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PM Letter To Water Pressure Group Does Not Satisfy

Letter from the Prime Minister - received Monday 18 February 2002.

Prime Minister

14 February 2002

Penny Bright
86A School Road

Dear Penny

I am writing in response to your email of 7 February 2002 concerning the Local Government Bill.

The bill in question is a Government bill. There is no difference in position between the Coalition partners on this matter. Cabinet included provisions in the legislation on the recommendation of the Minister for Local Government, designed to protect water services from any threat of privatisation.

If there is any problem with the wording of the proposed provisions, the select committee process is the appropriate method of addressing the concerns.

Yours sincerely

Helen Clark Prime Minister

Parliament Buildings, Wellington, New Zealand.


The sound of a whistle blowing is a harsh, strident sound. It has to be. It’s purpose is to warn people of danger ahead.

The Water Pressure Group continues to ‘blow the whistle’ on Sandra Lee’s Local Government Bill.

Had Sandra Lee stated that her Local Government Bill was putting some restrictions on water privatisation that don’t currently exist – that would have been more accurate. However, for Sandra Lee Minister of Local Government to claim the “Bill stops water privatisation, no ifs, no buts and no maybes! “is simply not true.

This Bill, if passed in its current form, will continue to allow water privatisation ,not stop it - through the mechanism of public-private- partnerships –‘contracting out’ like the Papakura District Council franchise with multinational water consortium United Water.

This is in direct opposition to stated Alliance policy

"The Alliance will discourage the sale or further privatisation of utilities or other strategic assets held by local government. Legislation which requires or encourages the sale of local assets, their contracting out, or their setting up in forms which makes them ripe for sale will be repealed."

“Contracting out of the management of water and wastewater systems will only be allowed for terms of 15 years or less. Long-term contracting out of management as a form of de facto privatisation will not be permitted, unlike at present where it is allowed,” says Sandra Lee.

Contracting out of water management, ‘short term’ or ‘long term’ is still contracting out. Contracting out in the form of public-private-partnerships of the Papakura type, known as the 'French model', is the most common international form of water privatisation. (In fact, it is only in the UK that private water companies actually own the pipes.)

Claims that public-private- partnerships are NOT privatisation because the assets are still owned by the public are deceitful ‘weasel words’.

That definition of privatisation is precisely what Angus Ogilvie argued and the Judge accepted in the recent Petition of Inquiry into the Auckland Local Body elections.

“10 By stating in relation to the 2001 election that Auckland Now and Citizens & Ratepayers did not have a privatisation agenda I meant that In so doing, I was outlining a policy which had been agreed by Auckland Citizens & Ratepayers Now that we would not sell the pipes and reticulation assets You will see that it is stressed there that in relation to water 'ACRN strongly believes that pipes and reticulation assets must be publicly owned. We are strongly against privatisation of these assets' . It is clear from this that 'privatisation' refers to assets.

* This ACRN policy would also not preclude an arrangement of the kind adopted by the Papakura District Council which was an agreement to operate the system for a given number of years in circumstances where the ownership of the assets was retained by Papakura District Council. 'Contracting out' is the term commonly applied to such arrangements and not ‘privatisation'. This is the kind of contract (although the terms may be different) which operates overseas, say in Victoria, Australia, in which assets are owned or controlled by the public sector. “

(Taken from Angus Ogilvie’s brief of evidence, in relation to the Water Pressure Group’s Petition of Inquiry, NP No 650/01)

Is Sandra Lee lining up with ACT on her definition of privatisation?

“Is contracting out in the form of the Papakura contract with United Water a form of privatisation yes or no? “

Sandra Lee has never answered this question – first put to all Labour,Alliance and Green MPs 30 January 2001.

LailaHarre, Alliance Associate Minister of Commerce did answer.

"In response to your question, I do consider franchising as it exists in the Papakura Contract with United Water to be privatisation." (reply to the Water Pressure Group dated 14 February 2001)

Ordinary people with a bit of common sense just ask the simple question - where is the money going?

