Green Oral Question for today

In Parliament today, the Green Party’s Questions for Oral Answer (number 3) is from Russel Norman to the Minister of Finance, Bill English:

Does he stand by his statement that “water assets will not be privatised as a result of the restructuring” of local government; and if so, how does he reconcile it with Cabinet’s decision to allow “ownership” of water infrastructure by the private sector?

Yesterday, Rodney Hide announced Cabinet’s decisions on local government reform. Hidden among them were changes that will effectively privatise local government water services, by allowing PPPs and repealing public ownership protection provisions in the Local Government Act.

The following legislative changes will be made:

  • extend the 15-year limit on water services contracts and joint arrangements with the private sector to 35 years, which makes these arrangements more workable
  • allow water services arrangements to include BOOT schemes by allowing ownership of infrastructure by the private sector during the contract period
  • repeal the provisions that require councils entering into a contract or joint arrangement with the private sector to retain control over the management of water services (control over pricing and policy to be retained by councils).

Yet, back in May, the beleagured Bill English, as Acting Prime Minister, categorically said “water assets will not be privatised as a result of the restructuring”. Here’s the relevant Hansard from the May question exchange:

Dr RUSSEL NORMAN (Co-Leader—Green) to the Prime Minister: Will he guarantee that sections 130(3) and 136(2) of the Local Government Act 2002, which prohibit the privatisation of council water services, will remain in force as long as he is Prime Minister?

Hon BILL ENGLISH (Deputy Prime Minister) on behalf of the Prime Minister: Privatisation of council water services is not being considered by the Government, in Auckland or anywhere else. I cannot give a guarantee on the sections of the Act, because they do not do exactly what the member describes. Officials will be considering those sections, along with many other legislative provisions, in the light of whether they assist or inhibit investment in infrastructure.

Dr Russel Norman: Can the Prime Minister therefore confirm that his promise not to privatise publicly owned assets during this term of Parliament is going to be broken, or is it going to be kept—that is, will he ensure, in respect of the restructuring of Auckland local governance, that water assets cannot be privatised as a result of that restructuring?

Hon BILL ENGLISH: I can confirm the Government’s view that those assets will not be privatised as a result of the restructuring.

Dr Russel Norman: Can the Prime Minister give the same commitment that he has given in relation to New Zealand Superannuation, that if there are any changes—any privatisation of water assets—he will resign as Prime Minister; that is, a complete promise from the Prime Minister that water assets in Auckland will not be privatised while he is Prime Minister?

Hon BILL ENGLISH: I can only confirm what I said in answer to an earlier question. Water assets will not be privatised as a result of the restructuring. In the end, as with every other local body in New Zealand, the decisions about local body assets are made by the elected representatives of the people who live in that local body area.

Dr Russel Norman: How can the Prime Minister say that it is up to Aucklanders to decide whether the privatisation of water services will proceed, when it would be possible for such privatisation to proceed only if his Government were to change the law around the Local Government Act, removing the protection that currently exists in the Act to stop the privatisation of water services; that is, it is not up to just the people of Auckland; it is up to this Parliament and his Government?

Hon BILL ENGLISH: I am not exactly sure what the member means by the privatisation of water services, or of the way the section of the Act to which he is referring protects it. Some councils already have water services delivered under concession. The section he is referring to simply puts a limit on the length of the concession at 15 years. So it is not saying that councils should not have concessions; it is just saying that they cannot be longer than 15 years. If that is the way the law is, then Auckland local bodies will have to work with it unless it changes.

Jeanette Fitzsimons: I raise a point of order, Mr Speaker. It is difficult to raise this, and I certainly do not want to accuse the Minister in any way of misleading the House, but I think he may have misread the Act in terms of what those—

Mr SPEAKER: That is not a point of order. Whether a Minister’s answer is to the member’s satisfaction is not a point of order. She can ask further supplementary questions to elucidate that matter, but she cannot use the point of order process in that way.

Dr Russel Norman: Will the Minister implement the royal commission’s recommendations for block tariffs for water, which guarantee that even large families have enough truly cheap water to live on, while making sure that those who waste water—with very large swimming pools, for example—pay for the privilege; that is, we guarantee water to those who need it, while having a steep price tariff for those who waste it, so there is an incentive to use water wisely?

