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Open letter from WPG to PM on Local Govt Bill

Open letter from WPG to Prime Minister on Local Govt Bill/Water Privatisation

Open Letter To Prime Minister – Helen Clark

7 February , 2002.

Dear Prime Minister,

The Water Pressure Group is writing directly to you as Prime Minister and Leader of the Parliamentary Labour Party for urgent clarification of the position of the Parliamentary Labour Party on the Local Government Bill, particularly on Section 129 which relates to water privatisation.

The Water Pressure Group asks you, Prime Minister Helen Clark to please reply personally and to not pass this letter on to

any other person to reply on your behalf., particularly Judith Tizard (Minister Assisting the Prime Minister with Auckland Issues) in whom we have no confidence and believe should be replaced. ( Five items of correspondence outlining why the Water Pressure group has no confidence in Judith Tizard is appended as an attachment to this letter.)

As you know, Prime Minister, elections are won or lost in Auckland. As the Avondale/Mt Roskill by-election result in 2000 proved, water services are of significant concern to thousands of Auckland voters.

We believe that the issue of water privatisation is of such huge concern to the voting public of Auckland and the rest of New Zealand that it warrants a reply directly from yourself as Leader of the Parliamentary Labour Party.

Please note that our concerns have been raised directly with Sandra Lee, Minister of Local Government on three separate occasions, and have been raised with the Alliance MPs and Alliance Party. We ask you please to not pass this letter to her as Minister Of Local Government to reply, because a reply from an Alliance Minister to questions asked of you as Leader of the Parliamentary Labour Party would simply not be appropriate – with all due respect.

In fact, because Sandra Lee has continued to mislead the public and the House about the water privatisation provisions of her Local Government Bill, we have called for her to resign.

Please, Prime Minister, we ask you to not underestimate the feeling of discontent that is growing in the community against politicians who fail to keep their promises, and who are seemingly unaccountable for their policies.

Your answers to these eight questions by Tuesday 12 February 2002 would be much appreciated.

Please note that the Water Pressure Group will be doing everything we can to alert the public to the true intentions of Sandra Lee’s Local Government Bill, by continuing to ‘blow the whistle’ and tell the truth about its provisions.

We look forward to your answers to our questions.


Sandra Lee, Minister of Local Government has received extensive publicity on statements claiming that under her Local Government Bill, ‘local authorities have been prohibited from privatising their water services’,when, in fact this same Bill does not prevent the main international form of water privatisation – ‘contracting out’ – otherwise known as public-private-partnerships.


Below is a copy of the relevant press statement.


“25 /1 /2002

Hon Sandra Lee

Alliance will stave off any attempt to soften moves to ban local body water privatisation

Local Government Minister and Deputy Leader of the Alliance Sandra Lee says the party will vigorously oppose any move to soften government proposals to ban the privatisation of local body water supply and wastewater services.

"This is the first time in the history of local government legislation that local authorities have been prohibited from privatising their water services. I said on the introduction of the Local Government Bill 2001 last month that access to water is not a commodity but a fundamental human right," said Ms Lee.

"I am advised some local authority figures may regard Clause 129 in the Bill as the toughest anti-privatisation measure ever inserted into local government legislation."

Ms Lee said Clause 129 stated that a territorial local authority that was providing water supply and wastewater

services once the Bill was passed into law later this year "must continue to do so and must maintain its capacity to do so".

The Bill also stated that local bodies "must not transfer ownership or control" of significant water assets to anyone unless they are council-controlled, and they are also banned from privatising the ownership of such council-controlled bodies.

"There are no ifs or buts or maybes around the words 'must' and 'must not', " Ms Lee said.

"I don't want to pre-empt the recommendations of the Local Government and Environment select committee which is now considering the entire Bill, but it is only fair to signal the Alliance is drawing a line in the sand on this issue."

"I am advised that some submissions are likely to be made to the select committee aimed at trying to soften or remove the anti-water-privatisation measures. The committee will make its recommendations in due course."

