International tide turning against privatisation

Friday 28 Nov 2014

As the Barnett Government looks to privatise Western Australia’s electricity system, more and more cities around the world are turning against privatisation and fighting to buy back their services.

Globally, over the past 15 years, at least 100 cities have done so with water services, including several, in France, which was once seen to be increasing its focus on water privatisation.

This trend – “remunicipalisation” – represents a global backlash against the increase in privatisation for the past 30 years.

A recent article in The Guardian outlined this very issue using Hamburg as a case study.

Former state secretary for the environment and urban planning in Hamburg Christian Mass says “In Germany, every month there is a new town that is buying back its energy infrastructure… People are interested in local energy supply and that is contradictory to the centralised, high profit-orientated large utility.”

Satoko Kishimoto, coordinator of the water justice project at the Transnational Institute in Amsterdam, also noted the recent cases in the water sector in Africa and Asia, from Mozambique to Malaysia: “This is not a minor trend; many municipalities have been disappointed with privatisation, with costs, with service quality. Remunicipalisation is seen as a tangible response, a way to rebuild important social services, more democratically.”

While David McDonald, professor at Queen’s University (Canada) and co-director of the Municipal Services Project international research network says it’s been “off the radar”, he concurs that “we have had this massive trend since the 1970s towards privatisation – an ideologically driven, powerful trend - which has created enormous debates. But now we are starting to see something happen, including outright reversals.”

While there is minimal research on remunicipalisation, the Public Services International Research Unit (PSIRU) at the University of Greenwich and the Transnational Institute has noted 180 cases in the water sector in countries as widespread as France, Germany, Hungary, Argentina and Indonesia.

The articles says there are a range of reasons for this trend. In some cases, governments are trying save money; in other cases, cities have no choice because nobody is actually bidding for the contracts. Sometimes private contractors leave, and other times there are political movements, grassroots protests to get private companies out for different reasons.

It is interesting that, at a time when the tide is turning on privatisation in other parts of the world, the Barnett Government is looking to sell Western Australia’s electricity system.  Privatisation fails because private companies have to make a profit.  As communities around the world have realised, privatisation leads to higher prices, poorer service quality and fewer jobs and apprenticeships.