Hon BILL ENGLISH: It is not the Government’s intention to become involved with the pricing of water. That will be carried out by whatever entity is in charge of water in Auckland, and that entity will be accountable to the elected representatives of the Auckland people.

Jeanette Fitzsimons: Has the Minister received any advice as to whether section 133 of the Local Government Act requires councils to retain their water services and not sell them, and any advice as to whether section 136(2) limits the matters that can be contracted out, to purely operational engineering matters?

Hon BILL ENGLISH: The Prime Minister has not received any detailed advice on that matter. The relevant sections do not prevent the use of concession agreements. They simply set out some of the limitations on what those agreements might be.

Join us at 2pm as Russel and the Green Team fight to keep our public drinking water clean, affordable, and ours.

30 thoughts on “Green Oral Question for today

  1. “When I lived in the Kapiti area, I was told many new houses in the area have 1000-litre water feeds / day…and if they run out they don’t get any more water….or must pay a premium.”

    Nope – I live in Kapiti – have followed the water debate pretty closely and never heard of such a thing.

    “Which means that they SHOULD be doing this using meters and charging according to what the council decides to charge. Not privatizing. The point I made was that there should be a CHARGE for the water. I also pointed out how the rate would be applied to the overage in consumption rather than to every drop. You ignored that and/or any variant of it.”

    I didn’t ignore it – I just didn’t have time to write about it.

    “however given the amount of rain we get here in Porirua I have to reckon that the only way to run short is to waste the stuff wholesale.”

    The way to run short of water is not to store it. If you have an increasing population and a council that doesn’t build more storage for decades you will eventually run short – doesn’t matter how much rain you get.

  2. National moving to privatise water and remove Auckland’s infrastructure from direct public control should be the front page news….not Rodney Hide’s travel details. Both are counter to the prevailing public opinion. I can’t help but feel the Rodney Hide story is intended by National’s mates in the media, to distract us and provide cover for the more important issues it has sidelined…..

  3. Sam

    Putting a price on everything is a sign of a failed society

    You have to have a price on CO2

    …and you have to have a price on clean water.

    NOT putting a price on the commons is a guarantee of a failed society.

    Nothing is for nothing. You can’t pick and choose.

    Reticulated water is a natural monopoly and has no realistic substitute, so should not be subject to market forces.

    Which means that they SHOULD be doing this using meters and charging according to what the council decides to charge. Not privatizing. The point I made was that there should be a CHARGE for the water. I also pointed out how the rate would be applied to the overage in consumption rather than to every drop. You ignored that and/or any variant of it.

    Finally, I only read about (and on rare occasions get to taste) the water problems there. Maybe it isn’t so horrible (though it really tasted awful).. however given the amount of rain we get here in Porirua I have to reckon that the only way to run short is to waste the stuff wholesale.

    respectfully
    BJ

  4. Sam Buchanan: When I lived in the Kapiti area, I was told many new houses in the area have 1000-litre water feeds / day…and if they run out they don’t get any more water….or must pay a premium. I can’t recall the details. Have you heard of this?

  5. Well your links show that property developers don’t want to spend money putting rainwater tanks into new houses, that there was a temporary ban on hosing six years ago and that people object to water metering. This doesn’t amount to much of a shortage. If hosing is a necessity, more storage of winter water is needed.

    If by “kapiti has a water problem” you mean the council hasn’t invested in infrastructure in 20 years or more, fair enough.

    “The second is that it means that poor people will have to be careful and rich people still won’t care. This is true… it depends how you run the charges but this is in general ALWAYS true of ANY sort of service that is metered in any fashion whatsoever.”

    So because poor people miss out on other resources, and bear the burden of coping when they are in short supply, they should bear the burden in case of water shortage? What sort of logic is that?

    Reticulated water is a natural monopoly and has no realistic substitute, so should not be subject to market forces.

    “…and the need to put a price on the commons remains.”

    Putting a price on everything is a sign of a failed society – I don’t think we have reached that point yet.

    ‘Scuse brevity – gotta run!

