Further to yesterday’s post on Rodney Hide’s fitness (or otherwise) to be Minister of Local Government, there is a new development in the Government’s unfolding privatisation agenda.
Now John Key’s happy centrist government wants to repeal the provision in the Local Government Act which requires councils to consult communities before embarking on privatisation or contracting out of public services.
When Mr Hide announced his proposed changes to the Local Government Act two weeks ago, this little gem was mysteriously absent from the press release or backgrounder, or any of the Ministers’ public statements. But it is lurking in the Cabinet Minute listed along with six other “Minor legislative amendments”.
Apparently, according to the Cabinet Minute section 88 of the Local Government Act which requires public consultation before assets or services can be privatised or contracted out “is biased against the use of the private sector to deliver council services”.
Put this alongside the announced intention to loosen the controls on privatisation of water, allowing private companies to own our water infrastructure for up to 35 years at a stretch, and the Government’s repeated denials that they have any intention to privatise assets looks more and more like a joke. A bad joke. And with the super city looming, a joke on Aucklanders.
Isn’t there a difference between delivering council services and owning council assets, the latter being what I would term privatisation..?
To be honest I don’t care if the council operates the gabage trucks and if they don’t, I don’t really want to be consulted which company picks up my bins, I just want it done and for as cheaply as possible…
Jeremy,
Don’t you see one affects the other. If you create a private monopoly in an essential service like water, who effect do you think that will have upon service standards and price?
Hint- look at the UK experience with water.
@Phil – it’s lucky they can’t sell us air isn’t it.
@Jeremy – I don’t care who picks up my garbage either, but I do care who dispenses my water and about public libraries.
@Topcat, doesn’t have to be like that, with the garbage example, why not have one or two year contracts..? Then if the price is getting too high another company can come in…
I work in a government department as a law enforcement officer and that has happened with our towing, we had one provider switched to another, they didn’t fulfill their contract so the old company came back with another better offer…
Jeremy,
So you agree 35 year contracts are a bit over the top?
Yep, I agree there are lots of services that the council should contract out. In fact in some areas I’d like to see more local businesses getting a go than they currenly do.
But stuff like water, electricity, public transport, building consents etc.. its really important that the providers are accountable and can’t hold the public to ransom.
Absolutely, 35 years is ridiculous… It means I won’t get even a say on water issues again till I’m 62…
I also agree it’s important the local and central government have a controlling interest in essential utilities…
What I was trying to point out is that I don’t think changing or repealing this section is essentially an asset privatisation move…
Jeremy, how about the example of a 35 year BOOT (Build Own Operate and Transfer) scheme to dam, treat or pump water to people’s homes. Asset ownership and contracting of services often go hand in hand. These kinds of public private partnerships are precisely what the Government is trying to encourage….and they dont want councils to have to be bothered consulting the public about it.
To reaffirm another point made in this blog, The use of (or miss use of) public information from Rodney.
Considering Section 88 of Local Government Act, it is miss leading to include privatisation as an amendment(quiet after thought). To not include in public statements after a bill had been put forward, to stop exactly this happening, is proof of intent to deceive and not act in public good… or grievous professional miss practice on his part.
@Phil, well 35 years is just ridiculous and completely against ACT’s constant blather about “competition” but on BOOTs I think the key word is B Own OT, the council retains ownership, if the contracts are done correctly and ratepayers get productivity and efficiency gains I don’t see the problem…
Vector Arena is a BOOT and seems to be doing very well, admittedly against my predictions…
You are very right however to point out that this has been slipped in and given the revelations about Hide over the last two weeks shows what a hypocritical snake he really is…
@ Jeremy – Assets & Services are two different things, It definitely makes a difference as to who owns the asset and who owns the service.
Rubbish removal was probably not the best example as it is just a service with no particular asset, but Waste Stations and Landfills, a different story.
Their charges are passed on to the contractor/s and eventually trickle down to the end user with everyone in between adding their cut.
The cost of contractors operating landfills has already “to my knowledge” increased the price of rubbish removal to the rate payer twofold.
Build, Own, Operate and Transfer mustn’t be allow to happen.
Has never been centrist – they’re hard-right radicals.
NACT have always had a privatisation agenda – everyone who thought about it and considered just what capitalism (NACT are the parties of capitalists) is knew this.
That last sentence wasn’t supposed to be part of the quote.
You’ve answered Grant Robertson’s post Phil – what I expect an MP to do is what you’ve done here. Dug up dodgy law changes by Act and National that will reduce democratic accountability to us, the public. I bet NACT don’t want hundreds of public submissions on every asset sale they try – screaming we don’t want our assets sold!
@ Jeremy Harris – you have BOOT round the wrong way. It is supposed to be Build, Own Operate and Transfer. Meaning the private company builds the asset, owns it, operates it, the transfers ownership back to the council concerned.
What Hide and NACT propose is increasing the operate period from 15 to 35 years – the useful life of most infrastructure – meaning the asset will be knackered when transferred back to public ownership, so council will have to fund a new one.
All that said, I think BOOT is misleading. Many PPPs seem to still have council or govt providing most of the capital for the Building of the asset, so the company gets paid to build someone else’s water pipes, or swimming pool, then gets paid to make a profit runnig it before handing it back stuffed to the public ‘owners’ to pay for a new one. Textbook capitalist rort.
But the capitalist PPP propoganda pretends the company will put up the cash to Build the asset. Deeply misleading.
And Jeremy, the NZ Bus lockout fiasco should show you that the public are the ones held to ransom when monopoly infrastructure or systems get run by a private company (who are outside democratic control). NZ Bus own such a high proportion of the Auckland (and NZ) bus fleet, that council cannot replace them at short notice. It would take a year or two to get 800+ new buses. So NZ Bus have ARC over a barrel.
Repeat this on any infrastructure with privatised operation. If you can’t replace a big staff or equipment list rapidly, you have no freedom to change suppliers. Towing is one of the few industries with a largely fragmented bunch of small operators.
Pity Labour didn’t remove the ability of councils to outsource their operations when Labour changed the Local Government Act 2-3 years back. Instead Labour made it easier to use PPPs like Rodney is proposing. Your thoughts Phil?
I think even 15 years is too long to have the water contracted out. Bring on 2011
Interesting Bob, I have to admit I haven’t done much reading on the operation of BOOT set ups and PPPs in general and will have to, to re-examine my thoughts…
Moreover, they actively encouraged the use of PPP’s with the new Northern Motorway extension a good example and the Penlink extension signed off by the Rodney Council under Labour’s watch.
To be brutally honest, this country is not wealthy enough to afford anything other than PPP’s for such infrastructure.
That’s bollocks Gooner, where do you think the $2.3 billion for the Puhoi to Wellsford holiday highway is going to come from..?
It’s a question of transport priorities, NZ has some of the worst in the world, one reason we are falling so far behind Australia…