Talking Points

The Water Privatization Referendum Act:

• Promotes public oversight of municipal water utilities that affects the health and safety of all citizens;
• Prevents privatization deals behind closed doors by including affected citizens in decision-making efforts relating to the privatization of municipal water utilities; and
• Ensures that citizens vote at the next regularly-scheduled general election on the issue of water utilities privatization, without imposing an undue financial burden on municipalities to conduct special elections.

The Public Services Accountability Act:

• Promotes government oversight of public services, including water services, contracted out to the private sector;
• Ensures public access to safe and affordable drinking water by establishing clear guidelines on rate changes and providing compliance and enforcement provisions relating to water quality standards;
• Sets limitations on the term of privatization contracts;
• Ensures that public records and information in the hands of, and/or created by, private contractors are subject to Freedom of Information Act requirements; and
• Protects those workers who report conditions and practices which impact on the efficiency and quality of public services provided by private contractors.

The privatization of water utilities or services has generated:

• Concerns about:
  • Implications for water quality, environmental values, public health, and local job security;
  • Requirements for adequate contract supervision;
  • Uncertain control during emergencies;
  • Loss of some degree of control over a vital public service;
  • Loss of expertise, which would make reversal of operations difficult; and
  • Lack of public access to important information about water utilities.
• Conflicts between short-term profit maximization and long-term needs to protect infrastructure and natural resources.(1)
• Strong public opposition to privatization proposals from private water companies because of the concern that privatization discourages natural resources conservation efforts; jeopardizes quality of services and leads to rate hikes; and, decreases direct accountability to the public and reduces government influence.

Privatization discourages natural resources conservation efforts.

• A corporation’s chief goal is to make a profit, which is often invested into new projects or simply pocketed rather than used to conserve natural resources like water.(2) Since maximizing profits often means encouraging increased consumption, it may not be in the interest of water corporations to promote water conservation.(3)
• If a private operator has purchased a municipality’s water-related assets, they may include the municipality’s watershed areas as well as industrial equipment. In order to maximize revenue, the operator may want to either develop the watershed area, which is considered surplus to its supply needs, or sell it off to others for development.(4)

Privatization jeopardizes quality of services and leads to rate hikes.

• Private water suppliers may have few economic incentives to address long-term health problems associated with low levels of some pollutants.(5) The profit motive may provide incentives to cut corners on long-term investments and reduce efforts to monitor water quality.(1)
• Rates have increased in many U.S. communities where water has been privatized, disproportionately affecting low-income families and small business owners. In Pekin, Illinois, rates increased 204 percent over the 18 years that Illinois-American, a subsidiary of American Water Works, ran the water system.(6)

Privatization decreases direct accountability to the public and reduces government influence.

• Private sector workers who deliver public services are directly accountable to their company – not to citizens; consequently, citizens’ ability to hold public officials and workers responsible for the quality and timeliness of public services is reduced.(7)
• Once water services are privatized, local governments may lack the influence needed to ensure that water quality and pollution standards are met and to penalize corporations who fail to meet them.(3) Weaknesses in monitoring progress can lead to ineffective service provision, discriminatory behavior, or violations of water quality protections.(5)