OPEN LETTER TO PAUL SWAIN, MINISTER OF COMMERCE.

6 June 2001.

Dear Minister,

The Water Pressure Group (Auckland) has received a copy of a letter dated 4 May 2001, that you sent to one of our members, Sue Henry, who is also Spokesperson for the Housing Lobby. Your letter reads as follows:

“Thank you for your letter of 7 February concerning the Auckland Regional Water Review, and also discussing the application of the Commerce Act to water services.

The delivery of water and wastewater services in the Auckland region, and indeed throughout the whole of New Zealand, is an important issue requiring careful consideration. Water and wastewater play a vital role in the economic, social and environmental well being of our country. I am very interested in the Auckland Region Water Review and am following its progress.

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 provisions of the Commerce Act concern the regulations of goods and services providers with the aim of promoting:

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- more efficient and innovative businesses;

- a wider choice of goods and services;

- higher quality goods and services; and

- competitive prices.

The purpose of the Act is to promote competition in New Zealand markets for the long term benefits of consumers.

The Act does not prohibit large players or monopolies from operating in markets, such as in the case of water.

Rather there are requirements that any person who has a dominant position in a market must not use their dominance for anti competitive purposes. As a last resort, if competition in a market is limited and it is in the interests of the acquirers of those goods or services, the Government may require any good or service to be controlled. In this instance, the Commerce Commission may control prices, revenues or quality standards for any goods or services.

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.”

The Water Pressure Group regards your statement, “The Government considers that the Commerce Act is appropriate legislation to apply to the provision of water services and other essential services,” to be a treacherous 180 degree U turn, and sellout of the Labour Party position on water services stated before the election.

Under the Commerce Act, the commodification of water is entrenched.

Water is a saleable commodity, its supply a commercial activity.

Before the 1999 General Election, the Water Pressure Group sent out a 16 question “Survey of Political Parties on the provision of water/wastewater services”. A response stating the position of the New Zealand Labour Party, prepared on behalf of the Executive of the Auckland Regional Council of the New Zealand Labour Party, and signed by Andrew Beyer (Auckland Regional Organiser, New Zealand Labour Party), was received on 26 October 1999.

In response to Question 1 of our survey:

“Does your Party consider the provision of water services to be an essential public service which should be affordable by all? Or as a commodity to be sold at a profit for those who own the service?”

The Labour Party reply was:

“Our party does consider the provision of water services to be an essential public service, which should be affordable by all.”

Who else shares the changed position of the now Labour Government? None other than Roger Kerr, well-known corporate representative of the NZ Business Roundtable, who stated in The Independent 9/ 4/ 2001 “Reforms to roading management, combined with similar moves to convert water and sewerage services into commercial utilities (or franchise them), would lead to a major and badly needed reshaping of local government”

We note with real concern your following “weasel words’:

“The application of the Commerce Act to water services does not mean that water infrastructure services should no longer be community owned assets.”

The franchising of water services that the NZ Business Roundtable would like to see, is privatisation in the European model. The local authority still owns the assets, but the operation and management of the assets is in the hands of transnational water corporations, making private profit out of public infrastructure. This process has already begun in the Auckland region, where Papakura’s water services are run by Australia and New Zealand’s largest private water company - United Water - a consortium of French & German companies (Vivendi and RWE - formally Thames Water).

In response to Question 6 of our survey:

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

The Labour party reply was:

“We do not support privatising water services. “

So why is the Labour Government helping to set up our water services for future privatisation?

Under the 1984 Labour Government, the first wave of “Rogernomics’ saw public property formally owned by central government, commercialised, corporatised then eventually privatised. Under “Rogernomics’ the 1984 Labour Government helped the corporations and the rich. Since 1984, in New Zealand, the wealthiest 5% have had a 25% increase in income. The bottom 80% (we, the general public) are worse off.

Globally, the corporations now want to get their greedy hands on basic services - health, education and water.

The entrenchment of water services under the Commerce Act will help to pave the way for this to happen.

If the supply of water is cemented under the Commerce Act as a commercial activity, then water services are being set up for future privatisation under the General Agreement on Trade in Services (G.A.T.S.). It is only public services which are NOT provided on a commercial or competitive basis which are not subject to the G.A.T.S.

The General Agreement on Trade in Services (GATS) is seen as the next Multilateral Agreement on Investment (MAI).

In 1994, The General Agreement on Trade in Services (GATS) was adopted as part of the Uruguay Round of trade negotiations, which also created the World Trade Organisation (WTO) to enforce such agreements.

New Zealand is one of the 139 countries which are in the WTO, and every country in the WTO is part of the GATS.

“Liberalisation” is the aim of bringing services into the WTO. “Liberalisation” or “Free Trade” means privatisation.

“Liberalisation” also means deregulating services at central and local government levels, for the benefit of transnational corporations, with the threat of economic sanctions enforcable by the WTO, if, for example, governments (central or local) discriminate in favour of their domestic service suppliers and against foreign suppliers of those services.

“Free trade’ means opening countries up for further privatisation. The Labour Government is committed to “Free Trade Agreements’. First the Singapore Free Trade Agreement, next - the Hong Kong Free Trade Agreement?

It appears that this Labour Government is stealthily setting in place steps for the second wave of “Rogernomics’ which will enable transnational corporations to gain control of essential public services such as water.

This is totally unacceptable. The word of the Labour government has yet again proven to be unreliable, and you are not keeping faith with the public. An Auckland regionwide water bill boycott is underway to back up our demands with a message that you cannot ignore. We have seen the damage caused by the pro-corporate Rogernomics’ agenda of the 1984 Labour Government. We will not sit back and allow further corporate control at our expense.

We demand that you keep faith with the public on water services and act in keeping with your pre-election promises.

We demand that you rescind your policy that “The Government considers that the Commerce Act is appropriate legislation to apply to the provision of water services and other essential services.”

We therefore expect all Labour Government Members of Parliament to support the following:

- I /We will support any legislation that seeks to take our water services out of the Commerce Act along the same lines as the health legislation

- I/We oppose the commercialisation of our water management and therefore would support legislation that seeks to take water management out of the governance of Local Authority Trading Enterprises (L.A.T.E.S)

- I/We support the concept that water services be run on the communities behalf by local councils. Either as a department of council or as a Stand Alone Business Unit. (SABU)

- I/We undertake to vote against any legislative change to the Local GovernmentAct or the Rating Powers Act that seeks to spread user pay charges, flat or poll tax charges for waste water. There are proposals to allow Stand Alone Business Units like the model in Waitakere to charge for waste water.

- I/We acknowledge that the Papakura franchise with United Water is privatisation, and will support any moves which seek to end the united water franchise in Papakura. Furthermore, I/We will endeavour to support any legislation that will prevent our water systems and management being privatised anywhere in New Zealand.

I/ We will support as per the Water Industry Act (UK) 1999, no restrictions or disconnections for non-payment of water services bills, because access to water is basic human right, and vital for public health and sanitation.

I/We are signing to endorse the above: Date:

PS: Copies of the Water Pressure Group pre-election survey on water services and the Labour Party response are attached for your reference.

Yours sincerely,

Penny Bright

Media spokesperson Water Pressure Group (Auckland).

CC: All Labour MPs, all Alliance MPs, the media.

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