Political stupidity and hydrocommerce madness

I don’t have a problem with the involvement of the private sector in water recycling, but I do have a problem with the private management of water without very tight government regulation. Water is a commodity like no other. Perhaps Premier Rees should be reminded that the private sector can’t always be trusted to do what’s in the best interests of all people.

This view I apparently share with the Public Interest Advocacy Centre (PDF 197KB), the Council of Social Service of New South Wales (PDF 43KB) and the Nature Conservation Council of NSW who accepted that there may be benefits from competition for the supply of non potable and recycled water to the business and industrial sectors, but who do not believe that the potential benefits of retail competition for residential users (in this case, consumers currently serviced by Hunter Water and Sydney Water) outweigh the potential costs of market failure in this area.

Anyone who follows water developments internationally knows that locking in residential consumers is precisely what international corporations are interested in.

I suspect the Water Industry Competition legislation has not been widely reported because people don't yet appreciate the likelihood that recycled water may soon be a necessary source of drinking water, and that the ownership of recycled water supplies and the infrastructure that creates it or which it passes through will then be a very valuable asset.

While the government may say it is not really privatising water, but rather delegating the management of utilities or operating them in partnership, the fundamental and very real issue is access to water. The key to access is control, and who ultimately controls the tap? Is it Premier Rees?

Under the Water Industry Competition Act 2006 a licensed network operator is the owner of its water industry infrastructure, whether or not the land in, on or over which it is situated is owned by the network operator, and that infrastructure is not to be taken in execution of any judgment against a person other than the network operator under any process of a court. Where exactly does this leave the current and any future state government if it becomes necessary to cancel a licence in the interests of the public?

Does the state government propose to call on God as a supplier of last resort if it doesn't own and can't get hold of the water infrastructure?

The Act defines "water industry infrastructure" as water infrastructure or sewerage infrastructure, and "water infrastructure" essentially means any infrastructure that is, or is to be, used for the production, treatment, filtration, storage, conveyance or reticulation of water.

The government makes assurances about water quality and public health, the construction and maintenance of water industry infrastructure and consumer protection, but we have received assurances like that before which have ended up ringing hollow, especially where Ministers have the ultimate power to grant and cancel licences.

One would have thought that before bringing the legislation into operation a government that was serious about protecting the interests of people and the environment would have actually put in place a water industry code of conduct, a marketing code of conduct and a transfer code of conduct for the transfer of water supplies or sewerage services to, from, or between, licensed retail suppliers before it handed over to “private” players the keys to our most importance resource.

To date we have been told that:

• about 30 per cent of the total cash that is generated by the allegedly better performing water utilities will end up in the Treasury (which arguably creates conflicts in terms of government introducing water saving measures);
• Sydney Services Pty Ltd (PDF 318KB)was blocked when it wanted to connect to the Sydney sewage system with a proposal to clean and deliver water to any quality standard, a program which would be financed from water rates from customers choosing its sewage services rather than Sydney Water’s. Why?;
• in 2007 Lend Lease Corporation Limited’s subsidiary, Bovis Lend Lease Limited, as part of Connect Alliance, was awarded the contract for the design and construction of the water delivery pipeline for Sydney’s desalination plant. That alliance includes McConnell Dowell, Kellogg Brown & Root (after Halliburton acquired Dresser Industries in 1998, Dresser's engineering subsidiary, The M. W. Kellogg Co., was merged with Halliburton's construction subsidiary, Brown & Root, to form Kellogg Brown & Root); and
• a network alliance formed between Sydney Water, Bovis Lend Lease, Veolia Water Network Services and CLM infrastructure to deliver a program aimed at reducing leaks and main breaks from Sydney Water’s 21,000km supply network

Where have you heard those names before?

Has the Premier honestly satisfied himself that the legislation in its current form is tight enough to avoid the circumstances previously raised by the Centre for Public Integrity and by the Senior Advisor on Water to the President of the United Nations General Assembly or by makers of the film Water makes money?

No, I bet he hasn't. And I bet he won't, because he can't.