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Friday, July 01, 2005
The Utopian Fix

To achieve a low tax economy demands creating ways of organisation that help lower government over-spending. Privatisation has its critics, but sometimes we forget how it helps make over-spending transparent by revealing losses that shareholders dislike intensely and price rises that consumers hate.

An interview on Radio 4 this morning between John Humphries and a representative of the water industry illuminated the alternative. As usual, Humphries poked at his interviewee like a small boy sticking his finger into someone's ribs. The issue was the old chestnut about water losses through leakage. Humphries point was that it was madness to waste all this water and then claim there was a water shortage. He wanted a "fix" - NOW!

The poor engineer respondent struggled to explain how complex mending water mains can be. Design, scheduling, permissions, consultations, unexpected engineering problems and the sheer unknown of digging up a street and replacing a water main were clearly in his mind.

Humphries would have none of it - it was all excuses. The poor water engineer then blurted out the term "economic level of leakage" and kapow! - Humphries was on him like a savaging prairie dog, snorting at what he saw as an excuse equivalent to the infamous "wrong sort of snow".

Of course, journalists are not engineers. Optimising capital spends and capital plant maintenance is not done to create perfection, it's done to maximise revenue through time. An economic level of leakage is a perfectly sensible commercial approach to supplying water out of our taps.

What this illustrates is the short-termism of the media - demanding fixes to problems right now and damn the complexities. The problem for the taxpayer is that if these become public issues the politicians see it in their interest to be seen to be "doing something". They too have no real knowledge, but they have gigantic powers to tax us and create an unholy financial mess "working hard" to "get things done". The reality is that they do nothing of the sort, they create meetings, plans and consultations while engineers wait for decisions to do practical things like digging up a street to replace a leaking valve.

Privatisation at least has the huge advantage of clearing away such nonsense. Engineers are humble enough to realise that Utopia is impossible, and that a long term plod through the practical issues will gradually improve the world. For taxpayers, that is an optimal solution, the alternative, for which we have reams of evidence from the days of nationalised industries, is the hidden cost of political planning, long term losses hidden in Treasury accounts, appalling service to the consumer and worst of all, yet higher taxes to pay for the distopia.

Posted by Eben Wilson - TPA Editorial Director | Permanent Link

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