A rant and a proposal about essential services

Water rates have recently been introduced here. That means the local council now sends us a bill, quarterly, for the cost of supplying water to our house. Actually the bill is for the cost plus the profit earned by some utility company set up for the particular purpose of administering the provision of domestic water, a job which had been done by the council. It’s not market capitalism because we don’t have a choice of water utility, rather it’s the idea that if you pay to have someone exploit you they’ll do a better job (for you? for who then?) than if you elect someone to exploit you. It’s pretty clear if only from the example of Californian electricity under Reagan’s governorship that this is not the case. The private utilities run down the service while increasing the price, something that should surprise no-one given that they have no incentive to do otherwise. Australia saw this happen over the last decade with a privatised telephone monopoly. Bolivia saw it with water.

But it could be worse. I saw recently in the home of monopoly capitalism gone mad a situation where being a few weeks late with the water bill meant getting your water cut off. Would the electricity company cut off power to medical equipment, or heating to an old lady who might freeze? Probably. In Australia we’re on that borderline, water is an essential service and won’t be cut. Power is not, and might after a month or two so of warnings in the post. Actually the US is just further to the right on the same scale – the city wouldn’t send the baliffs in to evict you because the land tax or the rates were late. Instead they’d levy a fine for being late and start charging interest on the overdue amount. Eventually, probably several years down the track, they would send in the baliffs.

Which set me thinking. Clearly a bank can be “too big to fail” and we throw out the religion of so called rational economics in view of the fact that these large institutions have been allowed to hold us all hostage. That was the wrong response, clearly it was the mortgagees that should have been protected. The government should have bought all the defaulting loans, for their now smaller value, and let the institutions fail. Home owners would have continued to pay their loans, or been given time to pay in the case of financial difficulty. Call it socialism if you like, it’s better than having the taxpayer cover the cost of the larger institutions swallowing one another and making out like bandits in the process. And why should the government do this for its people? The right answer is because the government is the people (it’s not the church of the great god “market”) and the people benefit from this, but another way to break it down is that housing is an essential service. Like food, medical care, and education. And information, by the way.

In my view all essential services should be provided as a minimum standard right of citizenship. I’ve always found it difficult to see a way through the problem that what is a right on the level of a society is likely to be, treated by the individual as an entitlement – and entitlement thinking destroys responsibility and initiative.

But here’s a possible medium term solution, in the context of the current economic and political system. The government, after all, has in most cases a life-long relationship with each citizen. That can be the context for a debt. It works like this – any essential service I require but cannot afford right now is provided by increasing that debt. I can’t pay for student fees, so they accumulate as a debt. I can’t afford water or rates or even (basic) food, so it is accumulated as a debt. The same for medical care. The loan that embodies this debt is not run for profit, however. Interest in any year would be exactly the cost of money to the government, say the treasury bond rate. At the same time, the provision of these services cannot be to the profit of monopoly providers – nor a cabal of semi-monopoly providers like the health industry. So the government must provide some itself and regulate the provision of others. Debt will be recovered on a sliding scale of repayments against income, up to for example 50% of income above $60k per year.

Naturally many people will die still owing large amounts. This is no disaster – the cost of caring, often badly, for a disabled person or someone chronically unemployed is represented in government finances in any case. Doing it properly will cost less and provide better outcomes. Many people will end up paying back their debts.

So, what do you think? It’s so far only the beginning of an idea, an attempt at putting individual repsonsibility together with state responsibility.

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2 Responses to A rant and a proposal about essential services

  1. sian says:

    This is true and if the administrative elite of Australia were kept busy in a useful role as you suggest, then they hopefuly would close down all the quangos and empires of nothingness they have created just to control and rip off the people, which they must do to overpay themselves.


  2. Maxine Barry says:

    I have been astonished and appalled since moving to Hobart from Melbourne, by the profligate way householders here use water – hosing leaves off the driveway, for example. If the new water qango, by providing tangible evidence of water usage, awakens people here to the preciousness of this resource, this will be a benefit. The main thing is that this body must NEVER be allowed to be privatised. I have heard that this was going to be Howard’s next push had he been re-elected.

    Having said that I think the debt idea has a lot of merit – it reminds me of the Grameen bank principle.

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