  6. http://www.stuff.co.nz/dominion-post/news/wellington/2521518/Kapiti-water-saving-moves-go-to-court

    http://www.google.co.nz/url?sa=t&source=web&ct=res&cd=17&ved=0CB4QFjAGOAo&url=http%3A%2F%2Fwww.gw.govt.nz%2Fassets%2Fcouncil-reports%2FReport_PDFs%2F2003_503_1_Report.pdf&ei=r0bqSt_NCoLmtgOS5cgI&usg=AFQjCNHiHGXva0UE7hWUcRXo227gO5pCIQ&sig2=71XlXnNDBtEXkBOg1ZcIqQ

    http://wellington.scoop.co.nz/?p=1878

    So- can we admit that Kapiti has a water “problem”???

    Odd and Even Days watering restrictions??

    ++++++++++++++++++++

    OK… that’s one issue.

    The second is that it means that poor people will have to be careful and rich people still won’t care. This is true… it depends how you run the charges but this is in general ALWAYS true of ANY sort of service that is metered in any fashion whatsoever. Electricity, Gas… if it costs something per unit of use it is going to impact people depending on how much money they have as well as how much of whatever it is that they use.

    If you want to make it a bit less onerous you can work out a per-occupant arrangement (which would be similar to the billing done now in terms of setting rates and provide a standard water credit), people only pay the overage, the standard charges remain part of the rates. That wouldn’t actually change anything except that the really frugal user wouldn’t be able to save anything.

    What leak detection? The best the council can do is identify a bunch of houses that are using more water than usual. If it can do that much. No idea which house is at fault. The individual has no method whatsoever of knowing that water is running off. The meter gives you a localized indication of a problem as well as the incentive to fix it.

    …and the need to put a price on the commons remains.

    respectfully
    BJ

  7. “having people being attentive to their to use all the time”

    You mean poor people being attentive to their water use? There is no way water is going to be priced high enough to make the rich trim their consumption.

    The Wellington City Council recently acknowledged that the cost of suppling reticulated water is too low for a realistic price to affect people’s consumption patterns – the charge will have to be well in excess of cost to make any difference.

    Then the only cost is the one-time of installing the meters…

    and maintenance, calibration, reading, billing and administering. Not to mention chasing defaulters.

    “and council can’t identify the big users OR the leaks.”

    What’s wrong with current leak detection methods?

  8. I dunno Sam. Rationing (which I know happens pretty regularly in Kapiti) is a sign that something is amiss with supply and use.

    It may still be required if water is priced reasonably and stably (as a council might do) and the seasonal supply varies markedly (as we know it does). The thing is that efficient use of water throughout the year, having people being attentive to their to use all the time rather than when the supply drops to where they have to supplement with bore water… that takes a more constant incentive.

    I think the problem probably has to get worse in Kapiti before someone there takes the bull by the tail and faces the situation, but the point is still real. If there is no price on the commons, it will be misused.

    As for making a buck, if they were smart they’d meter it and reduce the council rates accordingly. Then the only cost is the one-time of installing the meters and nobody “makes a buck” off them. The benefit is a long term ability to manage usage, which individuals simply do not now currently possess and council can’t identify the big users OR the leaks. Nobody can.

    I’ve grown up with meters for water and spent 41 years living with knowing how much of the stuff I was using. Didn’t stop when I was in the Navy either. Fresh water on a ship is not “free”.

    It wasn’t ever a big deal. Used properly it simply makes sense.

    respectfully
    BJ

  9. “Water is perpetually a problem in Kapiti,”

    No it isn’t. We don’t run out of water. People respond to shortages by cutting down use, despite all the choruses of “people only conserve water if they are made to pay”. The whole “water is scarce” myth is a creation of those looking to make a buck out of it.

  10. Kahikatea

    One time cost. Gets the job done. National gets the blame. What’s not to like?
    :-)

    Because LibertyScott is absolutely correct about the choice. Rationing and shortages or paying more. This is irrespective of privatization. That choice is real and that is what they make, and they don’t want to choose to pay more or pay according to usage so the problem gets worse every dry summer.

    It isn’t like the region has stopped growing. It isn’t like people are leaving it, hell *I* want to move there. Except I can SEE the “tragedy of the commons” going on in microcosm there.

    So I have to do something with a private well and water tank and purifying or desalinating my own.

    I know how, but I would rather have a meter and a council that does it right… and a water tank besides because the price needs to be high enough to encourage conservation at that level. Since I can’t have a council that does it right I have to accept privatization as a possible solution.

