The Age of Commodity: Water Privatisation in Southern Africa
Edited by David A. McDonald and Greg Ruiters
Earthscan, 2005
303 pages, $55 (pb)
REVIEW BY PHIL SHANNON
http://www.greenleft.org.au/node/32009
One billion people in the world lack access to safe drinking water and two billion lack access to sanitation. Access to water is literally a life and death matter but, as the articles collected by David McDonald and Greg Ruiters in their book on the commodification and privatisation of water show, for some people, their moral arithmetic doesn't rise above the "crude calculus of profit". Water, to global corporations, is nothing but a major untapped market from which to draw profits, and the needs of the poor and the planet can go hang.
The turning of water from a basic human right into a commodity that can be privately owned, bought and sold in the marketplace, is part of the capitalist mania for privatisation of essential human services, including electricity, health care and education. Behind the bland acronym GATS (General Agreement on Trade in Services), the 148 member-countries of the World Trade Organisation are scoping out an enforceable agreement on international trade in (privatised) services.
Water has enormous market potential, with US$1 trillion a year up for grabs by major US and European multinationals. This book focuses on South Africa, where existing programs for water privatisation show what is in store for the rest of the world's poor even before GATS kicks in.
Privatisation models range from the politically fraught outright sale of public assets, to the more politically marketable Public-Private Partnerships (PPPs), in which the state owns, and the private sector operates, water systems, to the most politically saleable model of corporatisation, in which the state retains ownership and almost all operational control but runs the service along business lines.
PPPs and corporatisation, by retaining formal state ownership of water, have proved most popular with South Africa's market-friendly African National Congress (ANC) government (busily hanging up its shingle that "South Africa is open for business" without appearing to completely throw in the towel of social responsibility to the poor).
Both PPPs and corporatisation, however, emphasise profit maximisation, cost reduction and cost recovery to meet a narrow and short-term financial bottom line that pays scant heed to social equity and need or environmental concerns. Water deprivation and regressive tariffs hit the poor whilst rural and remote areas suffer because infrastructure and maintenance costs are high (and therefore unprofitable).
As the World Bank and International Monetary Fund, heading the globalisation mafia, impose "conditionalities" such as privatisation on the national governments of poor countries in return for desperately needed loans, those left to carry the can in South Africa are the municipal governments, hounded by political and economic pressure from the national ANC government, which starves municipal councils of grants for water and other services.
Some compelling case studies in the book demonstrate that water privatisation only benefits the well-off minority. The new private owners or operators of water services make profits hand over fist. Industry, mining and large-scale agricultural consumers are the recipients of high state subsidies (sometimes receiving water for free). Peter McInnes reminds us in his chapter that in Australia in 1991-92, before neoliberal water reform in this (wealthy) country, commercial and industrial water users paid a tariff rate 15 times the going rate for households. This arrangement was far more equitable in terms of differential consumption rates and ability to pay, but this source for cross-subsidisation disappeared under corporatisation with lower tariffs for the big-consuming big end of town and country.
Affluent, largely white, residential areas in South Africa are able to afford more water than (and are in fact subsidised through regressive tariffs by) poor, largely black, areas. (Half the South African population is rural and 70% of the rural population live in poverty.) Although the ANC government introduced a "free basic water policy" in 2000, the "free" block cuts out at six kilolitres per month (25 litres per day), which is inadequate for healthy living, takes no account of the higher water needs of larger, mostly poor, households, and does not allow for subsistence gardening, which many poor households rely on. The tiered tariffs for the water usage blocks immediately above the "free" block are set at a high rate to recoup the cost of the "free" water to the poor, often nullifying any gains of the "free" block.
The tariff structures are also flat (rich and poor alike pay much the same price for water), which is regressive because low income households bear a proportionally greater cost burden compared with wealthy households. A more steeply rising tariff structure for the generally wealthier high water consumers, on the other hand, could provide the revenue to cross-subsidise the water costs of the poor who do not have lush gardens to cultivate, swimming pools to fill or cars to wash.
When the poor default on water bills under a PPP or corporatised water supply model, this hurts the commercial bottom line and the business imperative is often harsh cost-recovery measures. Some councils and private operators resort to collateral deprivations (e.g. denying electricity to cover the cost of water arrears). Water cut-offs are always an option but because they are often countered by illegal re-connections and political outcry, water limiters are preferred (such as push-button taps that supply a small amount of water at low pressure), flow restricters ("trickle valves"), which cut off supply after a set (low) daily volume, and pre-paid meters (PPMs) with automatic cut-off valves once a pre-paid credit is used up.
For those on the wrong end of these cost-recovery solutions, however, the results are degrading, humiliating and life-threatening. It can take an hour to fill a five-litre container from a tap fixed with a limiter. PPMs limit poor households' access to a sufficient and continuous supply of water necessary for drinking, sanitation, food preparation, hygiene, washing and emergencies such as fires. PPMs are also inconvenient, requiring travel over long distances to municipal offices to buy meter card credits which are not available after 5pm or on weekends.
With no ability to use credit by consuming the water first and paying later, poor households under a PPM regime are forced to choose between water and food, and water and health. Cholera outbreaks in South Africa have claimed the lives of hundreds of those forced into the desperate search for water from unprotected sources once their safe water supply is denied. PPMs are often called the "new apartheid" because they are installed in black townships and shanty towns but not in the rich (mostly white) suburbs where vast amounts of water are consumed.
The chimera of more "efficient" private sector water provision dissolves in the face of South Africa's experience with Public-Private Partnerships. Most PPPs are marked by inadequate regulation of financial accountability, technical issues (such as water quality) and social equity.
McDonald and Ruiters' book turns a detailed, and damning, spotlight on the phenomenon of "neoliberalism" in which the capitalist state ditches its "costly" and "inefficient" core functions by subjecting them to the logic of the market. When water is commodified and privatised, however, the results, for the well-off, are new riches and water security, safety and plenty all subsidised by the poor. What the poor get is high costs, humiliating water deprivation, and sickness and death. Water is the source of life, not a source of profit. Water is a right, not a commodity.