Hi I am from Croatia,

We have same issues going on here, and I can not really figure out what is best solution, as I see the option having either a private company running the water supply for profit or having the public running it ineffectively and expensively, as having to option to choose between the plaque and some other highly deathly decease.

I think at the end money rules, so I guess it will be hard for many countries and cities to keep the multinational companies away from this.

Good luck with your case

Morten

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Just a brief comment on Owen;s comment on having to connect if councils bring the pipes to your door.
That is correct one does have to pay that fee. I know it is a bit of a rip off.

But there you are Local bodies have far too much power!~!!

However most connections will be metered and we will only be allowed so much relative ‘free’ water before paying the higher rate.

This is where it will make a lot of sense to also have a tank and it should be encouraged.

Any corporate body that seeks to penalise those who use the initiative to collect their extra supply of water on their own property have, in my view very sinister motives.

Such companies should be opposed vigorously as ACT should be opposed vigorously!!!!!!!!!!!!!!!!!!!!!!

Vigorous campaigning is needed at the Epsom electorate!!!!!!!

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“The other effect is water being seen to be “free” when of course it isn’t free to treat and reticulate, and those who use more should pay more.”

That’s one way of looking at the world.

But regardless as to whether you think necessities of life shouldn’t be used to make a profit, the cost of water reticulation systems are largely fixed. Flow and delivery capacity have to be maintained regardless of actual use (for firefighting purposes if nothing else), so the true cost of providing a higher volume to one customer than another will be very small, certainly not enough to discourage waste.

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“If there is a goal to get people to be economical about water one way of doing this is ensuring those who reticulate it… to make money from it”

Why would allowing people to sell water at a profit encourage people to be economical with it? That’s like saying McDonald’s discourages people from eating hamburgers (well it does in a way, but that’s a quality issue, maybe if water quality is significantly reduced people will try and avoid using it).

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Libertyscott wrote: “The public sector stuffed up badly in the past, by not depreciating assets, by not making provision for renewals, so the likes of Dunedin had a water system that was notoriously bad until recently.”

how would a private-sector company have more incentive to maintain the quality of the Dunedin water supply than the council did? Surely they would be just as likely to run it into the ground to extract maximum profit from it like Tranzrail If anything, the council had slightly more incentive to maintain it, in that they were dependent on people’s votes to keep them in power.

“The other effect is water being seen to be “free” when of course it isn’t free to treat and reticulate, and those who use more should pay more.”

That’s a fair comment, but you can charge for water without privatising the system.

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I am for keeping public utilities public. I know that in the past, some old public departments were wastefull and neglected and that was because they had the wrong people at the top.

Richard Prebble tried to argue that the reasons they were inefficient was because they were not private enterprises.
The railway dept. was the main example.

Yet he totally ignored the armed forces, government organisations, well disciplined and always ran to budget.
Such public departments need a public advocate to take up complaints from the public and that is as I understand it to be the Ombudsmens Office.

Unfortunately the Ombudsmens Office never had the wideranging powers and resourses to be effective.

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Libertyscott – well said, it does seem that following some 20 years of effort, the English have got it pretty right, however because of the unique nature of water, not least being the practical impossibility of introducing competition, it hardly argues for the ‘market’ approach.

In my view it does argue strongly for a kind of hybrid joint public/private approach. It should not be described as privatisation.

I do not get the sense that most if any bloggers on this site are ‘opposing entrepeneurship, sticking to an ideological line, or even ‘opposing capitalism’. More they are asking for sanity, & rational thinking, & opposing the ideological thinking of this unprincipled and morally bankrupt government.

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Profit is in addition to cost of capital, which is something ignored at present.

If there is a goal to get people to be economical about water one way of doing this is ensuring those who reticulate it (who should not have a monopoly on collection on private property, which would be a denial of property rights), to make money from it, but one useful form of privatisation would be to hand shares over to the public. Then the public gets any surplus, and puts shareholder discipline on performance.

