Friday 28 October 2016

Ignoring unpopular truths about the water issue is a surrender to populism

A national body is needed to fix the water system and users will have to be charged. There is no feasible alternative, writes Colm McCarthy

Published 01/05/2016 | 02:30

Supply: Neglect has taken its toll on our water system, and higher capital spending is needed to fix it. Photo: Ray Ryan
Supply: Neglect has taken its toll on our water system, and higher capital spending is needed to fix it. Photo: Ray Ryan

Generations of neglect has taken its toll on Ireland's water supply and waste water disposal systems. The result is cryptosporidium, boil notices, service interruptions, dangerous levels of E. coli, high leakage rates, a looming supply crunch in the Dublin area, pollution of inland water bodies, untreated sewage discharged off coasts and high operating costs.

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Numerous expert studies have concluded that the neglect is not sustainable and an engineer-driven national organisation to fix the system is required. Higher capital spending will be needed for several decades. Until recently, user charges were contributing no more than one euro out of every six spent on operations and investment. The outgoing government's plans to raise more from user charges and to entrust the rehabilitation of the water industry to a national, State-owned utility, have been consigned to limbo. Both the future structure of the industry and its financing will be considered afresh by a commission if the Fine Gael minority government goes ahead.

This fudge will come unstuck when the commission concludes that a State-owned national utility is the best option and that user charges, currently confined to commercial customers, contribute too little. It will be a challenge to identify commissioners likely to favour the return of responsibility to 31 local authorities. It will also be hard to ensure a recommendation that financing, current and capital, continues to be provided almost entirely by the taxpayers. The commission will draw attention to the existence of a Water Framework Directive adopted by the European Union 16 years ago and binding on Ireland. The directive, at Article 9, requires a shift towards greater user charges, including user charges for households.

The interpretation of EU directives is a matter for lawyers, but fortunately two senior counsels, Michael Collins and Garrett Simons, were engaged by Irish Water to consider the implications of the Water Framework Directive.

According to Arthur Beesley's report in the Irish Times on March 29 last, the lawyers concluded that "there is no possibility under European law for the State to suspend or scrap water charges".

Beesley continued: "The introduction of water charges by the last government means the State can no longer avail of a 'very limited' exemption in the EU water directive, they say. 'The benefit of the derogation has been lost for all time, and cannot be revived by seeking to reverse the decision to introduce charges,' the legal opinion states. The lawyers concluded that, 'In our opinion, the Irish State is obliged to continue to impose charges for domestic water services.'"

It is possible that one of the political parties opposed to domestic water charges has secured a legal opinion contrary to the conclusion of Messrs Collins and Simons. If such an opinion exists, it has not reached outgoing Environment minister Alan Kelly, who indicated in his Dail speech during the week that his legal advice coincided with that furnished to Irish Water and quoted above.

The ultimate authority on what EU directives actually mean is the European Court of Justice in Luxembourg.

It should be noted that the EU Commission can institute infringement proceedings at the European Court against any member state it deems in breach of EU directives. It has already done so in cases involving the Water Framework Directive.

To summarise: two issues have apparently been kicked to touch, the organisational structure of the water industry and the introduction of domestic charges. In neither case does there appear to be a plausible alternative to the substance of what the last government had (with great dithering) put in place. Nobody has an operational alternative to a national water board of some description, and domestic charges are required under EU law.

RTE's exit poll on election day found that just 8pc of the public identified water charges as an issue that influenced their vote. A Red C pre-election poll for The Irish Sun on February 18 identified the six most important issues as the economy/jobs, the health service, crime, flood prevention, housing and political reform. There was no mention of water and no other poll identified water as a prominent issue during the campaign.

Yet the ongoing scuffle between Fine Gael and Fianna Fail has been punctuated with assertions that the General Election two months ago was tantamount to a single-­issue referendum on water. It was nothing of the sort, despite constant repetition of this claim by news anchors and talk show hosts.

Indeed, the prominence accorded to the water issue in recent years owes much to choices by the news media, notably RTE, to lead so often with stories about charges that, as Alan Kelly noted last week, were set to cost people €3 per week.

The (now suspended) household water charge was set at €260, offset by the €100 'water conservation' grant - to give a net cost of a flat €160 per annum. This coincides precisely with the cost of the annual TV licence fee, effectively a poll tax on households, since virtually every household is liable. The cost is as big an imposition as the water charge on poorer households, is unrelated to income or any other measure of ability to pay, but never attracts protest or objection from the left or indeed from any other quarter. In the past two years, motor insurance premiums have increased by more than the water charge.

There is no doubting the unpopularity of water charges, introduced after many tax hikes and spending cuts in the years from 2009 to 2013. In addition to the street protests, a substantial minority of households has declined to pay or to register for payment. But to pretend that this was the sole, or even a major, issue at the recent election is pure invention.

There should be no exoneration for the mishandling of the water issue by successive governments, not least in permitting the deterioration of the system now evident through the decades-long delay in taking action. The outgoing government has communicated poorly and permitted a minor issue to dominate the formation of its successor.

The water mess will resolve itself in time. There will be no alternative structure to the State-owned utility model, since none is feasible. Neither will there be an end to user charges for households unless the 28 member states of the European Union agree to repeal the Water Framework Directive - "Hey guys, let's scrap this Europe-wide directive, 8pc of the voters at an election in Ireland think it's important."

There will be an immediate Exchequer cost from the fudge over water, but it will not be the only one. The shopping list of the Independent deputies has yet to be revealed, but the Fianna Fail negotiators have been granted extra rent and mortgage interest subsidies and more health spending. The Budget in October will see a further postponement of the faltering attempt to stop the borrowing.

It is a constant of democracy everywhere that people demand better public services without offering to pay the taxes or charges that are implied. Opposition politicians succumb readily to temptation and encourage the electorate in the mistaken belief that this combination can be delivered. But when those in government also succumb, populism is elevated to the status of the preferred national political ideology.

Sunday Independent

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