September 2015        

The case against the privatisation of water

Paul Doran

Here are ten reasons—among many—why the privatisation of drinking water could spell doom for the Irish people and many of the world’s 6 billion-plus people
     1. Price increases have been used globally as a way for private water companies to maximise profits. The bottom line for these companies is profit, which translates into higher prices and inferior service for consumers. The companies are under no obligation to provide water or a service when water is defined as a marketable commodity rather than a human right. So, when consumers can no longer afford the price increases, water is simply cut off.
     2. Privatisation undermines water quality. Because the profit motive drives the water corporations’ agenda rather than serving the public interest, environmental standards are continually weakened. In the United States the National Association of Water Companies, representing the private water industry, intensively lobbies both the Congress and the Environmental Protection Agency to prevent higher water quality standards from being adopted. The water companies continually request that all official regulations be based on “sound” cost-benefit analysis. What this means is that public health is compromised for the sake of higher profits.
     3. Companies are accountable only to shareholders, not to consumers. Many water companies make deals with government agencies that include exclusive access to distribution for twenty-five or thirty years. These private monopolies tend to undermine accountability, resulting in poor customer service. The company is under little pressure to respond to consumers’ concerns, especially when the product in question is necessary to the lives of consumers.
     4. Privatisation fosters corruption; the very structures of privatisation encourage corruption. Checks and balances that could prevent corruption, such as accountability and transparency, are conspicuously missing from the process. With water contracts being worked out behind closed doors, executives and government officials are free to make deals in their own interest rather than that of the public.
     5. Privatisation reduces local control and public rights. When water services are privatised, public control is transferred to the private company, be it domestic or transnational. Once water rights have been signed over, very little can be done to ensure that the private company will work in the interests of the community.
     6. Private financing costs more than government financing. When water services are privatised there is often a false perception that the financial burden has shifted from the public to the private sector. So the company promises to repair, upgrade and maintain infrastructure, seemingly saving the taxpayers money. In reality the public pays for these projects through their monthly bill payments. Tax-free public financing usually translates into lower-cost projects. Taxable private financing, however, invariably brings with it higher interest rates. As a result, the consumers—who are already paying executives’ salaries and bonuses, and dividends to shareholders—will also be forced to make these higher payments on company loans.
     7. Privatisation leads to the loss of jobs, putting service and water quality at risk because of understaffing. Redundancies and poorer working terms and conditions are used to reduce costs and increase profits. This happened when refuse collection was privatised, with the notorious example of Greyhound. Following privatisation in Britain, for instance, the number of employees in water and waste water in ten major companies was reduced by almost ten thousand over ten years. In most cases the companies responded to demands for lower rates by sacking employees.
     8. Privatisation is difficult to reverse once part or all of the water has been handed over to a private company. If the company fails to live up to its end of the bargain, proving breach of contract is a difficult, complicated and costly proposition. Multinational trade agreements, such as the TTIP, provide corporations with powerful legal recourse. A private company could use TTIP’s closed tribunals to challenge the reversal of privatisation as being a forbidden action tantamount to “expropriation.”
     9. Remember when our bin collections were privatised not so long ago, and the rampant rise in these costs to the citizen? We were told that would not happen. It did.
     10. It is we and our parents and grandparents who built and paid, through our taxes, for the infrastructure to bring the access to water that we have today. It is crucial that we have a referendum to amend the Constitution to enshrine the keeping of water in public hands.

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