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Friday 29 August 2014

Hayes: Government will block bonuses to more than 500 Irish Water staff

Published 15/01/2014 | 06:34

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Brian Hayes TD Minister of state for public service reform & the office of public works
Brian Hayes TD Minister of state for public service reform & the office of public works
Minister Phil Hogan  (Pic.Michael Kelly)
Minister Phil Hogan Photo:Michael Kelly

A MINISTER has indicated the Government will move to block the payment of bonuses to staff at Irish Water.

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Junior finance minister Brian Hayes was responding to the revelation that all 510 staff - with the exception of managing director John Tierney who earns €200,000 - will be entitled to bonus payments for meeting specific targets.

Mr Hayes said Public Spending Minister Brendan Howlin had eliminated the payment of bonuses in the semi-state sector.

The minister said he was not in favour of the bonuses and the Government would have to examine the issue.

The revelation comes as the total set-up cost of Irish Water is expected to reach €180 million, its managing director has revealed.

As John Tierney confirmed nearly half that sum will be sucked up by external consultants, he insisted the Government knew about the budget breakdown all along.

The news has placed environment minister Phil Hogan in the spotlight amid controversy over the amount being paid on external consultants.

Mr Tierney, who sparked fury last week when he revealed that 50 million euro had been spent on outside help, said that figure could grow to nearly 85 million euro.

IT giant IBM will have been paid 44.8 million euro  by 2015, Accenture 17.2 million euro, Ernst & Young 4.6 million euro and KPMG 2.2 million euro.

A further 13.3 million euro will have been paid out on smaller contracts between now and then.

"This entire programme and associated budget as well as the approach to resourcing and staffing the programme was rigorously examined and approved, by both the internal Bord Gais governance and approval processes, and by the relevant Government departments," Mr Tierney said.

The Irish Water boss confirmed the spend under questioning by the Oireachtas Committee on the Environment, Culture and the Gaeltacht.

He will appear today before the Public Accounts Committee to explain and justify the costs behind the organisation, which is funded by the taxpayer.

Mr Tierney, who earns 200,000 euro a year, defended the huge outlay, insisting that once up and running, the national utility will have saved the state €2bn by 2021.

He insisted the organisations at the centre of the consultants' fees controversy were brought in out of absolute necessity.

"These service providers have joined our team temporarily to help us build a hugely valuable asset," he said.

"We did not bring in experts to tell us how to build Irish Water. We brought in contractors to help us build the systems and processes necessary to run the business. This is standard practice in utility businesses.

"In our case we simultaneously built five major systems and procured global specialist expertise to ensure that the most efficient industry practice is being deployed."

Mr Tierney said "these weren't people producing reports", but rather vital experts drafted in to help build a national utility within 18 months.

He also confirmed that the Government had been informed from the beginning of the set-up process in 2012 that outside help would be needed.

"From the very outset Bord Gais advised Government that this type of support was critical to deliver this programme and achieve the targets set in the demanding timeframe," Mr Tierney told the committee.

However, he revealed that he had never spoken directly to Environment Minister Phil Hogan regarding Irish Water, and insisted questions regarding his ministerial approval were not for him to answer.

Meanwhile, Irish Water has insisted that all external contracts it has awarded are in line with European rules on public competition.

As well as facing calls to explain how and why it has spent what it has on external consultants, the state monopoly has also been forced to clarify that IT companies were hired under strict guidelines.

It claimed it saved 58 million euro (£48 million) in software licences by using the same IT systems and processes as Bord Gais for billing, asset management and utility financial systems.

Parent company Bord Gais said it and Irish Water had been scrupulous in the awarding of contracts.

"To ensure value for money and transparency, all contracts have been awarded in line with the guidelines set out at EU level for public sector procurement," it said in a statement.

It added: "Both Irish Water and Bord Gais strongly reject any suggestion that the company was not fully compliant with all procurement rules."

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