Big business not the answer

24.10.2002

By JANE KELSEY*

Where on earth are public/private partnerships leading us?

The furore surrounding Ross Armstrong goes beyond the personalities to the heart of Third Way politics and the primacy it gives to partnerships between Government and business.

The Prime Minister's office is setting up a new unit to develop policies in line with the Programme of Action produced by the World Summit on Sustainable Development (WSSD) in Johannesburg in early September - a programme to which public/private partnerships are central.

The summit was meant to provide the next steps forward for sustainable development, based on the progressive agenda of the Rio Earth Summit a decade ago. Instead, it endorsed a programme centred on economic globalization. What began as Rio + 10 became known as Doha + 10, a reference to 10 months since the launching of a new round of free trade negotiations at the WTO ministerial meeting in Doha, Qatar.

There was nothing progressive about the process or the outcome. The people for whom sustainable development is a matter of life and death - poor and small island countries, indigenous nations, peasant farmers, local communities - were marginalized. So were their demands for debt relief, agrarian reform, rights to food security and clean drinking water, enforceable controls over transnational companies, protection of indigenous rights over biodiversity, an end to dumping of GE-grain on countries facing starvation and much more.

Delegations representing poorer countries objected that the UN's relatively open processes had been subverted by the kind of bullying, manipulation and backroom dealings that pervade the WTO.

Predictably, those who dominated were the major powers, especially the United States, EC and Japan, with strong support from Australia and New Zealand on issues of globalization. Sponsors, such as BMW, Hewlett-Packard and Daimler Chrysler, provided an up-market corporate image. The business end of civil society, rebranded through such alliances as the World

Business Council for Sustainable Development, and even Mining, Minerals and Sustainable Development, proclaimed their conversion to social responsibility.

The epitome of corporate greenwashing was a report from the chairmen of DuPont, Shell and Anova Holdings: Walking the Talk: The Business Case for Sustainable Development.

Their solution was to mobilize markets in favour of sustainability, using the power of innovation and global markets for the benefit of everyone - not just the developed world. This means a further liberalization of the market - a move that would be condemned by anti-globalization protesters.

The summit's location in post-apartheid Johannesburg underscored this paradox. About 20,000 people marched from the depressed township of Alexandra to the summit venue at elite Sandton to be met by about 8000 police, tanks, helicopters and barricades. At the fore were a group from Soweto where privatization of water and electricity had already led to terminations for non-payment and outbreaks of disease, such as cholera. The official delegations were quarantined from this uncivil society.

The champions of the WTO, including New Zealand, emerged victorious. Evidence that links global free markets to deepening inequality, environmental destruction, corporate corruption, collapsing infrastructure, social crises and political chaos was swept aside with the blanket assertion that trade liberalization enhances sustainable development.

Views were ignored from bodies like the World Health Assembly, UN Commission on Human Rights and UNCTAD, who fear the social impacts of WTO agreements on development rights to education, water, health care and medicines.

By endorsing the Doha agenda, the summit effectively sanctioned proposals to extend the power of major corporations over core services and guarantee rights to foreign investors, with no corresponding legal responsibility. This was confirmed by the shift in focus from Type-I treaties that are binding under international law to so-called Type-II outcomes of stakeholder partnerships.

Notionally these partnerships include indigenous peoples, local governments and (corporate-friendly) non-government organizations. In practice, they are designed to forge the bond between Governments and corporations that Walking the Talk proposed.

The summit's targets on energy, water and food assumed private provision by profit-driven transnational companies. An obvious alternative - to cancel the unpayable and often unconscionable debt - had been ruled out at the Conference on Financing of Development in Monterrey in March 2002. Sustainable development became code for corporations assuming more control over resources, not less. At a time when corporate corruption dominates the headlines and self-regulation is visibly failing internationally, and in New Zealand, this is an extraordinary coup for big business.

Already a Walking the Talk forum in Auckland has discussed the implications for business and the opportunities arising from the summit. More are scheduled.

I'm not opposing the idea of businesses becoming more socially responsible. But New Zealanders should not be seduced into believing companies like Waste Management or Shell have been reborn as responsible corporate citizens. Their power needs to be wound back and their actions regulated, not expanded further in the guise of sustainable development and social responsibility.

Nor should we naïvely believe Government partnerships with business will not seriously compromise democratic governance.

* Jane Kelsey is a professor of law at Auckland University and a member of the Action, Research and Education Network of Aotearoa (Arena).

Letter in Business Section of the New Zealand Herald 25th October 2002

Short on facts

In her anti-business, anti-privatization commentary (Business Herald, October 24), Jane Kelsey expressed a lot of opinions and some facts.

One fact was the claim that privatization of water and electricity has already led to terminations for non-payment (in Soweto) and outbreaks of diseases, such as cholera.

She got this wisdom from a march held by a coalition consisting of the Communist Party and others hardly accurate sources.

I lived in Johannesburg until 3 weeks ago and own a house there, which I¹m now selling. Soweto, where Kelsey claims this took place, is part of Johannesburg. All water and electricity is purchased, not from private vendors, but from the city government.

Neither are privately provided. In fact, the Government now provides a limited amount of both free of charge.

What the Johannesburg city council, controlled by the African National Congress, does do is cut off water and electricity for failure to pay local rates.

I, like Ms Kelsey, was at the World Summit as a delegate. I, too, heard the claims made by the marchers she cited. But unlike her I lived there for the past 12 years so I wasn¹t duped by these false claims.

As for the cholera outbreaks, these take place in areas where there are no water connections to begin with, let alone where connections are terminated mainly in rural Kwa Zula-Natal or in squatters¹ camps built along rivers where the same water is used for sanitation as well as for drinking.

Certainly her facts regarding this matter are wrong. And I suspect the rest of them are as well.

Jim Peron,

Newton

[Auckland]

New Zealand

Letter to the Editor

Business Herald

Jim Peron (25 October) challenges my report on opposition to electricity and water privatization from groups in Soweto, in the context of the recent World Summit on Sustainable Development in Johannesburg. He points out correctly that Eskom , the company which generates electricity for Soweto, is a para-statal. As New Zealanders know only too well, the commercialization of state-owned enterprises amounts to the privatization of a public utility, whether or not it is followed by a formal transfer of ownership. For chronically poor residents of townships like Soweto, Eskom¹s policy of Ocost reflectiveness¹ has moved from flat rate monthly charges for electricity services to bills based on metered consumption. A

2001 survey reported that 89% of households survey had some level of electricity debt, and 61% had their electricity cut off in the previous year (The Electricity Crisis in Soweto, Maj Fiil-Flynn et al, Municipal Services Project, August 2001).

The same point applies to water privatization. I presume the cholera outbreak in the KwaZulu-Natal region of South Africa to which he refers was that which hit over 3700 people and claimed at least 32 lives in late 2000. As the Water Affairs and Forestry Ministry admitted, this resulted from people resorting to polluted river water after their water supply was terminated for non-payment after the introduction of user-charges in 1999. The people of Soweto, and elsewhere throughout South Africa and the world, justifiably fear the same outcome.

Professor Jane Kelsey