APRECON SECTORAL WORKSHOP: Challenges to the Utilities and Municipal Sectors
Objectives:
·
Exchange
information on the key issues affecting the Utilities and Municipal Sectors in
the Asia Pacific Region
·
Discuss
the benefits of Public-Public Partnerships and learn from specific PUP cases
·
Consolidate
the experiences for inputs to the PSI Asia Pacific Regional Action Plan
·
Identify
key concerns of the sector and make recommendations to the APRECON
Inputs / Resource Persons:
1.
Economic
recession and cost cuttings – by Professor David Hall, PSIRU, Greenwich
University (via U -tube and audio link) http://www.youtube.com/watch?v=QeYV96L4Gns
DAVID HALL is director of Public Services
International Research Unit (PSIRU), and responsible for its work. He
specialises in water, energy and healthcare, and the design and maintenance of
the PSIRU database and website. Before joining, PSIRU he worked at the Public
Services Privatisation Research Unit, which developed a database on
privatisation for the UK trade unions. He had previously worked for trade union
research units, and as a lecturer in higher education. He has written books on
public expenditure and labour law.
2.
MNC
interventions, investments and trade agreements – by Mr Harvey Purse, Trade Justice
Campaigner, AFTINET (Australian Fair Trade and Investment Network) http://psi12aprecon.wordpress.com/conference-documents/workshop-document/presentationpaper-from-speakers/mr-harvey-purse/
HARVEY
PURSE is Trade Justice Campaigner for Australian Fair Trade and
Investment Network (AFTINET). He studied Industrial Relations and Sociology at
the University, became involved in student politics and local
community campaigns/actions, save railways stations
campaigns, the anti-apartheid movement and the anti-nuclear
movement, as well as broad community and industrial campaigns.
He has worked as a lighting operating in theatre as well as rock
and roll, an Immigration Officer, and at Sydney Water, where his interest in
trade justice took hold. He is an official with the Australian
Services Union in the State of New South Wales.” AFTINET is a national network
of community organizations, trade unions and individuals concerned about trade
agreements that restrict the ability of governments to regulate both
investments and key areas of social policy.
3.
“Structural
reforms and Privatization”, Presentation by Mr Vinay Pandey, Power
Engineer, India http://psi12aprecon.wordpress.com/conference-documents/workshop-document/presentationpaper-from-speakers/
VINAY PANDEY has worked with Power
generation utility for 23 years. He is Coordinator for electricity employees
and engineering unions in Madhya Pradesh for 5 years and General Secretary
of Madhya Pradesh Electricity Engineers Association for 4 years. Since last
year, he is secretary of Western India Power Engineers Federation.
Facilitator: Mr Greg McLean,
Utilities Network Coordinator, Assistant National Secretary ASU
GREG MCLEAN is Assistant National Secretary of
the ASU, and has vast experience in areas of public sector reform, policy
development, implementation, including industrial relations and community
outcomes. A director of a number of organisations including those linked to
professional development and skills acquisition, he has participated in a range
of public sector reform issues /campaigns.
INPUTS: Prospects for economic growth and public services in
Asia-Pacific
By Professor
David Hall, PSIRU
Despite the
economic crisis, countries in the Asia-Pacific region have experienced high
economic growth (at least 3.5% in all countries except
Japan, Australia, New Zealand), and few cuts in public spending except in New Zealand.
IMF and UNESCAP call for more social spending and
expand social protection in Asia
•
IMF Economic Outlook (Oct 2011): “Policymakers also need to find room for more social spending in support
of inclusive growth, such as greater investment in education and training and
social protection schemes. Indeed, public spending on social areas in Asia
generally falls short of levels in comparable regions at similar levels of development”
(IMF Asia and Pacific Oct 2011 http://www.imf.org/external/pubs/ft/reo/2011/apd/eng/areo1011.htm )
• UN ESCAP May 2011: Calls for “a social protection
floor based on universal principles and access should form the basis of future
policy. Such interventions are affordable and represent a significant
opportunity for governments to invest in both social and economic development
for the benefit of all.” (UNESCAP 2011 The Promise of Protection http://www.unescap.org/publications/detail.asp?id=1440 )
One example is Thailand’s Universal Health Coverage
Scheme. According to UN ESCAP 2011, “Everyone is now entitled to free
in-patient and out-patient treatment, maternity care, dental care and emergency
care. By 2009, about 48 million people, or about 76 per cent of the population,
were registered. The scheme is fully financed by the Government, with a total
budget in 2011 of USD $70 per person for 48 million insured persons – which
accounts for 5.9 per cent of the national budget.”