    The thing is that without metering nobody is going to fix that dripping faucet with any urgency. People DO NOT do the right thing when the commons has no price and they DO NOT want to put a price on the commons when it has always been “free”.

    They might (gasp) have to change their behavior!!!

    We’ve got a lot of experience with that. Don’t we?

    respectfully
    BJ

  11. Kahikatea: So councillors break promises, it is no different from any other area of council activity, but the Greens support the power of general competence and the principle of subsidiarity. What that means is that “will of the people” is reflected in the ballot box, and if people don’t like it, then they vote differently next time. Unless you want a mechanism to eject politicians when they break promises, which means judicial review and effectively undemocratic means to eject them, this is the price of liberal democracy. After all, sometimes politicians make promises that are ludicrous, and don’t fully understand the consequences of them.

    Water is perpetually a problem in Kapiti, without metering and without capital to invest in expanding supply. If Kapiti rejects private capital and metering, then the residents can put up with rationing and shortages. If Kapiti chooses private capital and metering, then people may pay more, but I suspect that it would be commercial users and large families that pay more, elderly residents would pay less. Nevertheless, it may be an effective way to limit sprawl and growth there, because if water is expensive (but good quality) it would say to prospective residents to make a choice of the coastal lifestyle, but pay the price of the scarce resource that has been a persistent problem. Of course privatisation isn’t necessary for that, but it could raise capital to expand and upgrade the capacity and spread that over time with the users paying by usage. I suspect Kapiti residents need to make the stark choice, rationing and shortages, or pay more.

  12. bjchip wrote:

    “If the government forced water privatization the meters would get installed. Maybe the smart thing is to let them go ahead and then take it back into as a council responsibility when the government changes back to sane.”

    Nooooo! taxpayers would have to pay out massive compensation to the water companies for breach of contract if that happened.

  13. The voters are doing just the same thing as the businesses are doing elsewhere in the environment.

    The commons in this case is their water supply.

    They are used to having it for free.

    However, this leads to completely irresponsible decisions relating to water USE.

    A portion of the council rates is determined by the cost of supplying water and this portion should be reduced if metering is introduced.

    Was that proposed or considered? I don’t know but I would be unsurprised if it had been neglected as an issue and the meters addressed as a way to supplement the council budget.

    Still, I can imagine the knee-jerk opposition.

    Which means that councils aren’t ever going to be able to handle this without first educating a lot of people. Can that be done? Fast enough?

    If the government forced water privatization the meters would get installed. Maybe the smart thing is to let them go ahead and then take it back into as a council responsibility when the government changes back to sane.

    If they are going to be goons, let them do it, take the hammering that results and then pull it back into the public domain… with the meters installed,

    Just thinking outside the box here. ;-)

    respectfully
    BJ

  14. “My point was that should this not be up to councils to decide this?”

    Water metering was the biggest issue in the last Kapiti local election, and voters overwhelmingly voted for anti-metering/anti-privatisation candidates, then had to battle to keep water meters off the council’s agenda as councillors “changed their minds” or split hairs over what they had committed to pre-election. Didn’t help having unelected council bureaucrats trying to sneak through water meters at every opportunity.

    By all means give residents a choice as to how water is supplied, but leaving it to councils is a recipe for cluelessness.

  15. Frog I did not say all is rosey, but quoting reports from a decade ago is being rather selective. It was difficult for those owning water operations to prosecute themselves for breaches of drinking water standards before privatisation in the UK, and there was a mountain of deferred maintenance – the massive digup of roads in London to replace pipes is because of this. Of course there has always been private providers of water in some parts of the UK, which nobody notices because nobody complains. The same may happen in NZ with a mix, but you don’t even want the debate. For example, it may be better for users to be given shares in a water company, so that it is genuine public ownership – not ownership driven by councils that delay difficult decisions year after year (e.g. Kapiti) about rationing and improving infrastructure.

    My point was that should this not be up to councils to decide this? Standing back from ideology, could it not be that one model does not fit all?

  16. Greenfly, see Russel’s press release after the question: http://www.greens.org.nz/press-releases/government-contradicts-itself-water-privatisation

    Bill made out that the only significant change was the timeframe, but under the current law it is not possible for private sector interests to buy, own, and operate water infrastructure in the way that the proposals contemplate, so this is a more significant change.

