Put Essential Services in Public Hands

The  Senate and House hearings  on  the  water  crisis generated a  flood of  criticisms  on the  murky water business of Manila Water and its hazy relationship with a government body, MWSS, that is  supposed  to  regulate the company.  The system of water governance is bad.  The  legislators described  the system as  “inefficient”, “mismanaged”, “incompetent”.

In addition, the hearings pounded  on the failure of  Manila  Water and  the  MWSS to anticipate the  water shortage and  coordinate plans  on how to prevent it.  There are also criticisms on how water has become expensive through the years; how the two private concessionaires, Manila Water and Maynilad, are still unable to provide water service to all, the poor households in  particular; and how these companies have been raking in, with Manila Water reporting a net income of  P6.5 billion in 2018 alone.

But are these not the same issues – inefficiency, mismanagement and incompetence —  that were raised two decades ago by those who pushed  for the  passage of  Republic Act No. 8041 or  the  Water Crisis  Act of  1995? Led by the World Bank, the  neo-liberal economists and  their partner technocrats in government argued loudly that the delivery of water and other essential public services should be transferred to the “more efficient” private sector.  They further justified the   privatization argument by saying that such transfer would reduce the cost of maintaining/operating an essential public service, enabling the concessionaire to provide service to all  consumers, rich and poor.  The battle cry of the  privatization advocates:  cut  the  “visible hand” of  the  government in the delivery of water and  other essential services. 

And yet, two decades after, the very same issues  raised in support of water privatization are now hounding the system of privatized water governance. Clearly, private is not necessarily better than public. 

In fact, the privatization of public or essential services is now being questioned in many countries across the  globe. It has also been reversed or in the process of being reversed in a number of  key cities in Europe, North America, Latin America and  Asia. 

A 2017 study by the Public Sector International (PSI) and the Transnational  Institute (TNI) of Amsterdam shows that there have been at least 835 cases of “re-municipalization” of public services from 2000 to 2016.  These cases  cover around 1,600 municipalities  in  45 countries. 

The leading target of the re-municipalization or re-nationalization campaign is the privatized  water service. More than 235 cities in 37 countries have re-municipalized water services, affecting over 100 million people.  In France, the united campaign by the citizens and local  governments led to the return of the water service business in the cities of Paris, Nice and  Grenoble in  the  hands  of  the  government. 

The  PSI-TNI study reports that there have been marked improvement in the re-municipalized water services as well as significant savings for the people and the concerned cities. For example, Paris saved 35 million Euros in the  first year (2010) of  re-municipalization and was  able to reduce the water tariffs by 8 per cent. According to a civil society report, Spotlight on Sustainable Development 2018, the improvements are brought about not only by the  change  in  the ownership structure from private to public but also in the  restoration of  “public ethos” in the  operation of the water business and the greater “transparency and  accountability” to the  citizens of the re-municipalized public service.  There is a democratization of the system of water governance, with the workers and citizens being involved in making decisions on reform and operation of the water service.

Other public services targeted by the re-municipalization movement are infrastructure development, electricity generation and distribution, transport, education, health care, waste collection and so on.  Germany, which has been under the control of the conservative CDU party, has the  most  number of re-municipalization cases,  347 in  all.  The re-municipalization  success is due to the unity of the Conservatives and the Greens in Germany on  the need to reverse  the  privatization of public services. This shows that the demand for better and more transparent system of operating public services  unites people of  various  political persuasions.  

The success of the re-municipalization movement is also due to the  increasing public awareness that an essential public service is a natural monopoly, which easily becomes a private monopoly when  transferred to the  private sector. Once in  the saddle, the executives of a private company  naturally do their damnedest primarily for the benefit of the company’s shareholders.  Thus the  tendency of private water service providers to prioritize the development of water infrastructures for the rich and well-developed areas while neglecting their obligation to insure the adequate flow of water in the poor low-income communities. This also explains why in the Philippines today, there is intense rivalry among the rich water companies on how they can acquire, via the  so-called “privatization” route,  the most developed water districts in  the  different provinces.

In the light of the foregoing global re-municipalization movement and the failure of  privatization to deliver the quality and reasonably-priced public services demanded by the  people, is it not about time that the  policy makers do a serious re-evaluation and adjustment of  the privatization program?  Instead of the usual public-private partnership or its hybrid PPP,  can we not develop a more transparent and participatory public-people governance modality in the operation of essential public services? Why not adopt the public-citizen partnership of France  and Germany in the  management of  re-municipalized  water and energy services?

Let us  put essential services in the  public  hands.