A year ago I wrote that the city's water services should not
be metered - now I'm not so sure.
There seems to be good evidence that people use far less
water when usage is metered. It's also easier to track down
leakage. The social justice argument against direct,
volumetric water charges can be countered by giving
low-income people a rebate or making a daily allocation free.
As for the outright asset sale of water services, the law
presently forbids this, but the law has recently been changed
to allow councils to contract out the provision, management
and control of services for up to 35 years. Some critics say
this is just privatisation by another name.
On the other hand, local body debt is large and rising. Much
of the debt is accounted for by the need to replace and
repair aging infrastructure, particularly water-related
infrastructure.
Dunedin City's 3 Waters Strategic Direction Statement
indicated that to maintain a reasonable level of service the
city would have to spend about $800 million over the next
fifty years - and that was a conservative estimate. (The 3
Waters Strategic Direction Statement is an excellent piece of
work by the council, looking at water sustainability issues
seriously and thoroughly.)
Contracting out services means the contracting company coughs
up for the expensive new infrastructure, which a council
could not borrow for without skyrocketing and arguably
unaffordable rates.
On the other hand (again), many cities have found water
tariffs go up and up after contracting out services. Users of
water services have to pay all associated costs sooner or
later, unless they defer these costs to their children and
grandchildren.
Council Controlled Organisations are supposed to make a
profit, as do private companies taking up contracts. Councils
don't. I feel uneasy about the fact that urban water services
are a global industry and that a place like Queenstown (among
many others in NZ and Australia) has water services supplied
by Veolia, one of the biggest international companies,
through its subsidiary, United Water.
These global 'water industry' companies claim to be making a
reasonable profit, but then the World Bank did an analysis
that the return on investment was only about 7%.
Costs of supplying water and discharging or recycling used
water in a non-polluting and sustainable way are likely to
rise, and rising oil shortages will make materials more
expensive.
But how can water be priced out of people's reach? You need
it to live. Cities' requirements for water will compete with
water needed for growing food.
To further complicate the mix, there are the pressures caused
by climate change and also possible sea level rise, which
could threaten a coastal sewage treatment plant like
Dunedin's. Also central government is likely to more strictly
regulate water use in the future and rules always have costs
attached.
Do people have a right to water? We would all like to believe
so. But the same argument can be made for a right to warmth,
shelter and food - all necessities we must find the money to
pay for. Water seems to be inevitably suffering ‘the tragedy
of the commons'.
The question of Dunedin's water services governance will
surely soon come up for public consultation. Should we have a
Council Controlled Organisation? If we do, might that CCO let
a contract, maybe to an international company like Veolia?
And maybe for 35 years? Once we had a CCO or a Council
Controlled Trading Organisation (CCTO) for water services,
would there be any transparency about how it was managed? Or
would it all be too ‘commercially sensitive' to include the
public?
I'm presently inclined to think that, after all, we should
meter water in Dunedin and, yes, we should have volumetric
charging (i.e. user pays water rates). We should also look
for and encourage water conservation methods.
Our rainfall, although increasing, may be a bit on the low
side to make rainfall harvesting cost-effective, but it's
something which should be investigated.
Since the council doesn't need to make a profit on water
services, it would be desirable to keep the services run
directly by the council, as they are now, efficiently enough,
and not make them into a Council Controlled Organization, a
possible first step to contracting them out.
But that is only if the city can afford to keep them,
considering the huge infrastructure expenditure necessary.
Sadly, I doubt that it can.
A name, residential address, and (preferably residential) telephone number is required from readers who comment on ODT Online. These details will not be visible to site visitors.