Irish Water Should Be Abolished
Barry Cowen TD, Fianna Fail spokesperson on the Environment & Local Government
The turbulent tale of Irish Water has at times fallen into the dark type of politics of intimidation that we do not want to see in Irish life. Discussions like this evening are important in threshing out ideas on how we can move forward in an open atmosphere.
Since its very inception, Irish Water has evolved through secrecy and getting information is proving impossible. It is all about spin rather than substance. Minister Kelly wrote to me last week saying “consent has been given in 2015 for Irish Water to enter into a number of committed facilities totalling €550 million with commercial banks (in addition to the existing facility with the NPRF). The rate on these facilities is commercially sensitive as Irish water is currently in negotiations in respect of further debt facilities”.
This is a farcical position when so much taxpayer’s money has already been invested in Irish Water. Accountability through questions in the Dáil in the public interest is being ignored and information is being hidden. It is this type of cloak and dagger activity that is exposing this government more and more, and it is very far away from the ‘democratic revolution’ they promised.
The recent payment figures reveal the scale of the challenge ahead. 57% of households did not pay their bills. Those who did pay are surely now considering whether it’s worthwhile. For what has been the most debated charge in the history of the state the compliance rate is abysmally low. The government went into spin overdrive when they described this as a “good steady start”. Nothing could be further from the truth.
Comparisons with the household charge or water bills in the UK are deeply misleading as a result. There is no shortage of knowledge about this bill. At the moment it mirrors the collapse and demise of the residential property tax in the mid-1990s.
The financial model of Irish water has been cast into grave doubt, and is holed below the water line. The government has introduced a charge that will actually cost it money. I don’t know of any other historic examples of that feat. It is the first government that has introduced a tax and are at a loss as a result.
No one will argue against more investment in water infrastructure. Unfortunately all the extra money has gone into setting up Irish water rather than an extra cent being put into modernising the country’s water systems.
In the context of this backdrop, I would like to focus my few words on three main areas. Firstly, what has gone wrong with Irish Water; secondly, why we need to abolish it and thirdly, how we can secure our water supply into the future.
The origins of Irish Water can be found well before the Troika agreement. In November 2009, one year before the EU/IMF agreement, Fine Gael published their New ERA policy document which called for the creation of Irish Water.
The EU/IMF agreement and national recovery plan did not sign up to the idea of setting up Irish Water.
Instead the Fine Gael and Labour government went against the explicit advice of its own external PWC consultancy report to set up Irish Water within Bord Gáis.
The government story of a new body equipped with the expertise to centralise and co-ordinate planning of our fragmented water services system quickly went astray. Revelations that it would cost €180m to set up with over €80m being gobbled up by consultants shocked the public. The still unresolved issue of bonus payments jarred with a public struggling with the burden of fresh taxes, new charges and services being cut to the bone. The costs of water meters rose to €540m and presented a very physical reminder of the new body.
An extra 700 new staff were placed upon the existing 4,000 local authority workers. An additional 400 staff are contracted in call centres. In the new system, people would contact a call centre in Cork, paid by a company in Dublin to report a problem in Offaly which the same Offaly local authority worker would fix.
At the head of this charge was Phil Hogan who regularly threatened to cut off water supplies to those who did not pay. The government’s bullish approach provoked an inevitable, hard backlash. Faced with a severe wave of public anger it committed a series of 14 u-turns desperate to keep the breaking wave at bay. Deadlines were pushed back, charges capped, allowances introduced only weeks previously were replaced, water meters effectively abandoned, the Commission for Energy Regulation sidelined and through it all not an extra cent put into the water infrastructure.
We are now witnessing the consequences of the government’s spiral of U-Turns as it desperately attempted to justify its decision to create Irish Water. Public trust has been completely shattered. The credibility of Irish Water has been shot through. The government set up a body and, realising its error haphazardly, proceeded to entirely undermine its basis.
The financial hole at the heart of the project runs the risk that the current capped charges regime is simply the first uneasy steps on a slippery slope. All the while, we await the long delayed Eurostat test results as keenly as a Leaving Cert student in August.
The outcome of the test has been dealt a debilitating blow by the latest payment figures. Even if it passed on the basis of projections given by the government in March, it will not pass next year on its actual performance. If current payment rates continue the government will lose between €35 – €70m per annum on the charge. On this basis, the whole reason for Irish Water, that it can borrow independently of the government and invest in infrastructure, will fall asunder.