Submissions on the Bill close on 22 February 2002.


However, reading of the relevant legislation itself, shows that Sandra Lee’s Local Government Bill does allow for water privatisation in the form of ‘contracting out’ or public-private-partnerships.

Section 129 of the Local Government Bill : (Pg 76)

"Restrictions on exit from delivery of water supply and wastewater services ...

(3) This section does not prevent- - ......

(b) contracts for the management of parts of the system for water supply or wastewater services if -

(i) the contract is not for the management of the system as a whole; or

(ii) the contract is for the management of the system as a whole, but not for a term longer than 15 years; or

(c) a joint venture for the construction or management of reticulated water supply, sewerage, or sewage treatment of

the assets remains with the territorial authority; or ....."

1) Do you, Prime Minister, recognise that the Papakura District Council’s 30 year ‘franchise’ with United Water, the largest private water company in Australasia; a consortium made up of two of the biggest multinational water corporations in the world (Vivendi – French, and RWE – German) is an example of such a ‘contract’? YES or NO?

2) Are you, Prime Minister, aware that water public-private- partnerships of the ‘French model’ of which the Papakura District Council’s ‘franchise’, or ‘contract’ with United Water is an example, are the main mechanism for water privatisation worldwide, and that it is in fact only in the UK that the water companies actually own the pipes? YES or NO?

3) Are you, Prime Minister, therefore aware that the main danger for water privatisation (IE: multinational water corporations operating managing and making private profit from publicly owned infrastructure) is from such ‘contracting out’ provisions that are allowed for in the above-mentioned section of Sandra Lee’s Local Government Bill? YES or NO?

_______________________________________________________ ________________________________

(For your information, quotes from “Water In Public hands” by David Hall, PSIRU, University of Greenwich, have been included. (The full version of “Water In Public hands” is available from the following website

{ HYPERLINK http://www.world- psi.org/psi.nsf/Publications/A348F0664B950B88C1256AB700348439?OpenDocument }http://www.world- psi.org/psi.nsf/Publications/A348F0664B950B88C1256AB700348439?Op enDocument

The Public Services International Research Unit (PSIRU) is part of the School of Computing and Mathematics in the University of Greenwich, London. It was established in 1998 to carry out empirical research into privatisation, public services, globalisation and corruption.

David Hall is the Director of the PSIRU, senior research fellow in the School of Computing and Mathematical Sciences at the University of Greenwich.

“In the last 10 years many organisations have promoted privatisation, invariably through a concession or lease arrangement on the French model (sometimes described as a public-private-partnership – (PPP), as the way forward for urban water supply and sanitation. This is the position taken, understandably, by the multinational water companies, and is the dominant view of the World Bank.” (Pg 6).

“The privatisation of water takes many forms. Sale to the private sector of the complete system has only been done in the UK. Most common is the French model, which involves concessions or leases under which the private contractor collects all the revenues for a water service, carries the cost of operating and maintaining it, and keeps the surplus as a profit.”. (Pg 8).

________________________________________________________ ______________________________________

Are you aware, Prime Minister, that under Sandra Lee’s Local Government Bill the management and operation of Auckland region's water services could be combined into one big water company? YES or NO?

United Water, the water multinational consortium could then potentially get a 15 year contract to manage, operate and make private profit from publicly owned water services infrastructure, for the whole Auckland region.

Far-fetched? Please read on.

The Local Government Bill will allow for such a combination of water services as follows:

"129 Restrictions on exit from delivery of water supply and wastewater services

(3) This section does not prevent- - .....

(d) 2 or more territorial authorities or council-controlled organisations arranging to combine the management and operation of services for reticulated water supply, sewerage, or sewage treatment."


Auckland City, the largest of all the Councils in the Auckland region, now has water privatisation openly on their agenda.

The Birch Report, released 14.12.2001 stated:

"Suggest Council investigate the possibility of using a public- private- partnership model for Metrowater and Watercare."

