Defenders of privatisation argue that by opening a market to multiple suppliers who then compete to attract customers, you can reduce prices and improve product quality. But as any business student knows, markets don’t always behave as you’d expect, and it’s hard to argue the privatisation of public utilities has been an unalloyedly positive experience.
Nick Buxton is Communications Manager at the Transnational Institute (TNI), a global fellowship of activist scholars, and in this interview with The Real News Network he discusses several cases in which the public sector has successfully reclaimed water utilities from private suppliers.
Mr Buxton gives Paris – home of the major water companies Suez and Veolia – as his lead example. In 2010, the city reclaimed its water system after strident resistance from these private suppliers. It discovered that they had directed their high rates and state subsidies toward short-term profits, rather than investing in the network for the public’s benefit. Contrary to the oft-repeated arguments of private sector efficiency, the city saved €35 million in the first year alone, leading to an 8% reduction in rates for ordinary Parisians. It then took further measures that private companies wouldn’t, such as establishing public-public partnerships with other national water utilities and creating a website showing what the city was doing to improve the network. The site even offered ways to include the public in decision-making about future investments. The TNI looked at similar cases all around the world, including in Dar es Salaam, Tanzania; Hamilton, Canada; and Selangor, Malaysia.
Some remunicipalisations haven’t gone well – an effort in Bolivia fell short of expectations, partially due to corruption (see this article for previous IPF coverage on Bolivia’s continuing struggle to supply clean water to its people). Mr Buxton recommends learning from both the failures and successes to conceive a new model for public ownership, with a focus on web-based mechanisms to encourage transparency and involve the public in monitoring, advising and even directing the company.
Could this be the new model for public-owned utilities? Could the lessons be spread across the rest of the public or even private sector? How does this affect your view of privatisation? Watch the video below and leave your thoughts in the comments.
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