The stream of failure from this government has steadily grown into a raging torrent. At the centre of the storm is the Minister for the Environment who, as members of his own coalition partners have stated, has now completed a perfect hat trick of disasters. The government debacle in implementing water charges shows that they have failed to learn any lessons from the household charge and Septic Tank fiascos. A lack of detail about how much metering will cost the consumer, out dated numbers, uncertainty for current employees, a rushed decision making process by-passing the Oireachtas and confusion in the Cabinet over the costs involved all point to another government disaster. The government is rushing ahead with the creation of Irish water and rolling out water meters without clearly considering the costs involved to consumers. Ultimately, it is householders that will be left to pay the price for government ineptitude.
We are calling on the government to stop before they go further down the disastrous road they have chosen.
Over the past few months the Customs House has become ground zero for a litany of government mistakes, botched implementations, hasty decisions and poor communication. At a time when the government should be focused on a critical referendum on the country’s future, its energies are spent on deflecting attention from escalating problems in Minister’s Hogan’s Department. A sense of arrogance has characterised the government’s approach to new charges. Consultation with the public has been replaced with dictation from the Minister. The abysmally low compliance rate with the household charge and protests over the Septic Tank attack on rural Ireland bears testament to the kind of approach taken by the government. This priggish attitude by the Minister is quickly becoming his trademark style and it now appears to be dominating his strategy to impose water charges.
The establishment of Irish water and the rolling out of water meters and charges by 2014 has been characterised by a lack of detail, ineptitude in communication and a crucial failure to appreciate the scale of the challenge at hand. Households have been hit with a raft of contradictory messages and numbers from the government. During a period when consumer confidence is at low ebb the government appears to be committed to sapping any potential for future improvements in sentiment.
Metering and Water Charges Costs
The roll out of metering, initially touted as an upfront charge only to be replaced by a €800 standing charge over 20 years is an excessively expensive. Amidst the Tánaiste and the Taoiseach directly contradicting each other, the ordinary householder is left trying to figure out the actual cost to them. The price of meters can range from €60 to €150 with labour an additional cost depending on the location and work involved. Yet the government has indicated that metering would cost €160 per meter with the remaining €640 going towards installation costs. In these straitened times it is difficult seeing companies vying for the tendering process with such exorbitantly high labour costs.
The detailed 2009 Walker Review in the UK considers the cost of alternative meter installations. Internal installation was found to cost between £106 and £385, and external installation in new boxes cost between £293 and £471. Employing these numbers and assuming that meters are rolled out to 1million households the total cost would range between approximately €125m million and more than €555m million. Given the vast differences at play on these figures it is legitimate to ask what cost-benefit analysis, if any, the government undertook in relation to internal and external metering.
The Irish people are borrowing €450 directly from the National pension Reserve Fund to finance the roll out of meters and the creation of Irish Water. Over 20 years we are going to repay €800m, almost €1bn on the back of tax payers to install meters.
Edgar Morgenroth from the ERSI has set out that potential water charge rates could reach between €473 and €560 per household. Simultaneously figures from the ERSI last week revealed a potential property tax each year of about €2.50 for every €1,000 of house value or €500 for a house worth €200,000. Struggling homeowners shocked by the scale of the charges have looked to the government to provide clarity only to receive obfuscation and confusion. Details on such issues as free allowances have not been forthcoming as the government kicks to touch, passing the buck by transferring the problems to the as yet non-existent Irish water.
Further questions also linger on whether private wells will be subjected to metering under the Water Directive, as some Commission reports indicate they will. These growing concerns, held by rural households across the country need to be fully addressed as soon as possible by the government and the EU Commission.
Looking at the numbers involved in Water metering yet more holes appear in the government case. The figures used by the government are based on the 2006 census as used in the PWC report on the provision of water services. But when we look at the 2011 census figures we can see all too clearly further potential problems with the government’s plans. 503,140 units or 36% of those households eligible to pay water charges are potentially unsuitable for metering by the government’s own standards. These units are either constructed pre-1960 or apartments. This is significantly higher than the 300,000 households or 20% of eligible units the government has cited.
Instead we learn that these homes will be subject to yet another regressive flat charge without any conservation incentive. This leaves potentially just under 890,000 households for water metering, more in chime with Dublin City Council’s executive manager Tom Leahy’s estimate that one third of households could not be metered. In stark contrast, the Department of Environment has said that over one million homes would be metered by the end of 2014, with only 300,000 being excluded, because they were apartments or gated communities.
Additionally, it is unclear whether the 60,000 holiday homes across the country are eligible to pay water charges and if a meter will be applied. Furthermore what is the future plan for the 230,000 other vacant houses in the state. Will they be metered on an on-going basis as they are occupied or in one fell swoop on estates? Or will they be allowed opt into the metering system at their own cost once they are occupied?
It is imperative that the government update its figures and sets out a clear business case for the plans they have announced before they go further down the road.
