LOCAL GOVERNMENT ACT 2002 AMENDMENT BILL
First Reading
Sue Kedgley
This is a terrible bill, a dreadful bill, which the Green Party will not be supporting.
I sincerely hope that people in New Zealand will not be fooled by the soothing words of Mr John Carter and Mr Hide that the bill is all about reducing rates, taking the cost out of local government, and focusing on core services.
Actually, this bill is all about further implementation of ACT's agenda to reduce spending in local government by as much as possible, to corporatise and privatise as much of local government as possible, and to shrink democracy.
As Roger Kerr and others have revealed, and I think Mr Hide has also referred to, it is modelled on what happened in a grand experiment in Colorado. A tax and expenditure limit on local government spending was set in Colorado, the aim of which was to reduce spending and of course make us all resent paying rates or taxes. It has had the effect of driving down the resources of local government, to the point where it has become bankrupt.
This year, as a result of this grand experiment in Colorado, which this bill is trying to implement, the Colorado budget will have a shortfall of US$28 million, or 10 percent of its whole budget, brought about by the strangulating effects of these tax and expenditure limits. One-third of Colorado Springs 24,000 street lights were turned off earlier this year, to save around US$1 million of expenditure. Residents can adopt a street light if they pay US$100 a year. The taxi drivers are trying to do the work of the police force, because it is so overstretched as a result of cuts. Park budgets have been slashed by 25 percent. Grass is mown monthly, not weekly. Buses were sold, and services no longer operate on evenings and in the weekends, and the fire and police budgets lost US$5.5 million.
Is this what we want in New Zealand?
Do we want millions of street lights around New Zealand turned off?
Do we want there to be no buses at the weekends or in the evenings?
Do we want our taxi drivers acting as our police force?
This, I tell members, is what will happen if we continue to be fooled by Rodney Hide and the ACT agenda. There is no question that local government is the new battleground for the agenda of the Government and Rodney Hide to corporatise and privatise as many assets as possible.
There are many other concerns about this bill, such as its definition of core services.
I notice that the environment is not considered a core service.
So what about issues like using toxic substances, such as methyl bromide?
I notice recreational facilities are a core service, but what about parks and reserves?
What about the Waitakere Ranges, etc? Are they core services?
The other issue I would like to focus on, and there are many in this bill that I could focus on, is water privatisation. This bill transfers management and decision-making control over water to private corporations, and in so doing it transforms the provision of water services from a public good to a source of private profit. It promotes water as a commodity to be traded, rather than as something that is essential to human life, to health and well-being.
Once a council has entered into one of these public-private partnerships for 35 years, the bottom line, the driving influence, on all decisions will be the return to the shareholder, not the public's best interests.
The water privatisation industry is a trillion-dollar industry, aided and abetted by the World Bank and the IMF. They are going around the world, seeking new markets for their water privatisation agenda, and of course they are turning their eyes to New Zealand and the Minister of Local Government, and to the National Government, which of course is coming to the party.
Water privatisation gives multinational corporations control over the necessities of life, their focus will be on returning money to their shareholders and running the assets into the ground not the public interest.
Why would they not? They are focused on profits. Many of them are run by private equity companies.
I will give an example from the United Kingdom, where Margaret Thatcher was one of the first to introduce widespread water privatisation and these kinds of long-term public private partnerships. The result was excessive pricing. There was a sharp increase in the cost of water, over 50 percent in the first 4 years and soaring profits for the shareholders, the water companies, 142 percent in the first 8 years. While the customers were having continual price rises; and there was huge underinvestment. The companies cut their investment programmes, and used the savings to maintain and increase their dividends, just like what happened to our railways under Michael Fay and Mr Richwhite. Huge salaries, bonuses, and fees were paid to the directors of the water companies. People felt so resentful of the companies, which were perceived as greedy, that they were not prepared to make the sacrifices to conserve water.
Following privatisation there was also a sharp rise in the number of households having their water supply disconnected or cut off, which of course endangered their health. Continuous access to water is an absolute basis of health and well-being. In fact, one of the criticisms was that water companies were failing to notify all these cut-offs to local authorities. There were no incentives under the privatisation to improve efficiency or to reduce leakages. Far from conserving water, the people in England were so resentful of the companies they did not bother to conserve water, nor did the companies.
I was explaining what an unmitigated disaster water privatisation had been in England, and I was describing the 35-year privatisation contracts, such as we will have here in New Zealand.
The Daily Mail, a staunch supporter of the Conservative Party, had a commentary with the headline "The Great Water Robbery". It stated: "In recent weeks the penny has been dropping that something has gone horrendously wrong with the privatisation of Britain's water industry … the water industry has become the biggest rip-off in Britain. Water bills, both to households and industry, have soared. And the directors and shareholders of Britain's top ten water companies have been able to use their position as monopoly suppliers to pull off the greatest act of licensed robbery in our history."
That was from the Daily Mail, and that is what we are opening ourselves up to in New Zealand with this Local Government Act 2002 Amendment Bill. Another point I wanted to make is that the 35-year contracts are completely secret. The contracts are commercially sensitive and are in confidence, so people do not know what is in them. Some of the contracts have a guaranteed rate of return.
In Latin America, one of the big companies said that it would withdraw from its investments unless the return on capital was 13 percent. It withdrew from most of Latin America because it could not get its guaranteed return. There have been huge revolts against the high prices charged by private operators right throughout Latin America. Domestic water prices went up by 150 percent in Bolivia following privatisation. That led to huge demonstrations, and so on and so forth.
And what happens when these companies go bankrupt in the course of their 35-year contract?
Something that we should all be thinking about is the number of bankruptcies.
Who takes over then?
Is it the bank? I ask what happens.
In Wellington, the Council, I think, has a 25-year contract with a company to manage its wastewater and sewage. This contract has changed three times in the past decade. It has gone from one company, to another subsidiary, and then it has passed to another.
What are the implications for all this? Over 35 years circumstances can change, but we are locked into these contracts. Everyone knows that water will be the oil of the 21st century. We will have water wars.
That is why all these corporate water companies are scouring the world trying to get hold of publicly owned water companies such as those that we have built up over generations in New Zealand.
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