The public sector stuffed up badly in the past, by not depreciating assets, by not making provision for renewals, so the likes of Dunedin had a water system that was notoriously bad until recently. The other effect is water being seen to be “free” when of course it isn’t free to treat and reticulate, and those who use more should pay more.

You can oppose capitalism per se, oppose profit and entrepreneurship and stick to that ideological line, but privatisation in England has meant significant investment in infrastructure, people paying by usage, but also much ignored is that water companies are fined for bad performance.

Councils are not very good at policing themselves for unhealthy water or leakages or wastage, but if the regulatory is separate from the provider it can be done. After all, for decades London’s leaky pipes were never addressed, now they are at a very steady pace, and the standard of London drinking water has improved, albeit from a bad base.

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Just to clarify the meaning of ‘profit’ I take as the percentage at the bottom line after all expences are included and that is money for replacement and expansion of building and plant known as ‘surplus value’.

Some tend to include profit into the surplus value and that tends to confuse the issue.
Both private and public operations have to have a surplus value in order to keep things working.

Private water outfits will have to charge costs of wages, upkeep of all installations, capital for expansion of plant(when population expands), but on top of all that they have to charge PROFIT to keep their shareholders happy.

A public outfit doesn’t have that pressure so long as it keeps avaricious and rapacious corporations off it’s back.

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samiuela
Yes, of course both private and public organisations can borrow. However councils in particular tend to be averse to debt. More importantly, at the time of the great move to privatisation around the world government debt levels tended to be high (for a number of reasons) and so governments were loathe to both raise taxes and borrow – rather like now.
And for one similar reason. They were coming out of the recession and stagflation caused by the great oil shock of 1972.
The main benefit of PPSs, if properly managed, is that if a private company will not invest in a project on a commercial footing then one has grounds for suspicion about its claimed benefits.
There is a place for full public ownership and total private ownership and for PPPs depending on the nature of the projects and the circumstances.
The strongest idealogues are those who see any private participation as a great evil. I presume the Green Party does not want to have the state own all our retail stores and Air New Zealand and all the radio and TV stations?

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Owen,

Both public organisations and private companies fund a lot of their infrastructure through borrowing. This debt then gets paid off over a period, with interest. A major difference between the state and private sector is that governments can often borrow money at lower interest rates, presumably because lenders perceive there is less risk associated with lending to governments. This is where PPPs often become more expensive than government projects, the PPP will often have higher borrowing costs, and also want to generate a profit for the private partner. Unless some major efficiencies can be achieved elsewhere, the cost to the public is higher in the long term. The ideology behind those who supports PPPs says the private sector can find the required efficiencies to make the cost to the public less; practice shows this is often not the case.

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There was a world wide move towards privatisation of infrastructure during the eighties and nineties for the simple reason that so much infrastructure was coming to the end of its life, or was becoming obsolete.
But taxes were high and governments did not want to fund the massive investment required out of taxes and decided it was much more palatable to hand the business over to private companies who would then raise the money from the public through the share market.
England had the most serious problem with its water because its water infrastructure was the oldest in Europe.
Because this was the objective the analysis in terms of setting up proper efficient markets was lacking.
Of course as the companies had to raise the money and invest hundreds of millions in upgrading the infrastructure the prices had to rise and many people blamed the price rises on the privatisation rather than on the upgrading or replacement of the plant. It does not matter whether an asset is in public or private ownership. There has to be a surplus to provide the funds to maintain or upgrade infrastructure. Profits provide this money in private companies. Public companies tend to either ignore the issue. If they are told to set aside funds for depreciation they tend to raid them at the first opportunity. IF something needs to be replaced beyond the next election most politicians don’t give a damn and want to spend the money during their term. They don’t pay taxes so the depreciation regime provides no benefit, where depreciation is an important means of reducing private company taxes, so there is some incentive to put some money aside for the future.

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The US Bechtel Corporation had control of water in Bolivia even charging water users for collecting rain water. If residents couldn’t or didn’t pay their property was reportedly seized and sold. The following link provides information:
http://www.openureyes.org.nz/blog/?q=node/1752

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