Kedgley Sue: Local Government Act 2002 Amendment Bill — Second Reading 
Kedgley Sue: Local Government Act 2002 Amendment Bill — Second Reading 
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SUE KEDGLEY (Green) 
: 
 Here we are once again in the dead of night at almost midnight debating under urgency another sinister bill the Local Government Act 2002 Amendment Bill which implements the radical agenda of ACT and the Business Roundtable—what I call Rogernomics part 2—to reduce democracy in local government gut local government consultation requirements and corporatise or privatise as much of local government’s commercial activities as possible including water. 
I have a copy of ACT’s local government policy. It states: “Local Government will be required to shed its commercial activity. … Roads and piped water will be supplied on a fully commercial basis.” Council services will be contracted out and councils will be required to focus on their core activities. This of course is exactly what this bill does. It may not go as far as Rodney Hide’s extreme agenda which he released last year but it implements this policy—the ACT local government policy. It removes the consultation requirements of local government. It allows councils to get rid of their strategic assets or to enter into 35-year contracts with private water companies without the inconvenience and the nuisance of having to consult their local residents first. 
It sends a signal to the world that New Zealand is now open to water privatisation. It makes water privatisation extremely attractive to global water companies which are on the prowl for new markets. Now in New Zealand they can own as well as manage and control water infrastructure for 35 years. 
The bill requires councils to focus on a narrow range of so-called core activities. When Rodney Hide introduced this bill he said: “it gives councils a clear indication first that they need to do core services well before they engage in any other services”. The narrow and arbitrary range of core services listed in this bill is supposed to become the No. 1 priority of local government. 
It is the water privatisation provisions that are most alarming because once a private corporation has taken over the management and ownership of local water supplies its focus will not be on protecting the public interest or ensuring everyone has access to clean fresh water but on maximising profits for its shareholders. 
We know from the experience of water privatisation around the world that there are three ways that water corporations maximise their profits once they get their hands on a local water supply. The first thing they do is sack most of the staff that run the water services and reduce their working conditions. The second thing they do is charge more for water. The price of water soars and becomes unaffordable for large numbers of people who then have their water cut off because they cannot afford to pay their water bills. Thirdly they allow the water infrastructure to be run down just as Fay and Richwhite ran down our rail network. They do not bother to fix the leaks or invest in basic infrastructure; instead they siphon off the profits for their shareholders. That is what has happened wherever water has been privatised: higher prices for water; huge profits for the corporations; more and more people being disconnected; no incentive to conserve water because it is in the interests of the company to sell more water to maximise their profits; and no incentive either to address long-term health problems associated with water. 
The United Kingdom is a case study of what happens when water is privatised. When Margaret Thatcher introduced water privatisation into the United Kingdom the water industry fired 25 percent of the workforce and increased the price of water by 50 percent in the next 4 years. Then it cut its investment programme and used the increased dividends to pay huge salaries and bonuses to the directors of the water companies. While customers were faced with continual price hikes and the number of people having their water supply cut off tripled company profits soared by 142 percent in the first 8 years. What happened in the United Kingdom is what will happen here—mark my words—if we go down the path of water privatisation that the Minister of Local Government is desperate to take us all down. 
Another problem with the long-term contracting out of water supplies is that once a private corporation owns or manages the water supply for 35 years the public and its elected representatives their councillors will have very little input into or say on water supplies for the next generation. The long-term contracts that are negotiated will inevitably be commercial-in-confidence—that is secret—so ratepayers will be completely in the dark about the deal their local council has struck with their water company. 
Many contracts have guaranteed rates of return for the company regardless of its performance. Chile had to guarantee a profit margin of 33 percent to Suez as a World Bank condition regardless of its performance and in Argentina Suez pulled out when it could not get a guaranteed rate of return. It said that the contract was not profitable enough and it just pulled out leaving an incredible mess behind. 
Another thing is that once councils are locked into the 35-year contracts they cannot get out of them even if the circumstances change radically or unforeseen circumstances arise. What happens pray tell if a company goes bankrupt or is unable or unwilling to deliver on its water services? What happens then? Many councils especially smaller ones do not have the expertise to negotiate contracts for water services with large private multinational corporations. The United Water contract in Auckland for example was negotiated by local solicitors. It did not include any conditions on customer service. There is a clause in the contract that states the contract can be extended by an additional 20 years and that is not even linked to performance. 
Water privatisation has a terrible track record around the world and there is a huge backlash against it. Communities are fighting back against water privatisation and more and more councils and Governments are trying to get out of contracts they have entered into with private corporations. In France more than 40 towns and cities have taken back their water services into public hands and in June this year Paris took back its water service after huge controversy. Other countries such as Uruguay have brought water back into the hands of the State at a national level because privatisation has been such a fiasco and caused such problems. In Bolivia hundreds of thousands of people lost their connections when their water was privatised and thousands of people took to the streets until the Government finally backed down and told the company to leave. Is that what we want here in New Zealand? 
Water is a precious resource. It is one of the life-support systems of the planet. It is really the ultimate public good and it should be controlled in the public interest not handed over to the private sector to make profits out of. Water is simply too important to our health and well-being and to the environment to be handed over to the private sector. 
As water has become scarce around the world global corporations are seeking to take advantage of the water crisis by trying to take over water supplies. They are lobbying Governments all around the world and the Business Roundtable here in New Zealand is frantically lobbying to privatise our water supplies. Those lobbyists must be rubbing their hands together with joy as tonight this Parliament agrees to allow water privatisation here in New Zealand. Some of them will try to argue and the National Party will too that it is not water privatisation but I can assure any listeners that contracting out owning and managing water for 35 years is precisely that—water privatisation.