Monday 24 October 2016

Irish Water was an inside job, stupid - so start over

The Irish Water mess originates in the privatisation agenda concocted by insiders

Published 02/08/2015 | 02:30

IGNORED: Insiders refused to listen to then ESRI economist Richard Tol, who advised on how to structure rates so that there were good allowances for families. Photo: Will Oliver
IGNORED: Insiders refused to listen to then ESRI economist Richard Tol, who advised on how to structure rates so that there were good allowances for families. Photo: Will Oliver

Bill Clinton's 1992 campaign strategist James Carville came up with the famous "It's the economy, stupid" line; launching not just Clinton's presidential campaign but an electoral cliche. It's behind the Taoiseach's repeated assurances that there'll be no election until 2016. The longer he waits, the more jobs there'll be, and the more votes to go with them. Employed people will vote for political stability and economic growth, not headbangers, stupid.

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But as Forrest Gump's mother would say, "Stupid is as stupid does" and Irish Water has a lot of stupid in the story. The really stupid part is that the government clings so tightly to the cliche about the economy, that they refuse to accept that for a lot of sane people, it's more than that. As the country pieces itself back together, it becomes obvious that for all the faults of voters and borrowers, a large part of the damage was done from the inside. And while some of us have borne the consequences of our mistakes, the insiders haven't.

The key thing about Irish Water is that it's an inside job. It was set up by insiders with an insider's agenda. And while politicians will pay an electoral price for screwing up, the insiders will carry on lining their pockets and being protected from their mistakes.

If the Taoiseach is to recover any ground he must admit (at least to himself) that the politicians got played by the lifers and they need to start over. Otherwise, it doesn't matter who's in office. Nothing has changed, and voters have nothing to lose by giving the headbangers a chance. The economy won't matter.

It should never have come to this because the case for Irish Water is overwhelming.

The unavoidable truth is that we must have water rates structured to incentivise us to use less water because it's the right thing to do, and because it's European Law. The Water Framework Directive was agreed in 2000 and the deadlines it set have long passed. So there's no way out of water rates and any politician who tells you otherwise is either delusional or deliberately lying to get your vote. Any voter who falls for that lie forfeits the right to complain later.

The case for setting up a single entity to manage water and sewerage nationally is also compelling. This is about big infrastructure and big investment, and a system whereby dozens of different local authorities in relatively small geographical areas compete with each other for supply and resources is ridiculously inefficient. Consolidating resources and management into one corporate structure is the sensible option.

But right from the start the insiders saw that as an opportunity - and the failure to identify and challenge that agenda was the first mistake the politicians made.

The agenda is privatisation. As far back as 2012, Paul Hunt, a respected energy economist, pointed out that the PwC consultation report on Irish Water redacted key information on costs due to "commercial sensitivity". How, he asked, could there be commercial sensitivities if the entity was to be a publicly owned state monopoly? If more experts had seen those figures, they could have advised on how to set it up better and cheaper.

Instead the insiders charged on, ignoring advice and excluding independent voices. That's why all this is so frustrating. We're not the first country to introduce water rates. In Europe, we're the last. More transparency and honesty at the start - and a simple willingness to listen - would have spared us a lot of grief. It was ever thus.

Instead, we carried on with the stupid stuff. Like appointing John Tierney, the former Dublin City Council manager, fresh from the Poolbeg incinerator debacle, as CEO. Someone with a track record operating a major utility, not a public service insider, should have got that job. Then, in a staggering repeat of the HSE folly, all local authority employees transferring to the new company were guaranteed their jobs, thus immediately undermining any hoped for efficiencies that might come in the future - and guaranteeing everyone a pay day when the sell-off was achieved. Hello, Telecom Eireann. Stupid.

The insiders refused to listen to people like then ESRI economist Richard Tol, who advised on how to structure rates so that there were good allowances for families. Stupid. And finally, establishing the "water-conservation grant" while simultaneously maintaining the "off-books" pretence was stupid. It took Eurostat to finally call a halt to the nonsense.

Now, I like the fact that our Dear Leader is a stubborn man. It got him where he is and his persistence in implementing the bailout conditions is paying off. But I know too well myself that our greatest strengths can also be our biggest weaknesses. Major public projects are often experiments, and when they go wrong, the mature thing to do is admit the error and fix it as quickly as possible. But to do that, he has to get the insiders out and listen to those who got sidelined.

Anything else simply proves that we learned nothing from the financial crisis. And that's just stupid.

Analysis Gene Kerrigan, Page 32

Sunday Independent

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