On Tuesday, one of the trade unions at the Water and Sewerage Authority (WASA) issued a news release in which it rejected the voluntary separation of employment plan (VSEP) that the utility is offering to its employees. WASA has decided to offer its workers the VSEP to optimise the authority’s performance, the utility said in a statement last week in which it emphasised the voluntary nature of the proposal, as well as the fact that those who accept would benefit from lump-sum payments, based on current salary; vacation leave buyout; enhanced pension; immediate pension for life; and life-skills training. The authority stated that “these interventions are aimed at creating a platform for WASA to achieve viability and operational efficiency over a five-year period.” And there is no doubt that WASA desperately needs to “achieve viability and operational efficiency” as soon as possible because, according to one of the budget documents accompanying the 2011 Appropriations Bill, the utility’s estimated expenditure to September 2011 was $2.3 billion, while its anticipated revenue was $706 million. In other words, for WASA to continue to provide the citizens of this country with a regular supply of pipe-borne water, the utility needs $1.6 billion in either direct government subventions or government-guaranteed loans.
As an editorial in the Guardian last August noted, “Less than a third of the authority’s revenue comes from its customers, with the balance of its expenditure being funded indirectly by taxpayers.” And almost one year ago, this newspaper pointed out that WASA’s “current employee count demands a focused review relative to its capacity to deliver its services,” because the authority’s wage bill for the period ending September 2011 was estimated to be $734.5 million, a third of its overall costs and the number of people directly employed by the utility had doubled from 2,300 in 1999 to 4,790 in 2011. While the number of WASA employees increased by more than 100 per cent in 12 years, it is quite likely that there are very few people in this country who would argue that their water supply has improved in that period. So while the trade unions may choose to rant and rave because WASA—which is “owned” by the people of this country and supplies a commodity that each and every one of the citizens of T&T cannot live without—has the effrontery to seek “to achieve viability and operational efficiency,” this is one policy that is likely to have the support of the majority of the population. The obvious rationale behind the support of the majority for WASA’s viability and efficiency is the realisation that if the Government could reduce the annual $1.6 billion in subventions or Government-guaranteed loans to the utility, it may be able to expand CDAP for those who need pharmaceuticals, increase the number of children receiving laptops or expand the number of state-subsidised houses for those who are now living in substandard conditions.
In short, improving the viability and efficiency of WASA could lead to the redistribution of state resources to people who really need the Government’s help. The same argument could and should be made about the fuel subsidy, which is estimated to be costing the Government upwards of $3 billion. And if the viability and efficiency of WASA requires an increase in water rates, which are absurdly low in this country, that is likely to gain traction with the population as well.
If the trade unions at WASA cannot see the logic of the Government’s approach to the utility—an approach that all administrations in the last 40 years have tried to adopt—then the question raised in this column’s headline is appropriate.
The other issue raised by the trade union in its press release on Tuesday was the statement that the VSEP offered to WASA’s workforce was “yet another step in the implementation of the PP Government’s policy of privatisation of the public utility. This intention to privatise WASA is a part of its overall policy of privatisation, which, by admission of the former Minister of Finance, is to involve ports, airports, public utilities and healthcare provision.” According to the union, the aforementioned privatisations are in addition to the announced intention of the Government to privatise First Citizens, merge and privatise TTMF/Home Mortgage Bank, seek a foreign partner for Petrotrin and to divest Plipdeco. If this is indeed the Government’s intention, I am 100 per cent behind them on this issue.
For many years now, I have used this space to lobby for governments to embark on a well-thought-out, well-executed programme of divestment/privatisation to local individuals and institutions. The rationale behind that position is that the Government has billions of dollars in assets and profits locked up in state-owned companies. If the Government were to start a programme of privatising state assets, it would be transferring the ownership of these companies from corporation sole to T&T individuals, institutions and the employees of the divested companies.
The advantages of such a programme are obvious:
• Privatisation of companies such as First Citizens, the 51 per cent of PowerGen owned by T&TEC, the 100 per cent of the National Gas Company owned by the State, the 56 per cent of Methanol Holdings (Trinidad) Ltd held by Clico and the 32.3 per cent of Republic Bank held by Clico would mean that the dividends generated by these companies would go to individual investors and institutional investors such as the National Insurance Board, mutual funds, credit unions and the nation’s pension plans. These investments can be facilitated by the reintroduction of the tax credit on the purchase of shares in these newly-divested companies
• The latest statistics from the Central Bank indicate that T&T’s commercial banks hold nearly $82 billion in deposits on their balance sheets. That money is a source of potential instability to economy in terms of capital flight as well as contributing to higher rates of inflation. If the Government were to make investments in privatised State companies attractive, it would contribute to a reversal of capital flight and prevent the potentially inflationary threat of the nearly $82 billion in deposits
• Privatisation would give the Government billions of dollars in proceeds that can be used to finance new entrepreneurship, retire existing debt and contribute to annual revenues in order to lower or eliminate future deficits.
The disadvantages are also clear:
• Currently, all of the income generated by the state sector is reinvested in the companies and/or goes into the Consolidated Fund where it is used to fund salaries of public-sector workers, finance infrastructural development and pay for goods and services by the public sector. On an ongoing basis, the contribution of the state sector to the Consolidated Fund would be less, but this would be more than made up for by the monetisation of the Government’s investments in these companies
• If these companies are placed into private, local hands, they may be forced to become more efficient, which may mean job losses in the long term
Do the advantages of privatisation outweigh the disadvantages?
I think they do, but I am also sure that this is the kind of debate the country needs to have at this point.
I have said my piece. Do any readers have views on this issue?