Fianna Fáil has a number of serious, specific concerns about the Government’s New Era or New Error project plans to establish Irish Water. From what we have seen so far the government is rushing ahead with the creation of Irish water without seriously considering the broader costs and consequences of setting up a new government monopoly company over such an important resource. A smoke screen consultation process was utterly undermined by the fact that the government had already decided what it was going to do. The consultative process was mere widow dressing and tinkering around the edges rather than coming to the key issues with an open mind. There are a number of areas in which I would like to re-iterate our concerns namely,
Stripping Local Government of their role
The Government has yet to publish their White Paper on Local Government Reform yet it is aggressively pressing ahead with stripping 34 Local Authorities of one of their key roles. This incoherent, ad hoc approach undermines meaningful efforts to re-shape local government to suit the needs of modern Ireland.
The PWC report has indicated that Irish Water will operate with significantly lower numbers than the 4,278 currently employed by Local Authorities in the provision of water. In yet another contradiction An Taoiseach Enda Kenny denied any potential job losses only to be subsequently contradicted by the Department who said it would be a matter for Irish Water. Based on the example of Northern Ireland at least 1,200 jobs could be lost here.
Local Authority staff have an on the ground knowledge that will be lost with the creation of a new company and the shedding of jobs. The local response of a centralised company will inevitably suffer in comparison to on the ground operations that have experience in the field of dealing with the water infrastructure.
Thus far €130,000 has been spent on consultation fees to PWC. Yet the advice that they gave was ignored. The absence of a coherent government strategy has generated substantial fees for private consultants with money going down the drain. The experience in Northern Ireland confirms the large amount of money committed to contracting private consultants to help create a new body. The studies published by the government give no indication of the costs involved in hiring consultants which will spiral as the scale of the administrative challenge created by the government’s decisions becomes more apparent over the coming years.
Governance Structure and Technical Issues
The government has set out the broad parameters of the New Era Irish Water company but has failed to provide meaningful detail on the corporate governance structures of the company. Details on whether it will provide a commercial return its assets, reporting structures and democratic oversight remain entirely absent. Furthermore the links between this separate company and the planning authorities which previously would have all belonged to the Local Authority presents fresh challenges in ensuring proper sustainable planning.
A step towards privatisation
Regardless of its rhetoric in the Dáil, the government’s insistence on the creation of a company indicates that it is preparing the ground for an eventual privatisation of the water system. The choice of Bord Gáis which has been partially earmarked for sale further confirms this suspicion. The failure to consider a third way in providing strengthened oversight and an investment model to upgrade the water infrastructure reveals the privatisation goal at the heart of this New EraWhite Elephant.
Additional Pressure on the Department of the Environment
The pressures mounting on the Department have clearly been shown up in the cracks that are emerging. The rushed nature of the plans to develop Irish Water will place additional pressure on an already under strain Department and Local Authority officials that will inevitably undermine the quality of work that underpins this project. The lack of detail and contradictory messages thus far bears testament to the strain they are operating under. This does not bode well for the future implementation of an immensely complex process. Again, the lack of any planned and strategic approach by the government opens the door to expensive and unnecessary consultancy fees.
The government’s justification for the creation of a singular government monopoly rests upon the economies of scale of the project and efficiency gains. The PWC report fails to specify detailed efficiency gains instead it gives a vague outline of potential savings. For example given the Taoiseach’s insistence that no jobs will be lost where are the savings coming from? The Minister has yet to clarify these issues.
The Customer is completely absent
The plans laid out for the future of Irish water fails to place the customer at the heart of the process. The deficit of local knowledge and on the ground responsiveness will inevitably negatively affect Irish consumers. Furthermore, the deficit of democratic engagement with the stripping of Local Authorities involvement and the creation of separate centralised body will create an unaccountable body detached from customers.
We fundamentally disagree with the privatisation model put forward by the government. It lacks local accountability, responsiveness and will lead to job losses. We will shortly be publishing our own strategy to ensure advocate ensure efficiency in infrastructural upgrades while keeping the effective local element that currently exists. Our modle will exclude the also excludes the heavy consultation fees that this proposed system will generate.
Bord Gáis & the Commission for Energy Regulation
The creation of Irish Water as a part of Bord Gáis follows a murky selection process without public scrutinising or accountability. This decision flies in the face of the only advice that the government got from its own consultants. The PWC report commissioned by the Department of the Environment recommended against a multi-utility model on the basis of international experience that found this approach had been unsuccessful elsewhere.
The strength and associated experience of the retail side of Bord Gáis, dealing regularly with consumers, has, the government claims, earmarked it as suitable for this massive project. However this is exactly the side of the company that the Government intends to sell in the future, further exacerbating fears about the privatisation of Irish Water at some stage. Further questions have been raised by commentators about the competency of Bord Gáis in taking on this onerous managerial responsibility.
The attribution of price setting powers to the Commission for Energy Regulation brings with it another set of unanswered questions. What additional resources will be given to the Commission? What will be the nature of the relationship between the government and the revamped Commission? How suitable is this particular Commission for this very specific and challenging task? What role will the National Consumer Agency have?
Minister Hogan is emerging from this latest debacle like John Heuston’s crooked character in Chinatown, holding the public’s water supply to ransom with jobs, charges, deep household uncertainty all on the line. Rather than take heed and learn from grave mistakes in the all too recent past the Minister has ploughed ahead with poorly thought out plans based on outdated figures with little sense of the potential repercussions. The future of water supplies in Ireland deserves and demands better. The Minister and the Government need to answer the mounting list of questions over the future of Irish Water.