(Pg 48 of the Birch Report - down load from: www.akcity.govt.nz)

The following resolutions were passed by the Auckland City Council following discussion of the Birch Report at a special meeting of the Finance and Corporate Business Committee (19.12.2001).

"BX. That the Council confirm its interest in the possibility of some private sector participation in appropriate infrastructural projects as a means of helping ensure the completion of infrastructural projects which might otherwise lack funding sources.

BY. That the Chief Executive provide Council with more information on national and international developments in this area and in particular Australian experiences with a view to helping the Council develop some guidelines on what might be appropriate infrastructural projects that could be considered for a public/private partnership approach and with a view to developing some guidelines on how competitive private sector participation might take place with some of the city's infrastructural projects."

(Pg 35 Open Minutes Special Finance and Corporate Business Committee 19 December 2001)

5) Is it not true, Prime Minister, that under Sandra Lee’s Local Government Bill, if passed into legislation as currently worded, United Water, the water multinational consortium with a 30 year contract with the Papakura District Council, could then potentially get a 15 year contract to manage, operate and make private profit from publicly owned water services infrastructure, for the whole Auckland region? YES or NO?

6) Do you accept that the stated policy of the Labour Party on water services prior to the 1999 General Election - is in direct contradiction to the current wording of Section 129 of Sandra Lee’s Local Government Bill : (Pg 76)

"Restrictions on exit from delivery of water supply and wastewater services - (3) (b) ii, and (c), and that any Labour MP who supported passing this Bill as currently worded would be helping to legislate against Labour Party policy?

YES or NO?

(Please particularly note the Labour party answer to Question 3 below.

Response to the Water Pressure Group

“Survey of Political Parties on the provision of water/wastewater services”

This response was prepared on behalf of the Executive of the Auckland Regional Council of the New Zealand Labour Party.

(26 October 1999) Andrew Beyer Auckland Regional Organiser New Zealand Labour Party.

(A full copy of the Water pressure Group’s survey and the Labour Party’s response is at the end of this letter.)

WPG Question 2 “Does your party consider that the way in which water and wastewater systems are funded and managed in New Zealand needs to be restructured, and if so, broadly along what lines, and why?"

Labour Party answer: "The provision of water and wastewater services should be managed and funded to retain access and affordability to the services by all.

WPG Question 3 "Does your party intend to support any changes at central government level which would give local bodies greater power or ability to commercialise, privatise, or contract out essential public services such as water?"

Labour Party answer: "No."

WPG Question 4 “Does your party accept that the process of commercialisation of publicly owned assets and utilities into State Owned Enterprises was a precursor to the privatisation of those assets, at national level, while at a local level the commercialisation of local government assets into local Authority Trading Enterprises (L.A.T.E.s) is heading down the same path to privatisation?

Labour Party answer: We recognise that a number of formerly publicly owned and operated assets and utilities have been first commercialised and then privatised. We do not see that there is a necessary or inevitable link between the two.

We recognise the strong public demand for public and civic assets to be administered and managed efficiently, and some commercial procedures assist with. We detect no strong public demand for privatising further public or civic assets.

WPG Question 6 “Does your party support the view that water services should ultimately be privatised?”

Labour Party answer: “We do not support privatising water services.”

________________________________________________________________ ______________________

7) Do you agree that for all Labour MPs to keep faith with the public, and to keep Labour promises on water services, that the Local Government Bill, must be amended in such a way to make it ‘watertight’ against all and any forms of water privatisation including public-private-partnerships, ‘contracting out’, ‘franchising’, ‘concessions’ etc.? YES or NO

8) Do you accept that any Labour MP who does not support such an amendment to the Local Government Bill to make it ‘watertight’ against all and any forms of water privatisation including public-private-partnerships, ‘contracting out’, ‘franchising’, ‘concessions’ etc, would be seen to be breaking Labour policy on water services and would be regarded by the Water Pressure Group as a sellout? YES or NO

Yours truly

Penny Bright

Media Spokesperson

For the Water Pressure Group (Auckland)

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