An Independent Queensland Regional & Rural
AUSTRALIA'S WATER FUTURE
A NATIONAL WATER GRID
PRIVATISATION OF AUSTRALIA'S
WATER is the sleeping element in the privatisation debate. With all the activity previously focused on telecommunications, investors are thinking that any move on water and sewerage is at least 10 years away.
reality is different.
potential $70 BILLION to be realised through the sale of water assets is
becoming too tempting for the State treasurers committed to economic
Governments are already chipping away at their water systems and at least three
have commissioned reports to evaluate the impact of privatisation.
is one of the most emotive, sensitive issues in the privatisation
a staple of life - far more so than electricity and telephones - any move to
privatisation raises concerns that water will become more expensive for
Australia, investment bankers are salivating at the prospect of water
privatisation. Many have hired specialists from public sector to prepare them
for when the lobbying intensifies.
Walters, executive Vice-President of BT
Investment Bank, says,
are very interested in the water industry because there are so many potential
opportunities for the private sector to get involved".
observers believe privatisation of water is inevitable. Mark Green, national
director of utilities and partner at the accountancy firm Ernst
& Young says:
think after electricity and gas, WATER is likely to be the next utility cab off
the rank. I also think it could happen in the next few years."
electricity companies, water
companies do not operate in highly competitive markets: they have regional
monopolies whereas electricity companies compete against other generators on a
water firms, many of them European, are also taking leading roles in building
the water supplies of developing nations.
British experience is highly relevant to Australia.
water companies are reported to have extracted big efficiency gains since being
privatised. The state-based water and sewerage industries in Australia also are
big and there are a lot of potential profits to be extracted. But they are
capital-intensive and in some areas require extensive upgrading.
satisfy demand and ensure health and environmental standards, Australia needs to
spend heavily on upgrading and expanding its water system.
the private sector is saying it can meet these costs, the Australian Government
has set up a water-reform unit in Treasury and is involving an ever-growing
number of private-sector interests in water-treatment projects.
of these involve so-called BOOT
(Build, Own, Operate, Transfer) schemes. An operator enters a long-term
contract with a government agency to build, operate and provide a facility on a
and accounting incentives are offered to ensure investors receive a return on
their investment earlier than they normally would through such huge
argue that, through BOOT projects, they can reduce building costs, avoid the
operating risks that owner’s face and still access the latest technology and
that decide to privatise will be under pressure to ensure a consumer benefit.
Schachtel, Andersen Consulting managing
partner for the utilities industry (Asia-Pacific), says governments will not
fully privatise water until they work out an effective regulatory regime that
passes the risks to the private sector but ensures it does not get excess
profits at the expense of consumers.
would be political dynamite to have companies making big profits through water
rationalisation when Australia is prone to droughts," he says."
privatisation is a big, thorny political issue, but that doesn’t mean it
won’t happen. I just think it will be very considered."
Governments are studying the British model of privatisation closely.
Adelaide, every time you turn on the tap, the cash registers are ringing in
Paris, London and Houston, Texas. United Water owns Adelaide’s water supply, a
joint venture between three water multinationals based in France, Britain and
the US. In fact, just three companies now control 75% of the world water
move is widely seen as a precursor to privatisation with United Water a
front-runner to buy the business. United Water is a joint venture of Veolia
Water (47%), Thames
Water (47.5%) and Halliburton
In December 1997, three publicly owned Queensland water pipelines (Eungella, Collinsville and Blackwater) that supply coalmines and other industrial customers in central Queensland were offered for sale. Four Australian and overseas consortia were short-listed to buy the pipelines. The then Treasure, Joan Sheldon, set up an inter-departmental working party to manage the sales with the water assets valued between $12/15 billion.