What we are left with is the worst of all worlds:
The profound failure of Irish Water to win over the trust of Irish people is irreversible. The damage done to the water charges regime is permanent. People are right not to trust the government’s agenda in creating Irish Water. It is almost the exact opposite of what a public service should be. €180 million has been spent on setting up a company which itself does nothing but install meters that are not being used and send out bills.
The actual work of fixing pipes is still being done by the same people as always – in our local authorities – and, because of Irish Water, there is less funding than before to do this.
Irish Water should be abolished. It has failed and it should go before it does any more damage. I believe it’s time to call a stop to the absurdity of the government actually losing money on a charge. It’s time to go back to the drawing board on how we can deliver water services.
There is also a broader issue that other speakers have addressed. Opposition cannot simply be about opposing. There needs to be credible, costed alternatives and constructive engagement. It’s time to press the re-set button on water charges and set up a new system that the public can have faith in; a system which will deliver the investment our water network needs.
At the heart of the Fianna Fáil vision is the central belief that water is a vital natural resource. A safe, reliable water supply is an integral part of the national social and economic infrastructure. This will grow in importance as global water resources come under more and more pressure in the coming years. We have specific proposals to achieve the goals of a fit-for-purpose, equitable water services infrastructure.
Scrapping Water Charges
The botched implementation of the water charges regime by the government has shaken public trust in the tariff system. Fianna Fáil maintains its call for the immediate suspension of charges. Domestic charges should only be introduced when the national infrastructure is brought up to standard. Fianna Fáil believes that 3 key tests should be set by the CER in relation to bringing the system up standard. These tests are vital in setting out our vision of what our water network should achieve.
1. Water quality
This should be based on the EU Water Framework directive standards for water quality and levels across our entire water network. Eliminating the 23,000 boiled water notices across Ireland will be a critical element of this.
2. Water Supply
This should be based on CSO demographic analysis of future domestic and business demand levels. Our water supply must be equipped to deal with population rises and increased business demands.
3. Water Leakage Rates
Reducing leakage rates in line with the OECD average of 20% must be a priority for capital investment.
Abolishing Irish Water
Fianna Fáil consistently opposed the creation of Irish Water. The controversy of consultancy costs, bonuses and overstaffing at the super quango has borne out our fears. Irish Water is a management heavy tier placed on top of the existing water services structure and has lost the confidence of the Irish people. It should be abolished and a new model of local delivery with national standards and planning put in its place. We estimate this will cost around €177m.
However some of the start-up costs such as the asset management system will be transferable to the new slimmed down NRA style holding company. The annual pay bill saving would be €45m per year compared to Irish Water, excluding bonuses. The estimated costs for a slimmed down new body ranges from €9 million to €13 million per annum leading to a savings of €32 million per annum. Under this new model the costs of abolition would be met within 6 years.
In contrast, if the current payment rates continued, the government would be a further €180 to €420m worse off over a similar period.
New delivery model
In its place a new, slimmed down National Water Directorate based on the National Roads Authority model should set national standards, capital investment planning and borrow on behalf of local authorities. Delivery will be returned to Local Authorities in order to ensure on the ground local knowledge and direct democratic accountability. The new National Water Directorate will be drastically slimmed down to 100 staff, Oireachtas control over consultancy costs and no bonus structure.
This will ensure a national co-ordinated approach. The fragmentation outlined by other speakers will be directly addressed by ensuring major projects are undertaken across county boundaries. The on-the-ground knowledge of local authorities, which already deliver the services, will play an important role in guaranteeing real delivery for communities.
Water infrastructure for the 21st century
Water is a precious social and economic resource. Upgrading our infrastructure to make it fit for purpose must be national priority to ensure we have a supply that is safe, reliable and adequate for both homes and businesses. In an age of climate change, an effective supply will be a major competitive advantage. Our target is to reduce the water mains leakage rate from 40% to the OECD average of 20% and meeting our EU Water Framework directive targets for water quality and sewerage treatment by 2027 must be a national priority.
To achieve these clear targets Fianna Fáil proposes a €10bn capital investment programme over 12 years from 2016 to meet these targets. This will support some 10,000 jobs in the construction sector over the duration of the programme. This will be funded via the Strategic Investment Fund, European Investment Bank and complemented by general taxation.
I believe the abolition of the failed Irish Water model, creation of a new slimmed down delivery model, suspension of charges until a service that delivers is achieved and a €10bn capital investment plan to upgrade the network for the 21st century will transform water services in Ireland. Resolving this issue will be a critical challenge for the next government. It is a fundamental strategic challenge for this country. We cannot shirk our responsibilities to think boldly about the future of the country. It’s time to get to grips with water.