Irish Water and a raging torrent of inconvenient truths
Had Irish Water not been set up, we could have saved €240m and fixed the leaks too, says Stephen Donnelly
Published 05/04/2015 | 02:30
Throughout the week, Irish Water and Fine Gael/Labour were killed telling us the good news - they'd be able to find lots of leaks, and fix them - all thanks to those water meters.
No business case has been presented, but even a cursory glance at the figures shows that they'll be the most expensive fixed pipes in Christendom.
And then there's the detail - the majority of leaks won't actually be fixed, or paid for, by Irish Water. While they'll deal with leaks, once, if they're between the road and the house, it's expected that most leaks are in the houses. So it'll be up to homeowners to pay plumbers to find them and fix them. And if home owners don't? Well, an Irish Water spokesman pointed out on Morning Ireland that they have enforcement powers, so they can insist. RTE's Cathal Mac Coille suggested that it sounded very like a threat. I had to agree.
With the first bills on their way, Fine Gael/Labour is determined to make the case for installing the water meters, and for charging people for water. Two deeply inconvenient truths make that task next to impossible.
The first is this: It'll cost about the same amount to collect the water charge as will be collected. So the money being paid out isn't going to pay for water, or to upgrade the system - it's going to cover the costs of the meters, bills, adverts, call centres, lawyers, debt collectors, postage, printing, and so on. And that's a conservative estimate - if a few things don't go according to plan - like some people not paying (likely), and the average costs of collection being higher than the industry average (likely), then it could end up costing the State about €80m more to collect the money than is collected - so money will have to be borrowed, or diverted from areas like health and education, to help cover the cost of charging for water.
The water charge is a useless endeavour. In fact it's much worse than useless, as it demands much-needed cash from every household, during a recession, for no gain to anyone. It's a valueless activity that charges people to pay for its own existence. It's like charging people to erect a sign saying: 'Do not throw stones at this sign'.
What the Government isn't saying, certainly before an election, is this: The water charge will make sense in the future, when it's increased to, say, €500 per household. Make no mistake - 'semi-state commercial' utility companies are expected to fully cover their own costs, or more.
The second inconvenient truth is this: Even if it was free to collect the money, it still wouldn't be necessary to do so. Let's imagine that those water meters, coming in at a cool €539m, were instead donated by a benevolent water meter manufacturer. Let's imagine the army of water-meter installers had all volunteered their time and effort, that the vans and shovels and barriers were donated, that the call centres were built by philanthropists, staffed by volunteers, and supported by army of professional advisors working pro-bono, and so on and so forth.
In this world, at least, the water charges paid out could be invested in upgrading the system. But even in this world, it wouldn't be necessary to change anyone. Here's why:
When you take 34 separate organisations and merge them into just one, and when you introduce new technologies, you can save a mountain of cash. When the Scots did something similar with their water system, they saved about 40pc of the total running costs. People I've spoken with who've run the rule over the Irish water system believe we could have done the same. But let's go easy on ourselves - let's say we were only able to achieve half the level of savings they did in Scotland - that would still have saved about €240m.
This figure of €240m is important, because it's more than the total new investment in the water infrastructure. The need to upgrade the system is real - and the figure for new investment is €200m per year. Which is less than the amount we could have reduced the cost base by. So, had we achieved just half the savings they did in Scotland, we could have funded the entire additional investment in the water system, and had €40m left over (that's about 1,000 new teachers). Instead, astonishingly, the running costs for Irish Water, even before you include the new investment, have not fallen - they have risen.
This isn't the fault of Irish Water management - it's the fault of Government, which locked in these costs in a series of secret meetings right at the start. The Labour party has been on the end of an unmerciful kicking over Irish Water - they promised to fight water charges, and instead are out there telling everyone why they're such a good idea. So, fair enough. But what about Fine Gael? Unlike Labour, they have managed to escape their broken promises more or less unscathed. This is the party that talked the big talk about transparency, about changing the way politics was done, about running public services efficiently - after the many years of Fianna Fail.
Irish Water wasn't set up by Alan Kelly, it was set up by Phil Hogan, a Fine Gael minister. Refusing to establish it properly, and reinvest the potential savings into the system, is the work of Fine Gael. Setting it up in secret, with no minutes of key meetings, and no financial plans available, is the work of Fine Gael. Refusing to engage with parliament - that's the work of Fine Gael. Threatening to turn people's water down to a trickle, refusing to introduce an ability-to-pay clause - that's all the work of Fine Gael.
Yes, Labour broke an election promise. But Fine Gael have now demonstrated categorically that when it comes to wasting public money, doing deals behind closed doors, ignoring parliament and putting the interests of the party ahead of the country, they can out-Fianna Fail Fianna Fail with ease.
The French have a well-worn saying, 'plus ca change, plus c'est la meme chose', the more things change, the more they stay the same. While looking for its source, I came across the following explanation: "New people, new promises, but the same old problems."
When it comes to Irish Water, and the Fine Gael/Labour axis of incompetence, that just about sums it up.