Magazine of the Socialist Party, Australian section of the CWI

Only a planned economy can solve water crisis

At the November 7 summit on the Southern Murray Darling Basin, Federal and State governments continued to set up for Australian water consumers a privatised water system on a user pays basis , where the cost and quality of water will depend upon a personal ability to pay not upon need.

The Socialist Party has always subscribed to the view of: ‘From each according to their ability to each according to their needs’ as the only way to operate a civilised society in direct contrast to the capitalist system of each for themselves and only for themselves. This most certainly applies to the need for water.

Australia is one of the driest continents on earth and has a long history of supply of water via government run and owned facilities. It has been with the intervention of the productivity commission since the 1990s initiated by the ALP, which set up a regime of increasing competition of community goods such as electricity, gas, transport and telecommunications. The National Water Initiative agreement set up by Coalition of Australian Governments (COAG) in June 2004 carried on from the framework for water reform signed by Australian and, state and territory governments since 1994. In July 2006, COAG reaffirmed commitments of all governments to six basic points of National Water Reform including:

-Conversion of existing water rights into secure and tradable water access entitlements.
-Establishment of open and low cost water trading arrangements and;
-Improvement of water pricing to support the wider water reform agenda

The National Competition Policy assessment of 2005 (completed by National Water Commission) had a key finding that progress towards effective water trading arrangements had been too slow and COAG at 14/7/2006 meeting agreed efforts should be accelerated.

The meeting of governments on 7/11/06 made several decisions but one of the key ones was relating to water trading: “Ensure that permanent interstate trading will commence in the southern MDB States by 1 January 2007 as recommended by the National Water Commission. New South Wales, Victoria, South Australia and Queensland also agreed in substance to accept the advice from the Australian Competition and Consumer Commission on exit fees.”

Water trading is the buying and selling of water entitlements, a water entitlement is a share of the total water that is available for diversion from a river in a year. One of the key elements of water trading is the price structure, which the National Water Initiative requires: a lower bound pricing for Rural Water Market and an upper band pricing for Urban Water Market. What this means is that prices for rural water will not go below that which will at least recover the costs of operating the business and for urban water will not recover more than costs of operating business at a level to avoid monopoly rents (it includes a commercial rate of return on assets).

At least in the opinion of one expert Peter Schwerdtfeger I, Emeritus Professor of Meteorology, Flinders University Airborne Research Centre: “Water trading as it stands now is an evil nonsense. It has allowed the fallacious belief to develop that water can be sold either upstream or downstream without any consequences. Water that is sold to NSW will not flow downstream and the bed of the Murray may dry out. It is not environmentally or economically viable. Water trading only works if you have a surplus of water. Instead, why don’t we encourage people to use water more efficiently?”

Even without this opinion it would appear that all that water trading does is allow for some to profit from others lack of water. It assumes that others have spare water to sell, or alternatively it would assume that those who can afford to pay more (perhaps because they believe they can make more profit from it) will get water before those who cannot.

The Socialist Party believes that water needs can be met as well as or better by community and government then private enterprise, there is nothing magical about the market. What is required is proper planning and execution of a plan, but a plan based on water needs of the community not the profit greed of a few. Access to water based on need not on greed.

Editorial from the December 2006-January 2007 Edition of ‘The Socialist’