
is still not happening. Water can be priced below its real
value – for
example, Cubby station in Dirrambandi in Southern Queensland,
the largest cotton farm in the southern hemisphere,
pays only $3,700 to extract enough water to fill Sydney
Harbour.
Another disadvantage
is the awakening of “sleeper” entitlements.
With the establishment of water markets, many farmers found they
have entitlements which they do not need. Previously, the water
covered by these entitlements simply flowed down the river. Now
the temptation is there for the farmer to sell these unused entitlements
to others who will extract this water from the river.
Campaign
Focus
SAO
is asking all candidates in the forthcoming election
to support legislation to ensure that people
on low incomes will not be deprived of affordable access
to clean water supplies as a result of the privatisation
of water services.
SAO is further asking candidates to ensure that water market
prices reflect the real value of water as a scarce resource. |
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