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There
was a time, not all that long ago, when it was generally understood that
certain basic services should be available to all people, as a
fundamental human right. The right to food and shelter were typically
seen as being on par with other rights such as a minimum right to
drinking water. Of course, the realities of our unequal world meant
that, even when this was generally accepted, it did not mean that all
people actually did have access to these things.
However, the role of the state in attempting to provide some of these
services, and particularly those which were seen as "natural
monopolies", to its citizens was established. Indeed, it would have been
hard to find even the most rabid of free-marketeers arguing that these
were activities for the private sector.
All that has changed, not just rapidly but quite dramatically. There is
now virtually no state activity (even defence, in some African states)
which is seen as necessarily the sole preserve of the state. And the
trend of privatisation of a range of public services has become so
pronounced that it no longer raises any eyebrows. Almost all public
goods are now seen as freely tradeable commodities, and private
ingenuity works out ways to make people pay even when access is hard to
limit, and governments fall into step with the dominant ideology.
Nevertheless, the news that from April Fools Day this year, the water
supply of the city of Johannesburg in South Africa has been privatised
and handed over to a single monopolist supplier, still comes as a shock.
After all, the South African government is controlled by the African
National Congress, which came to power in 1994 promising free public
services to those who could not afford them, and in fact promised
universal public access to clean drinking water only three years ago.
This
privatisation of water supply is part of a larger plan, known as Igoli
2002, which aims to turn Johannesburg into a "world-class city". The
strategy for this is the dubious one of privatising more than a dozen
services, through cleaning hawkers off the streets, paying top
executives millions of rands, building thousands of drop toilets with no
flush facilities on top of the water table, and through selling off
profitable assets.
There has been a massive two-year civic campaign against this
privatisation led by the South African Municipal Workers' Union (SAMWU).
Not only the workers affected, but hundreds of thousands of other
citizens took part in this protest movement. Not only did SAMWU point
out the numerous cases across the world where privatisation of public
services led to higher prices and monopolistic practices, but they also
specifically criticised this particular deal. They emphasised that the
new supplier, Suez Lyonnaise des Eaux of France, had made no commitment
to provide water supply to the poor.
Suez Lyonnaise's recent record does not give grounds for great optimism.
In Santiago, Chile, the company has insisted on a 33 per cent profit
margin in its operations. In the city of Casablanca, within the first
year after the company took over the water supply, prices rose three
times. Even in France, their record is less than spotless in terms of
either consumer satisfaction or low prices.
While it remains to be seen what happens in Johannesburg, the writing on
the wall is already fairly clear. The absence of adequate regulation in
this sector and the fact the company will be effectively a monopoly in
the area mean thatpoor people may face a large hurdle : covering both
relatively non-subsidised recurrent (operating and maintenance) costs,
and paying sufficiently high service charges so as to reward investors
with the expected 32 percent rate of return.
The current mainstream discussion is replete with pious statements of
how people must be prepared to pay for the public services they benefit
from. This ignores the basic points that all citizens effectively pay
for public service provision through taxation, and that the poor
typically pay a much higher proportion of their income in indirect taxes
that the rich. Those eager to raise "user charges" for public service
provision need to be gently reminded that one major reason why many
citizens of developing countries do not pay is because they cannot –
they simply do not have the money.
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