Could St. Paul Become Another Sydney, Australia?

That city of 3 million people once had a publicly owned and operated water system. But last year, only a few years after contracting with Australian Water Services, which is owned by the same corporation interested in St. Paul’s water system, hundreds of people reported feeling ill. The dangerous parasites giardia and cryptosporidium were detected at elevated levels in the city’s water supply. For some five weeks residents were told to boil all water before using it and to send their children to school with bottles of drinking water.

The crisis constituted a grave threat to public health. The parasites can cause severe gastrointestinal problems and are especially dangerous to children. Cryptosporidium got into Milwaukee’s water supply in 1993, killing about 100 people and making more than 400,000 others sick.

But the threat to public health has been only one consequence of Sydney’s privatization of its water system. Others include:

• Higher rates for homeowners. Privatization of water services has been pushed forward across the globe, as it has here, under the mantra of “competition.” The reality is the opposite. An article in the journal CPPA Monitor by Jan-William Goudriaan and David Hall describes the industry as “very small groups of closely knit, cartel-prone multinationals with recent records of corruption, incompetence...who finance investment through higher prices for consumers, and generate dividends from job cuts.”

When the Sydney Water Board was “corporatized,” according to one article posted on the Internet, “thousands of jobs were lost. Household water prices went up 30 percent in four years, while bills for big business dropped an average of 45 percent in real terms since 1993.”

• Lack of accountability. According to the Sydney Herald newspaper, the deals that put the private contracts in place were hidden from public view by assertions of “commercial secrecy” that even an official post-crisis investigation could not entirely breach.

But as the mid-1998 crisis unfolded, Sydney Water revealed that the contract with Australian Water Services (AWS), the private operator of Sydney’s main water treatment plant at Prospect, New South Wales, did not require it to filter for giardia or cryptosporidium, and in fact set no conditions at all for bacteria levels. The Associated Press quoted a state political opposition leader who said, “You’ve got Sydney Water saying, ‘But we’ve complied with the guidelines’ — the problem is you can’t drink the water that’s provided under the guidelines.”

An anti-privatization web site in Australia reported that the contract terms made it likely that AWS would “escape all legal liability for Sydney’s disaster.” Privatization, they said, was directly connected to the elimination of jobs and reduction of maintenance to boost profits, as well as the decision to pay for expensive private treatment plants instead of regulating and restricting polluters in Sydney’s watershed area, all factors that led to the crisis.

The situation in Sydney is not, unfortunately, unique.

Privatization critics also cite the case of Great Britain, where many publicly owned resources were sold off under Margaret Thatcher’s administration. “The strongest argument against privatization in the provision of water is the 1989 privatization of the water supply in Britain,” notes one author writing on an Internet site.

“In the first four years, charges rose three times faster than inflation. In 1991–92 there were 21,286 water disconnections of those unable to pay. There was a horrifying increase in dysentery, cholera, hepatitis — diseases associated with a lack of clean water. The privatized companies laid off almost 25 percent of the work force, some 100,000 workers.”

— Dave Riehle