Saturday 22 October 2016

Parties baying for abolition of Irish Water have no idea how much it will cost

Published 12/04/2016 | 02:30

Anti-water charges campaigners taking part in protests outside Irish Water headquarters on Dublin’s Talbot Street – similar protests took place in Galway, Cork and Limerick last year. Photo: Tony Gavin
Anti-water charges campaigners taking part in protests outside Irish Water headquarters on Dublin’s Talbot Street – similar protests took place in Galway, Cork and Limerick last year. Photo: Tony Gavin

Welcome to the new era of responsible governance in Ireland, where parties baying for the abolition of Irish Water appear to have no idea how much it would cost but are determined to plough ahead regardless.

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Speaking recently, Sinn Féin TD Eoin Ó Broin stated there was "no obvious alternative model to Irish Water" and an independent commission was required to investigate a "detailed and credible" manner of providing water services across the country.

This announcement probably came as a surprise to anyone who listened to the party last year promise that its first act of government, if it were in power after the election, would be to "abolish Irish Water and water charges".

While the party spent the past 12 months demanding the scrapping of Irish Water, it appears it didn't bother fleshing out its master plan any further, so that now it seems to have no idea what it wants to replace the utility with.

In the desperate search for an entity to manage the provision of water services, Sinn Féin has belatedly decided an independent commission should examine all of the options available - except the one option that we actually have.

Now, I don't like Irish Water much, but I can't see the point of demolishing one national utility to set up a separate national utility from scratch - but then again, I'm not a politician spending other people's money.

Asked yesterday to explain the rationale of its position, Sinn Féin TD Pearse Doherty agreed "the cost of abolishing Irish Water without a replacement model in place would be large" but insisted that wasn't the party's plan.

"Our policy is to abolish Irish Water and in its place put a National Utility accountable to the Oireachtas and with proper governance standards," he said, adding that this national utility would not charge domestic customers.

Essentially, instead of abolishing Irish Water, Sinn Féin wants to rebrand it, which at least has the merit of accepting that, reviled as it is, Irish Water cannot simply be wished away.

Similarly, Fianna Fáil has been champing at the bit to get rid of Irish Water and its election manifesto is clear that it intends to "abolish Irish Water and water charges".

However, when it comes to the pesky detail of how much that would cost and what the utility would ultimately be replaced with, things become a lot more opaque.

Irish Water has suggested the cost of its abolition could be a staggering €7bn over five years, comprising €100m in cash costs, sunk costs of €670m, €1.6bn in foregone domestic water charges, €1.6bn in nebulous savings and the remaining circa €3bn in the lost possibility of removing its debts from the Exchequer's books. Irish Water failed the test, with the result that its debts remain on the State books, so that €3bn figure can be discounted. As can the €1.6bn in savings which could still be delivered even if Irish Water wasn't the vehicle to do so.

Likewise, sunk costs like water meters and IT systems would not simply cease to function if Irish Water was abolished. They become assets that any new utility or agency could utilise. However, the €100m cash cost of paying off staff or breaking leases cannot be so easily discounted - except by Fianna Fáil, which thinks that the entire mammoth organisation can be obliterated for a mere €9.1m - its estimate of what a redundancy scheme for staff would cost.

Nowhere in its manifesto is there any acknowledgement that those who had entered into contracts or signed leases with Irish Water would expect to be paid, or that the cost of its demise would involve anything other than lump-sum redundancy payments.

Instead of retaining Irish Water as a national utility and restructuring the entity to make it more efficient, Fianna Fáil wants to scrap it entirely and create in its place a new "slimmed-down agency".

Micheál Martin has likened this new agency to an National Roads Authority (NRA) for water, with responsibility for the day-to-day delivery of water services reverting back to local authorities - which previously managed the system so well that more than 50pc of water currently leaks from pipes.

Speaking on RTE's 'This Week' programme, Irish Water union rep Adrian Kane rubbished this analogy, pointing out the NRA is responsible for just 6pc of the road network and outsources the bulk of its work to the private sector.

According to Mr Kane, the coherent provision of water and waste-water services across the country, due to its scale and complexity, cannot be managed by an NRA-type directorate with a skeleton staff.

Given Mr Kane represents workers in Irish Water, he too has a vested interest in its continued survival. But, before Fianna Fáil gets to work annihilating Irish Water, shouldn't it investigate these concerns further and ensure that its proposal is the most cost-efficient one for the country?

Meanwhile, a Fianna Fáil spokesperson insisted yesterday that suggestions it favoured the amalgamation of water charges and property tax were "without foundation" and that "the party's position on water charges is clear".

This is just as well as any attempt to bundle up water charges and property tax would make the introduction of a metered cost for water virtually impossible and invariably lead to a huge boycott of the proposed new household charge, as people transferred their boycott of water charges to the new fee. The rushed establishment of Irish Water has been an expensive fiasco that led to the biggest public protests in the history of the State. The lesson, if there is one, is that evidence-based policy, credible costings and robust research should be essential prerequisites before the State dismantles one water utility to replace it with another. Calling for the abolition of Irish Water is easy. Deciding what it should be replaced with is not.

Irish Independent

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