There is
long-term link between public spending and growth.
Public services need to be financed by affordable and
fair taxation.
The new PSIRU
website aimed to provide more information for PSI
and affiliates and others, and contains publications, countries, companies, ‘CutsWatch’
especially in Europe and North America, etc. (see: http://www.youtube.com/watch?v=MPywkn9DS3g)
MNC interventions, investments and trade agreements
By Mr. Harvey
Purse, AFTINET
The Australian government is negotiating a
Trans-Pacific Partnership free trade agreement (TPPA) with the US, Chile, Peru,
Brunei, Singapore, New Zealand and Vietnam where the agenda is being set by
giant US corporations and based on US free trade agenda of liberalization,
deregulation and secrecy.
US corporations
have made public submissions to oppose commitments to workers’ rights. They
also want to use the TPPA negotiations to undermine local jobs and fair
employment conditions for government contracts. The US business agenda is about
more rights for corporations, but less rights for workers, and less ability for
governments to make laws in the public interest. Local consultations may be
deemed a barrier to trade as MNCs are based offshore and have no onshore
capacity.
In the health
sector, giant US pharmaceutical and tobacco corporations are lobbying to impose
US intellectual property laws which give US pharmaceuticals more rights to
charge higher prices for longer periods for medicines; restrict the ability of
governments to provide medicines at affordable prices; and give US tobacco
corporations the right to sue governments millions of dollars when they try to
protect public health through regulation.
These provisions
can allow US corporations to sue governments for millions of dollars over
health and environmental legislation which they can argue as barriers to trade.
In 2010, Philip Morris filed a claim against Uruguay challenging tobacco
advertising restrictions introduced by Uruguay health authorities based on WHO
recommendations.
Japan may
participate in TPPA, and this is expected to slow down the negotiation process;
the entry of a new country in general will slow down the process.
In 2001, Pacific
Island Countries signed two regional trade agreements – Pacific Island
Countries Trade Agreement (PICTA) and Pacific Agreement in Closer Economic
Relations (PACER). In 2009, Australia and New Zealand convinced the
Pacific Island countries to commence discussions on PACER Plus, a regional free
trade agreement. PACER Plus for the much smaller and vulnerable Pacific
nations could be a social, economic and environmental disaster. Any free trade
agreement that covers trade in goods, services and foreign investments need
detailed research on impacts, consultations and capacity-building.
Structural Reforms and privatization
By Mr. Vinay
Pandey, Power Engineer, India
The presentation
focuses the paradigm shift in structural reforms, the experience so far (in
India context) and way ahead.
The paradigm
shift in structural reforms is premised on: higher Investment in
public services, Efficiency in public services, and Distancing
business from governance – or “IED” Improvised Explosive Device, which when
handles less handled carefully, risk threat of destruction and devastation.
Reform actions
consist of: Change of Government Polices; Corporatization and Disinvestment of
the Government Stake in the Entities; Unbundling the Entities; Shifting from
‘Capacity to Pay’ approach to ‘Cost of supply’ approach.
The experience to
date in India context:
1.
Cost of services
•
Power – The reforms were introduced by statute. In last decade, the cost has
increased minimum three times. In electricity sector, Orissa state was the
first to pass legislation, and in 2003, Indian electricity law was
passed. The power deficit or capacity shortfall has gone up while the
cost of electricity has increased 3x or more than 200%.
•
Water is a relatively new development. New schemes are introduced by
multilateral development agencies (MDAs) even in small towns, shifting from
simplified local resource use context to providing water piped through longs
distances. However, there is a clear sign of shooting up water taxes wherever
large schemes are being taken up with assistance from MDAs. On basis of poverty
line of 60 cents/day per person, total income is now proposed for investment.
Water charges need to be raised many times.
Health –
Typically this sector has not been subjected to any formal reform, but there is
systematic reduction in budget. Yet with diminishing per capita real term
health subsidy, the cost to an average person has to pay has spiraled. As per a
study report published recently on 12th October, in last seven
years, cost of health services have shot up by 22 times in rural areas and 40
times in urban areas.