Queensland Commission of Audit, a body set up by the Borbidge Government in
1997, recommended an end to public ownership of water assets. The Government
appointed Deutsche Morgan Grenfell to advise it on the sale of the pipelines. An
announcement was expected in August 1998, but was not released for public
& Young say water is not a commodity that lends itself as easily as
electricity or gas.
distinguishing factor is that water has a quality about it. To retain the
quality and keep prices from escalating, you need some form of regulation.
powers need to be much greater than for electricity and gas.
is not a lot of growth in the basic consumer retail market because people cannot
be encouraged to use more, but many opportunities for growth in industries such
as beverages, hospitals, mines, nurseries, pulp and paper, and in co-generation
these industries need water and if you can tap into that, there is lots of
potential for somebody to make lots money.
privatisation can be fully achieved, bulks water entitlements as well as
quality and price must be examined. Heavy consumers of water are given a ceiling
on their consumption entitlement. If they do not use it all, they can sell the
balance to consumers that need water above given ceiling. Such a system is
supposed to promote more efficient use of limited water resources.
is a form of competition based on tradeable water rights. Chile
has had this system for over 40 years.
sides of the water-privatisation debate agree that the value in water assets
lies in the fact that they have a captive customer base.
is a good wholesale market in water for the private sector to make money out of
and, in terms of retail; there is again, a captive audience.
corporate advisers envisage the time when a company, for example, energy
utility, will bid for water assets so that it can provide a one-stop-shop for
gas, electricity and water on one meter. Such utilities companies will be
interested in water as a means to diversify their portfolios and gain unlimited
retailing is a big factor that will generate the interest of the multinationals.
has already occurred in Britain. The first merger
of a power company and a water company was in 1995.
utility companies from one industry seek to enter the markets in another, the
exploitation of synergy across related industries is a key business strategy.
the regulators, however, it creates a need for greater co-ordination of policies
and information sharing.
Without adequate regulation, there are three possible outcomes:
governments will need to get the regulatory structures right before they fully
privatise, and this may take time.
contrast, Australian states have full control over their water systems and the
structure is much simpler. This means Australia has two advantages over Britain:
contracts and trade sales of water assets are likely to precede share offerings,
so water company floats are probably still a few years off.
Nevertheless, multinational investors will start preparing themselves.
Should Australia's Federal or State Governments (party politicians) SELL Australia's water resources to foreign multinational conglomerates, the wrath of the people will ensure the demise of any such Government and the political party responsible.
United Nations (Water)
hosted a 3-day conference in Paris, during March 1998, on managing the world's
limited fresh water supplies. According to the British BBC and the United States
Boston Sunday Globe, environment ministers and officials attended this
conference from 84 countries. It was agreed that water should be paid for as a
commodity rather than be treated as an essential staple to be supplied free!
President, Jacques Chirac, told delegates "no more barren wrangling over
the market versus the state. Water has a price and zero price is a forewarning
(who chaired the conference) estimated that it would cost $400 billion to set up
reliable water networks around the world and told participants that governments
could not foot the bill alone.
proposed solution was to market water as a prime opportunity for multinational
As John Bastin of the European Bank of Reconstruction and Development has said, "Water is the last infrastructure frontier for private investors."
people have every right to ask:
Australia’s taxpayers must now pay the price of our politician’s folly and their eagerness to support International Treaties!
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AUSTRALIA' CONSTITUTION - WATER RIGHTS
Section 100 of Australia's Constitution GUARANTEES the right to WATER by all Australians... unimpeded!
This RIGHT is a CONSTITUTIONAL RIGHT that cannot be removed, or legislated against, by Commonwealth, State or Local Governments.
Australia's Constitution overrides ALL State Constitutions, Commonwealth and State statute laws, Local government by-laws and regulations.
The ONLY method of removing this Constitutional RIGHT to WATER is via a National referendum in accordance with section 128 of Australia's Constitution.
Wonky Holes... are mouths of ancient underground rivers some up to 30 metres across and twisting 10 kilometres from the coast out to sea.
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Written and Authorised by Selwyn Johnston, Cairns FNQ 4870