By Peter Boyle
MELBOURNE — If there is a buck to be made out of it, we'll flog it. That's the motto of the Kennett state government. It hopes to sell off Melbourne Water (which provides sewerage services and water supplies), the Gas and Fuel Corporation and the state Electricity Commission.
Melbourne Water made an operating profit of $134.7 million on a turnover of about $1 billion last year — and a profit like that just begs to be privatised.
The impetus to privatisation of utilities is all the greater in these times of capitalist economic crisis, when big business finds it difficult to turn a profit from its usual fields of investment. According to a report in the May 14 Australian Financial Review, Britain's privatised water services was the best performing sector on the London Stock Exchange last year. Close on its heels were the privatised electricity, gas and telecommunications monopolies.
Preparations for the privatisation of Melbourne Water began under the previous state Labor government, which "commercialised" the utility. The word "corporatised" made some in the Labor Party nervous because it was seen, correctly, as simply a preliminary to privatisation. The effect of commercialisation was the same.
Under the Melbourne Water Corporation Act (1992), the primary duty of directors is to advance the commercial and financial interests of the corporation, rather than providing services to meet community needs. Social and urban planning, environmental and other social concerns are completely swept away by the act, according to the Plumbers and Gasfitters Union and the Australian Workers Union.
Melbourne Water's management actually had this approach well before official commercialisation. Since 1988, some 4000 jobs have been axed, and another 1000 jobs will be axed in ongoing management plans to make
Melbourne Water more commercial.
There have also been environmental costs of commercialisation. For most of last summer, the main beaches in Port Phillip Bay were closed because raw sewage was being pumped into the sea. Desperately in need of a $2 billion upgrade, Melbourne's sewers have been collapsing, in one instance leaving a bus-sized hole in a suburban street, and in another rendering a block of flats unstable.
Melbourne Water's general manager, David Knipe, blithely admits that the utility is "one of Melbourne's greatest polluters". The sewerage system is used by many industries to dump waste products with, and sometimes without, the utility's approval. Knipe has publicly affirmed that privatisation remains his priority.
Melbourne Water management's attitude is predictable, since it stands to be a major beneficiary of privatisation. It fact it has already made some gains. According to the recent audit into state finances commissioned by the Kennett government, under a sale to management of Melbourne Water's information technology division in 1990 the corporation guaranteed payments of $11.6 million to the new private company. The audit said that it was not clear that this deal — entered into without a competitive tender — was in the best interest of the public.
The government recently made Melbourne Water move to a user-pays system for water supply. From July 1, a portion of water rates will be based on actual usage. The rest will remain rated on the property value of each household. On April 21 the government passed an amendment to the Residential Tenancies Act which allows landlords to pass this charge on to tenants. The Public Tenants Union and the Tenants Union of Victoria are campaigning against this change.
The People's Committee for Melbourne, an anti-privatisation coalition, says that the assets of Melbourne Water have been built up with public funds over many generations and the government has no mandate to sell them off.
At an individual and household level, water and
sewerage are necessities, and they are also vital for economic development. So any change in the control of these resources requires substantial public debate, the committee argues.
"Water is also a scarce resource that requires strategic and integrated planning to maximise its conservation", says Andrea Sharam, a spokesperson for the committee. Privatisation will not help.
Sharam argues that privatisation of the water utility will also be against the interests of most consumers. "Domestic consumers will subsidise big business and the poor will subsidise the wealthy", she says.
A natural public monopoly ("It's absurd to expect two or more sets of pipes going to each house to give the consumer a 'choice' of water company") will be transformed into a private monopoly dedicated to making profit.