2.
Investment – Investment is coming only if investors get 15.5% profit
tax-free, and investment is only in power generation, primarily intended to
grab scarce natural resources.
Major investment
drivers are:
•
Assured Cost Plus Assured Return (tax free min 15.5%).
•
Grabbing of scarce Natural resources (land, water, Coal).
•
Concentrated projects carry environment risk. More than double of existing
capacity is proposed in just 30 districts.
•
Old structure suffered from inadequate planning of generation capacity, now the
same is being repeated, with fuel planning.
•
Benchmark costs of equipments / projects not available, hence hidden cost of
environment risk is not known.
3.
Efficiency improvement is yet to be tested. For instance, in
the Philippines which has nearly completed privatization of its electricity
industry now has the highest electricity rates in Asia. Salient notes to note
are:
•
In-spite of lot of commitments for better efficiency and higher standards of
operation, new players (except for UMPP) are not providing cheaper power to
distributers.
•
Even UMPPs are now asking for compensation for coal price fluctuation thus
plant transforming the bidding route to cost plus route.
•
No major investment has come up with investments to bring in Energy savings,
Loss reductions or Improving Energy Intensity.
Distancing Business
from Governance – The Slogan has already lost its sanctity:
•
US economic crisis has proved that no government can afford to maintain arms
length distance with the issues having direct impact on common person on the
street.
•
Japan crisis has shown that in absence of Government’s strong vigil and a high
degree of readiness to intervene. Corporate unwillingness to reveal risks may
prove crucial.
•
In India, even after more than 10 years of power reform, no political party
dares to state that if it comes to power it will not intervene into power
sector rather they continuously reiterate to act as mentor of public interest.
Way ahead:
1.
Creating awareness among stakeholders
•
Investment alone is not sufficient. For Public Good, Investment has to pass the
test of “Efficacy”.
•
Industry efficiency is a function of Technology, Investment, Managerial
Excellence and Commitment. Ownership cannot decide Efficiency.
•
Good Governance can not materialize without Efficient Infrastructure and
Quality Public Services and unless good governance is ensured Business can not
survive.
•
Real risk is not from Private Sector Participation, Risk is from giving them an
unchecked leveraged privilege.
2.
Ensuring action
•
Ensuring thorough Study and research work on the various aspects of policy
decisions and implications of one decision on the other (for ex. - Energy v/s
Environment).
•
Lobbying with Policy makers and Media to make findings of such studies effective.
•
Employees of Public Utility have to initiate a self propelled program to
improvise the quality of Public Services.
•
And finally remember the bottom line – “Unless we, the Employees of Public
Utilities set a benchmark of performance, no one will take us seriously.”
OPEN FORUM:
Bobet
Corral: PSI promotes public-public partnerships (PUPs) as alternative to
public-private partnerships (PPPs) that are now being promoted by IFIs. A PUP
is a collaboration between two or more public authorities on a not-for-profit
basis, and is widespread in many countries across the
globe as a key sector of development cooperation. PUPs have several advantages: Mutual understanding of public sector objectives and
ethos; Non-commercial relationship, low risk to municipality; Transparency and
accountability; Many public partners to choose from, north and south; Low
transaction costs; Long-term gain in capacity-building; Local control over
objectives and methods; Can involve local civil society and workforce.
Dave Hall:
At an international water conference in January 2011 in Chennai, India, most
Indian states stated their general agreement with PUPs. India will be
important in the coming months and years to raise pressure on PPPs. In
terms of efficiency, the cost of capital is cheaper in the public sector.
Peter
Waldorff: Fair taxation for public services is important. PSI
prioritizes how to secure funding for public services.
Japanese
union: There is no official disclosure by the government of Japan about
free trade agreements; if Japan enters TPPA, we have to be cautious.
Harvey
Purse: Japan unions can link up with existing international networks,
including farmers’ organizations in Japan; the US will propose that Japan
reduce its agricultural subsidies.
Vinay
Pandey: Although there is ~3% growth rate in general in Asia, the actual
inflation rate is very high as an effect of the economic crisis.
Increasing taxes is always a dilemma for governments; even without raising
taxes, there are other ways to increase investments.
Harvey
Purse: In March 2010, non-state actors (civil society) of PACER Plus will
meet in Brisbane, Australia; interested PSI unions are invited to join the
event.
