Affectionately known as ‘Aggie’, the charming hamlet of St Agnes in Cornwall is a postcard of the best of Britain. Between the sandstone facades and whitewashed houses, narrow streets lead to a cove of painted boats and water as blue as the Aegean Sea.
However, last November, Trevaunance Cove turned brown due to sewage. Rescuers described the stench as “unbearable.” The utility company responsible – South West Water – said heavy rain had forced it to release sewage and stormwater runoff to prevent the local filtration system from being overwhelmed.
But the pollution event was not isolated. Two months previously, discharge alerts were in place at more than 100 beaches across the country, and in 2021 there have been more than 370,000 discharges of raw sewage by water services across the UK . That year, another company, Southern Water, was fined a record £90 million for dumping 21 billion liters of untreated sewage into marine protected areas off the south coast of England.
Rivers and lakes were also used as dumping grounds; there are credible reports that untreated wastewater is discharged into natural waterways every two and a half minutes. As temperatures in the UK have risen, there has been a growing backlash over the government’s failure to tackle the problem.
At the heart of the scandal is the decision in 1989 to sell off the country’s water and sanitation sector.
Since then, the profit motive has had its effect: the nine largest water companies have accumulated debts of $100 billion while paying dividends of $125 billion. More than 70 percent of the industry is owned by foreign hedge funds and private equity firms who have squeezed every last ounce of value possible from the country’s existing stock of water infrastructure.
Now, urgent plans are being drawn up to repair the UK’s water and sewerage network. Perhaps unsurprisingly, the multibillion-euro cost of this upgrade is borne not by the industry, but by taxpayers.
Public goods disappear
Although it has flirted with the idea of selling Snowy Hydro and contracted private companies to operate desalination plants, Australia has, by and large, not sold its assets in water.
Elsewhere, however, politicians have sold off public assets across all sectors of our economy.
Airlines and airports. Power plants and prisons. Banks and bus lines. Even serum labs and land records. The list goes on. And the roads… how can we forget the tolls we pay just to get around?
There was even a failure to offload the Immigration Department’s visa processing function for around $1 billion (which petered out after it was revealed that a friend of a former prime minister was in the running for the contract).
But did it work? Has the sale of assets to free up cash for public spending been effective? John Quiggin, an economics laureate at the University of Queensland, has long sought an answer to this question.
He has no doubt about the failure of the experiment.
“It is clear that privatization has, in general, not delivered the results promised,” he wrote to a parliamentary inquiry. “This has not improved the fiscal situation of governments, nor has there been, in general, an improvement in customer service standards or a fall in prices compared to the previous trend.”
He calls the idea that asset sales “will allow (governments) to increase public spending or reduce taxes without incurring additional debt” a “delusional belief.” In essence, this is because governments made bad deals and then misspent the revenue they managed to raise.
Have public sales benefited us?
But what happens if we look beyond the “fiscal situation”?
What if we asked tougher questions about the contribution of privatization to the creation of a better, fairer and more harmonious society? Has recidivism decreased? Are buses and ferries more often on time? Are more unemployed people being helped to find work? In other words, have these public sales been beneficial to us?
The public doesn’t think so, and hasn’t for a long time.
Since 2011, Essential Research has verified it several times. That year, overwhelming majorities were unhappy with the privatization of Qantas (44 per cent), Telstra (53 per cent) and the Commonwealth Bank (42 per cent).
The polling agency found that only 6 percent of respondents thought these privatizations had benefited the general public. Fifty-nine percent, including a majority of Conservative voters, believe it would instead benefit the business sector.
Two years later, Essential asked whether “having public services owned or managed by private companies” was a good or bad idea.
Fifty-eight percent thought it was bad.
In 2015, she asked more specifically about a range of government services, including schools, hospitals, prisons, water services and public transport. In none of these seven main categories did people approve of privatization (public transport came in first, with 37 percent supporting to 47 percent opposed; primary schools had the least, 25 percent for, 58 percent against).
The atmosphere is the same in the cradle of Thatcherism.
Decades of rising utility bills and transport costs, combined with tens of thousands of layoffs, have reinforced the British people’s antipathy to privatization. Polls are increasingly calling for the nationalization of entire sectors, including electricity and gas, postal services and water and sanitation supplies, and of course the country’s struggling railways, which, by European standards, are appalling. Between 53 percent and 65 percent of people think they should all return to fully public ownership.
Recover privatized industries
Here, many are witnessing the first major recovery of privatized industries in Australia.
In New South Wales, private prisons are to be brought back under the control of the Department of Correctional Services. These include Junee, which houses nearly 500 maximum security prisoners and was the state’s first private prison. Parklea Correctional Center is likely to be next, and Clarence Correctional Centre, run by Serco, could follow suit.
The Labor government informed reporters that it was considering returning all prisons to the public sector, and the minister said he would “consider all options as contracts for other private facilities are close to completion.” be renewed.”
Meanwhile, 28 years after the sale of Victoria’s electricity sector, Jacinta Allan’s government continues its partial restoration to public ownership. First announced by Dan Andrews, his plan is to revive a version of the State Electricity Commission.
The commission’s role in the 21st century will be to help the Victorian electricity network move away from coal-fired generation and towards greater reliance on renewable energy. The state will invest $1 billion in a reform that promises Victoria will get 95 per cent of its electricity from renewable sources within just 12 years.
These commitments are widely viewed with skepticism. But perhaps the coming decades will see a return to a more balanced mix of private and public interests in the economy.
There is certainly now a renewed focus in the civil service — thanks to the PwC tax leak scandal — on the vulnerabilities created by the outsourcing of its core functions to the voracious Big Four consultancies.
If this is a break, perhaps we could be grateful that it came at the right time. A serious drought awaits us and so far we have at least managed to protect our water.
Vigilance may be required. Temptation is everywhere for cash-strapped treasurers. Banks and hedge funds are looking at the growing infrastructure backlog and seeing dollar signs.
We were talking about sale of Sydney Water before the last NSW election. And who could forget those heady days when the item was almost stolen as part of a plot to enrich the famous Obeid family?
But if ever a reminder of the risks proves necessary, just check the state of things in old Blighty. For example, new figures were released last week: in 2021 and 2022, a combined total of 46.3 billion liters of raw sewage were discharged into the River Thames. Ah… thanks, but no thanks.