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An Interview with a Waterworks Union Activist


An Interview with a Waterworks Union Activist

Globalization Monitor

July 2007

(Notes: In July 2007, in the preparation for the Chinese version of the book Reclaiming Public Water, a joint publication by TNI and CEO, we conducted an interview with an activist from the Government Waterworks Professionals Association, Hong Kong. The activist chose to remain anonymous.)

The water supply in Hong Kong has been run by the government since the British occupation. Recently a book authored by Lam Pun Lee raised many criticisms about the publicly run water supply. In it he argues that water supply suffers from low productivity if compared to other public enterprises, low profitability etc. As a public servant in the waterworks department, how would you respond to these complaints? More importantly, do you think Hong Kong’s water supply should remain in the public’s hands?

Firstly, the author of the book in question hypothesized that water is a commodity. Yet water services are a basic human right and an indispensable responsibility for a government, and there is consensus among many people and experts over this. Hence the author of the book passed his judgment based on profitability is in itself questionable. He simply dismissed out of hand that for decades the government has not intended to make a profit from the water supply in the first place; it merely wants to cover the basic costs. The government supplies water to remote villages where most often the residents are underprivileged. It may cost several ten thousand dollars to set up the water mains but this is a basic right for these citizens. Therefore it is not appropriate to judge this question according to profitability.

Another hypothesis of the author was that private water supply is more efficient than public water supply. I don’t know what sorts of data are provided to support his argument. One must looks at objective criteria though. And the fact is that our current performance has already reached the standard required by the WHO, with a water supply coverage reaching 99%. Over the past years our work has gained public recognition and we have strived to improve our services.

Keeping the water supply in public hands also implies more quality control over the services. The government has set out many regulations to control the operation of the public services in general, ensuring the justice, openness and transparency of the work. Whereas in the private sector decisions will be more discretionary and there is much less public monitoring, hence it is vulnerable to insider trading, secret exchanges of benefits, or a monopoly. In our view, if Hong Kong’s public water supply becomes privately run, the first threat to the public would be the monopolization of the water supply by a private supplier. We have witnessed this phenomenon in gas and electricity etc. In the face of problems, the government is unable to coerce the private corporations to charge reasonable levies. If the water supply is privatized, the private company would inevitably raise the prices to maximize its profit.

Regarding the question of efficiency, the Water Supplies Department has already achieved very high standards, with 99 percent of compliance rate with WHO standards. For countries such as the UK andFrance, compliance is much lower than HK. Some may have compliance as low as 80 percent or even 70 percent.

In addition, I think we should first ask every resident if they are dissatisfied with the current water supply. In terms of quality, stability, customer service or crisis management, do they find the water service at present satisfactory or not? We understand that there is always a possibility for further improvement but there are lots of other ways to achieve this other than privatization. I personally don’t understand why the author thinks that privatization is the only way.

In fact, back in 1998, the Department was already looking into room for improvement. Later, the Department came up with proposals including procedural simplification, cost reduction, personnel shuffles and so on. The number of employees was cut from 6000 to 4500. At the time, the Department was one of the ten departments which had the greatest number of employees. This is no longer the case now.

Can you describe what kinds of standards are involved concerning the quality of water supply? For example, what is the standard for permissible level of colon bacillus in a certain volume of water?

My colleague from the laboratory is more qualified than me in explaining these standards. Basically they are used to monitor the safety of fresh water, to check the amounts of harmful substances and health-threatening bacteria in the water to see if they exceed the permissible level. I am not quite familiar with the names of the bacteria but they must include colon bacillus, malaria bacteria etc. WHO has made several dozens of standards and we have complied with all of them.

The Water Supplies Department has claimed that the current water supply’s tap water is reasonably drinkable without boiling. Is that so?

We agree on this point. Of course, we have to point out that the public pipe lines only run through public spaces and they stop at private buildings. If residents want to make sure that their tape water is clean we need their cooperation, namely to have good maintenance [of their water tanks and pipes]. The Water Supplies Department has been promoting residents’ awareness of this issue through its “quality water service” program.

The quality of our water is not a problem at all. What citizens should pay attention to is the water tanks of their building, and related apparatus and equipment. If these things are well maintained and cleaned, there shouldn’t be any problems. Yet if they are not, you will be sick after drinking no matter how clean the water we supply has been.

The book also mentions that the cost of publicly run water is just too high, so the return rate is too low. Is it true that the Department has been suffering from losses?

