Sydney water crisis due to corporatisation

Issue 

By James Vassilopoulos

SYDNEY — The Sydney Water Corporation announced on August 3 that the city's tap water was again safe to drink. Since July 30, nine days after the parasites giardia and cryptosporidium had been detected in Sydney's water supply, residents had been forced to boil tap water before it could be consumed.

Is the water really safe to drink? Who can believe anything Sydney Water says, after its mishandling of this major public health crisis? After all, the public was not immediately warned of the dangers posed by the parasites in the water.

According to the August 6 Sydney Morning Herald, the chairperson of SWC, David Hill, allegedly pressured the Health Department to tell the public that the number of contaminated areas was fewer than had been reported in an earlier press release. SWC managing director Chris Pollett said that the Prospect water treatment plant had been bypassed from the water supply system, when it had not.

In September 1994, after a 1993 outbreak of the disease in Milwaukee, which killed over 100 people and left 400,000 people infected, the US National Centre for Infectious Diseases convened a workshop entitled "Prevention and Control of Waterborne Cryptosporidiosis: An emerging Public Health Threat".

The workshop concluded that "no current method can guarantee complete removal" of the parasite and that it was unknown if small numbers of the parasite in water were harmful. Unless a new method has been found to remove the parasite since 1994, the SWC is misleading the public over the water supply's clean bill of health.

While the immediate source of the contamination may be unknown, one thing that is known for certain is that the corporatisation and privatisation of water and water treatment services increase the risk of contamination, increase the price of water services for the community (but not business) and reduce jobs.

Corporatisation of Sydney Water

SWC is not a public utility but a state government-owned corporation. The Sydney Water Board was corporatised by the Coalition government in 1995. The water treatment plant at Prospect, at the centre of the contamination, has been privatised to Australian Water Services, a joint venture of Lend Lease and one of the biggest water corporations in the world — the French-owned Lyonnaise des Eaux.

Corporatisation is one step short of privatisation — the full sale of public utilities to private capitalists. Like every other corporation in the market, SWC's aim is to maximise its profits and dividends. The only difference is that the "profits" go to the state government.

The NSW Labor government is under pressure to take more and more money from the SWC, leaving less for maintenance and upgrading, in order to give more handouts to big business and to assist it to get reelected. In 1994-95, the government received $106 million from Sydney Water. In the last financial year, it took out $250 million.

When the Sydney Water Board was corporatised, thousands of jobs were lost. Household water prices went up from 65 cents a kilolitre in 1994 to 85 cents in 1998. It will reach almost $1 a kilolitre in 2000. Water bills for big business have dropped by an average of 45% in real terms since 1993.

Operating costs have been cut by 25% in real terms since 1993. This may look good on the balance sheets, but in the light of Sydney's major health scare, it is outrageous. These cuts are the real source of Sydney's water contamination crisis.

Lyonnaise des Eaux

The water treatment plant at Prospect is one of four plants that have been "outsourced". Australian Water Services runs the Prospect plant. French-owned General des Eaux won the Illawarra and Woronora contracts and British company United Utilities controls the Macarthur site.

Corporatisation, privatisation and outsourcing of the water "industry" are being carried out by governments across the world. One justification is that they will increase competition. This is simply not true. The world water industry is dominated by a few multinationals.

In Britain, the Thatcher government in 1989 handed each company a regional monopoly for 25 years. An article in the journal CCPA Monitor by Jan-William Goudriaan and David Hall describes the industry as "very small groups of closely knit, cartel-prone multinationals with recent records of corruption, incompetence ... who finance investment through higher prices for consumers, and generate dividends from job cuts".

The biggest water corporations are Lyonnaise des Eaux, General des Eaux and SAUR, which is owned by Bouygues, followed by Spain's Aguas de Barcelona (24% of which is owned by Lyonnaise des Eaux) and some of the British companies, including Thames Water and United Utilities (formerly known as NorthWest Water).

Lyonnaise des Eaux is present in 120 countries. Its interests are not only in water, but also energy, waste services, construction and communications.

It has a history of swallowing up or merging with its competition, and travels side by side with French imperialism. The company was formed to operate the Suez Canal, and by the 1940s it had interests in Morocco, Tunisia, Congo and New Caledonia. Today it has contracts in Manila, Budapest, Casablanca, Medan, Jakarta, Cincinnati, Britain, the Czech Republic and China, just to name a few.

As of March 31, 1998, the quarterly revenue of the company was $13.52 billion. Its net profit for 1997 was $1.1 billion. Much of this profit is based on increasing prices and slashing jobs, thereby compromising public health.

Since June 1994, French magistrates have investigated the executives of both Lyonnaise des Eaux and General des Eaux for allegations of corruption, the CCPA Monitor has reported. Executives from both companies have been convicted and further cases are pending.

In 1996, five of 13 directors on the board of General des Eaux were being investigated for corruption, mostly related to conflict of interest as a result of having jobs with other companies.

Across the world, where water has been privatised, there has been a sharp increase in prices for working people, including Rostock in Germany, Limeira in Brazil and Gdansk in Poland. In St Etienne, France — where Lyonnaise and General, supposedly bitter rivals, won a contract as a joint venture — prices rose from 97 cents per kilolitre in 1990 to $2.36 in 1996.

General des Eaux, which runs Adelaide's water supply, has already had experience of cryptosporidium outbreaks. When the parasite was found in the water supply in north London, General and its major partner, United Water, failed to inform the community for weeks. It had no procedure for dealing with such an outbreak.

Despite all these problems, governments continue to give contracts to these giant private companies. Workers and the community lose four times over when water multinationals (whether Australian or overseas-owned — SWC has interests in Asia) compromise health standards, increase prices, implement large-scale sackings and give price concessions to big business.

The UK experience

The strongest argument against private involvement in the provision of water is the 1989 privatisation of the water supply in Britain.

In the first four years, charges rose three times faster than inflation. In 1991-92, there were 21,286 water disconnections of those unable to pay. There was a horrifying increase in dysentery, cholera, hepatitis — diseases associated with a lack of clean water.

The privatised companies in the UK sacked almost 25% of the work force, some 100,000 workers. The elimination of cross-subsidies increased regional price differences from 39% to 76%.

As the South African Municipal Workers' Union, which is fighting the privatisation of water by the British company Biwater, explains: "Water is a life-giving scarce resource, which therefore must remain in the hands of the community through public sector delivery. Water must not be provided for profit, but to meet needs."

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