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.