I think one must first ask: do you think the Social Welfare Department is an unprofitable department? The Social Welfare Department spends a lot of money every year, so does education. We adopt a different approach from the author’s: water supply, like social welfare and education, should be viewed as basic human rights, so they should not be compared to profit making enterprises. How is it possible to compare an orange with an apple? By the same token, if water is not regarded as a commodity, returns should not be stressed. We should of course try to be cost effective, but this is different from focusing on the return rate.

Speaking of costs, much of it simply cannot be cut at the discretion of the Water Supplies Department. Firstly this is because costs involve the salaries of the employees and this is not flexible because the government is committed to a social contract with its public employees. Secondly, we have to purchase water from the mainland [and this part of the cost is not flexible either]. Lastly, there are the running costs such as expenditure on electricity and chemicals, the operation and maintenance of offices and factories etc. Roughly speaking, each of these three main expenditures account for one third of the total cost.

The Department has tried hard to cut the running costs. We understand that citizens have expectations of us to achieve this. But we must also take the issue of electricity costs into account. The Department is actually one of the largest customers of the two electricity corporations. Reduction in electricity charges is almost impossible, however. We are aware that clean fresh water is more and more scarce and therefore we have been testing the desalination of sea water. In fact, we have brought in the latest technologies, but its success hinges on electricity costs. If it can be lowered, a cost-effective mode of desalination would be practical. For now, this is hindered by high electricity costs.

How much does the Government subsidize the Department every year?

The sum total of subsidies remains unknown. But you can get some idea from the fact that each household is charged 4 HKD for each cubic liter of water while the cost for the same volume is 17 HKD. But when we charge incoming and outgoing ships for the same volume of water – they need to re-fill their fresh water reserves during embankment – it is 9HKD per cubic liter. They are not HK citizens hence we charge them more.

You just mentioned that Hong Kong’s water quality is of a higher international standard than many countries. But how about the water bill? For instance, is Hong Kong’s water bill higher or lower than Macau?

It is very difficult to make comparisons concerning cost without considering that some regions face unfavorable environments and/or lack natural resources, meaning that the cost of acquiring fresh water must be higher. I think, to make a fair comparison, we should compare Hong Kong with a place which is similar, such as SingaporeSingapore purchases water from Malaysia due to lack of natural water resources. Even here, however, there is a big difference between the two. When Malaysia supplies water to Singapore it has already been purified to a large extent, namely it already achieved the third phase of water treatment. The first phase refers to the simplest sedimentation and removal of surface substances. The second is physical and technical treatment, while the third is chemical processing and the fourth is biological processing and sterilization. Biological processing is only required in sewage management, rarely in fresh water management. While Singapore only needs to finish the last step of sterilization with ozone and chloride, Hong Kong has to complete the full processes of water treatment.

How unclean is the un-treated water from Mainland China as Hong Kong is required to carry out the full processes of water treatment?

The condition has become better now. With the adoption of sealed mains for transportation [of water] toHong Kong and the introduction of a biological treatment system in the New Territories, the quality of un-treated water from Mainland China has been stabilized. A few years ago, a rainstorm could inflict a big change to the substance and bacterial indices of the water. Now the situation is much better. Yet don’t forget that the cost of the sealed mains and other infrastructure were covered by the government. It is an indirect cost in order to guarantee water quality.

I would like to return to the subject about comparing Hong Kong with Macau in this regard. WhereasHong Kong has developed a complex system of collecting rain water in the mountains to provide fresh water for its citizens, Macau’s water supply does not have this option [because they do not have mountains – editor notes]. In fact it is quite rare around the world because it raises the cost.

Unlike Hong Kong, whose water supply has always been in public hands, Macau has always been in private hands. Yet the service provided by the first generation of the private water company was pretty bad. So it was sold in recent years to another company. The service there was taken over by New World Development and French-based Sino French Water Development and the new company had to invest a lot of money to renew equipment. So in this case I think it is acceptable for the company to make a profit because it needs an incentive to raise the quality of tap water to international hygiene levels. Surely there was concern over the company’s practices of charging a fixed fee of 30 Macaudollars, regardless of if the household’s consumption of tap water is zero.

This new company in Macau has only a 10-year history of water supply. It is now hard to evaluate fully on its performances. It will be even harder to compare it to Hong Kong whose water supply has always been in public hands for the past 150 years. Despite the geographic proximity, the two regions have different histories and different systems of water storage and infrastructure, which makes a precise comparison implausible.