Public-private-partnerships of this type, are the thinking corporates far more intelligent form of privatisation.

Why spend a fortune buying the asset base, when for the much lower cost of a long term lease, multinational corporations can have a basically guaranteed income stream? People cannot live without this essential public service - water- which is being run as a profit-making business. Who benefits? The public, who have paid for and use the pipes, or the shareholders whose private company has 'leased' the pipes?

Will Sandra Lee’s Bill stop this? No. FACT.

A Papkura –type contract is still possible. FACT.

15 years of multinational water company control of any of our water services is 15 years too many and totally unacceptable to the Water Pressure Group. FACT.

Also, what is to stop the contract being renewed for another 15 years? Nothing in this Bill prohibits that. FACT.

The Water Pressure Group wants this Bill amended so that it is ‘watertight’ against all forms of privatisation, including contracting out PPPs.

We are fighting vigorously to uphold Alliance policy.

We expect Alliance members and MPs to do the same, or what was the point in voting for the Alliance? Alliance MPs who stand with Sandra Lee on this Bill as currently worded – run the risk of falling with her.

In a letter received 18 February 2002, the Prime Minister, Helen Clark stated in reply to the Water Pressure Group:

“The Bill in question is a Government Bill. There is no difference in position between the Coalition partners on this matter. Cabinet included provisions in the legislation on the recommendation of the Minister for Local Government, designed to protect water services from any threat of privatisation.”

Not a good look Helen! Pity there is a major difference between the position of the Coalition partners on the Local Government Bill and your stated policies on water services before the 1999 General election!

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."

PS: There is nothing in this Bill which stops people having their water restricted or disconnected for non-payment of bills as exists in the Water Industry Act 1999 UK. So much for water being a basic human right.

Water currently IS a commodity. Water services now come under the Commerce Act. Judge Salmon ruled that water was a saleable commodity and its sale a commercial activity.

That is why the WPG has called for this Labour/Alliance Coalition Government to take water services out from under the Commerce Act.

What action has been taken by Labour or Alliance to take water services out from under the Commerce Act? Worse than none.

Paul Swain, Minister of Commerce, stated in a letter to a Water Pressure Group member on 4 May 2001:

"You have asked me to consider exempting water from the provisions of the Commerce Act, on the basis that water is an essential service....

This request follows the High Court Judgment of Salmon J of December 1999 and from the Court of Appeal of July 2000. These Court cases concern whether water can be classified as ‘goods’ or ‘services’ under the Commerce Act and therefore whether the provisions of this Act can apply to water. The Courts found that water was so classified and that the Commerce Act did apply. The Courts have found that the Commerce Act overrides the Common Law doctrine of prime necessity.....

The application of the Commerce Act to water services does not mean that water infrastructure services should no longer be community owned assets. The Commerce Act also applies to community owned airports and other local government service provisions. The Act in fact applies to all individuals and organisations including state owned enterprises, local government and government departments insofar as they engage in trade including the provision of services.

The Government considers that the Commerce Act is appropriate legislation to apply to the provision of water services and other essential services, given the above.

Yours sincerely

Hon Paul Swain Minister of Commerce.”

Beware the 'weasel' words of 'community owned assets'! Where does the income stream from 'community owned asset' go? Multinational water corporations???

Water services still come under LATE legislation, which commercialised Auckland City’s water services as a profit-making business and allowed user-pays charges for wastewater, which are crippling families. Working class families in Auckland City can pay $700 per year rates and $1400 per year water services charges!This is supposed to be a 'fairer'system ? The WPG submitted that water services be removed from LATE legislation in February last year. They weren’t.

The Water Pressure Group demands that Alliance (and Labour) MPs uphold their stated policy of opposition to water privatisation (which includes ‘contracting out’) or in election year they will pay the price. Beware!

Penny Bright Media Spokesperson Water Pressure Group (Auckland) Ph: (09) 846 9825

© Scoop Media

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