    Also, the Greens opposed even the partial privatisation for 15 years that Bill English referred to; Jeanette especially. As chair of the relevant Select Committee at the time, her main contribution was to fight for the constraints that require councils to retain management that are now being removed.

  17. So…. Bill is lying? There is no privatisation planned, other than that which already exists, extended now out to 35 years and were our MP’s not aware of Bill’s most likely response, that the Green Party okayed the 15 year permits that are in place now?
    Any comments to clarify this, please? The Green MP’s seemed to be laughing cynically at English’s claims, but the casual observer couldn’t see what they were on about.

  18. All the more incentive to get your water tank in now and connect it to your downpipes. Any issues with bacteria, dust etc. are easily solved with simple technology.

    (Put in a compost toilet while you’re at it)

  19. “public management still has to be watching the private firms performance.”

    And Frog’s post clearly shows the result of failing to have that oversight.

    respectfully
    BJ

  20. People only have one set of pipes leading to their houses. Communities only have one set of dams and storage tanks and whatnot leading into the pipes. This is a “natural” monopoly.

    This makes the “difference” between private and public essentially the addition of a layer of private corporation management, as public management is going to have to be watching the private firm’s performance even if the private firm is run perfectly. Because even if it IS run perfectly, the ultimate responsibility is the Council’s.

    The only reason to prefer privatizing is a fixation on privatization. It isn’t meaningful in practice.

    The fact that councils have thus far, not worked out that metering and charging people for water use is the right way to persuade them to fix their plumbing is a whole different problem, and one over which I tend to argue sometimes. To me this is the same problem of putting a price on the commons… writ small.

    respectfully
    BJ

  21. @libertyscott “it is quite a lie to claim privatised water would mean it isn’t clean – anyone died in England from privately provided water?”

    Or perhaps a lie to suggest all is rosey in England’s water?

    These reports suggest otherwise:
    http://www.parliament.the-stationery-office.co.uk/pa/cm199900/cmselect/cmenvaud/597/59703.htm#a3
    http://libcom.org/book/export/html/2106

    Thatcher’s water privatisation, buttered by a write off of all water company debts and a “green dowry” costing lots of public money was a disaster: a 50% price rise in four years, with 18,000 households having water cut off due to inability to pay the hiked prices; increase in dysentery, outbreak of cryptosporidiosis, non-compliance with heavy metal and pesiticide levels, and worse public health outcomes from the water supply. Indeed, the private water companies were successfully prosecuted 260 times for pollution.

    Just what we need!

  22. Interesting to see this issue arise.. comments also useful.. eg rimu’s link to Part 7 and the wording pertinent to so-called obligations.. Instance the term management which, apparently, ought be taken to include significant matters like quality of drinking water (since no other reference to standards is made there)..

    I had begun this comment with an intended query relating to such standards – viz is there any uniformity, nationally, across regions etc without which any privatizations must rely on local resource/s and could or would present legal recourse difficulties to contractor councils and others in event non-performance – but thought not to ‘take advantage’ of the blogger’s intent. Apols if I have anyway :-) Yet can someone oblige links, data re my request.. If not now then mebbe sometime more suitably..

  23. Why shouldn’t councils decide what they contract out or sell? If you believe in local democracy, then it really shouldn’t be an issue – but if you think local democracy should be subservient to what central government wants, then why is your vision of forcing councils to adopt a model of management and ownership of assets you claim are “the peoples'” better than what the councils choose?

    All the government is doing is remove the last minute tagon sections of the LGA 2002 that Sandra Lee put in as part of the Alliance stamping its mark on the legislation.

    In other words, water will be subject to the power of general competence, like roads, rubbish collection, parks, housing and ports.

    So either propose severely constraining the power of general competence, along your own ideological lines (hey I’d do it the opposite way, so I’d understand if you want to), or let it be.

    You can’t believe passionately in local democracy and then want to override it if people vote for a council that believes in privatising water.

    Besides which, it is quite a lie to claim privatised water would mean it isn’t clean – anyone died in England from privately provided water? Of course not.

  24. Russel – I sincerely hope you seriously embarrass Hide and the Government over this and follow through to prevent this outrage.

    Take them to task. Call them on their lies. Show them your muscle :-)

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