I think fresh water is an essential life-sustaining factor. If the quality of the water supply is already good enough, why should we make profound changes to the present system? Who knows how much risk involved in this kind of change? Are citizens really discontented with the service now? If not, why take such a high-risk venture?

So you don’t think the Government needs privatization in its water supply?

Honestly, there is no reason at all to take such a risk. Secondly, the privatization proponents have not given details about their plans, so we just don’t know how far they want to go: do they want just a part of the water supply to be privatized or do they want to privatize the whole service? I should say that in some areas, we should maintain an open attitude, and will like to have open dialogue, but we do not prefer a profound change.

Has the Department ever published any document concerning privatization proposals?

The Hong Kong Government once conducted research for the Department. A proposal was made to execute the re-construction of Shatin Water Treatment Works in PPP (Public Private Partnership) mode. The project was suggested to be sub-contracted to a company along with its operation over the next 10 to 20 years. We think it is too much. Shatin Water Treatment Works treats 40% of all freshwater in Hong Kong, covering a population of 3-million. The risk is too high. They should consider starting some experiment first in some smaller water plant.

Without the knowledge of the employees, the Government in fact conducted one more piece of research into the private operation of the water supply in southern Shatin. It suggested turning the whole water networks of Shatin, Kowloon and Hong Kong Island over to private hands. (All of them?) Yes. So, if the pipe at your home is damaged and requires immediate repairs, you have to call the contractor. We have asked the Government if this is what they want, we always get the same response: “we have not yet reached any decision”, but we know they are very proactive in promoting privatization.

Our observation is that even if the first proposal aims only at partial privatization under PPP mode, their real intention is always aimed at wholesale privatization in the end.

Has the Department disclosed this document?

Yes in part. Two consultant reports are available on the website of Environment, Transportation and Works Bureau. But the second part of the report which includes some data provided by interested private companies to explain the feasibility of privatization was not publicized.

Reviewing the consultant reports, we can spot some hints about how they are going to make profits. Solely relying on the water supply is not enough. We suspect that they really have their eyes on the land where the water plants stand, to make extra profit from the land so as to compensate for the low level of profit from the water supply. The government has always given favors to private companies by providing cheap land to them for their operations, for instance taxi LPG stations. But the problem is that very often when the companies themselves benefit from cheap land, this benefit, or part of it, has not passed to consumers. We worry that the same thing will happen if the water supply is privatized.

The running of public service by private enterprises often involves the reward of cheap land from the government. Take Towngas for instance. Many high-priced properties are now situated on sites where there used to be company gas-tanks. So we may ask where the gas-tanks are now. They are all underground now. Some years ago the Government allowed Towngas to enlarge its underground pipes, making the operation of huge gas-tanks superfluous, and then the government allowed Towngas to turn the land into residential buildings and profit from it.

Your union protested against the government’s plan to privatize the water supply in 1999. Are you able to stop it?

After our protest they were no longer able to avoid the proper procedure of consultation with the Legislature and the public. But there is still a lack of transparency.

It was said that one of the factors which led the Housing Authority to privatize the management of its public housing was to create jobs for retired high ranking officials from the department. And it seems to be true that today many top managers of major property management firms in Hong Kong are retired public employees from this department. Does a similar thing exist in your department?

Once I encountered a high ranking official from my department who tried to persuade me into accepting PPP by saying, “introducing private ownership to the water supply is actually not too bad. We might become directors or something like that in private firms one day.” Then he raised many similar overseas examples. This is of course a big temptation [for high ranking officials]. But if you talk about retired officials setting up a new water company then it is not quite possible because the scale of the water supply is too large for individuals to be able to own or operate.

Since your union’s protest in 1999, do you find your union members more united than before?

I think yes because different unions now have a common enemy and interest. The Housing Authority is a bit different. If I remember correctly, they have nearly 30 unions, causing internal competition. We only have seven unions so this makes it easier for us to unite. Also during the whole process we disseminated the news and information to concerned Legislative Councilors and the public, so we were able to win some of their support. We spent a lot of time on lobbying the Councilors. This was important. If the unions of the Housing Authority had done this they might be able to slow down their process of privatization. We won’t claim we are the victor. We just raised questions for our discussion [on appropriate tactics]. And that doesn’t mean they have to agree with us.

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