Saturday 1 October 2016

Paul Melia: The question Eurostat asks is: who controls Irish Water?

Published 31/07/2015 | 02:30

Alan Kelly
Alan Kelly

The Government's ham-fisted attempt to keep water borrowings off the national debt has backfired spectacularly.

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Despite repeated assertions that the company would comply with Eurostat rules, it now appears that the problems with Irish Water are more pronounced than merely getting payment rates up.

In a detailed decision paper, the European statistical agency sets out the reasons why the utility is not independent of the State.

They essentially all boil down to one key issue - there is too much control exerted by Government.

We always knew this. The first inkling was early last year when not only did the Government tell the 'independent' regulator to structure charges so that the 'average' household paid no more than €240 per year, once that decision had been made by the Commission for Energy Regulation, the Coalition promptly cast that charging structure aside in the wake of a concerted campaign of opposition.

Eurostat also makes the point that the Government appoints board members, and has included an "impressive list of actions" which require ministerial consent.

And it's not just one minister calling the shots, but four - Finance, Environment, Energy, and Public Expenditure and Reform.

In fact, Eurostat seems unclear as to who exactly is in charge of Irish Water.

Parent company Ervia holds no economic rights, meaning it cannot benefit from dividends, nor does it consolidate Irish Water's financial statements into its own accounts.

The regulator has powers to set prices, examine the company's spending plans and produce codes of practice.

And Eurostat admits that although it may be "difficult" for it to judge the level of autonomy enjoyed by the company, "the specific extended powers that Government has in the case of Irish Water looks exceptional".

There are bigger problems too, for future governments seeking to re-run the test.

Irish Water's heavy reliance on the local authority sector to operate the network raised concerns that it is, effectively, just re-organising the existing system.

The ESRI and the regulator, among others, raised concerns that entering these 12-year 'Service Level Agreements' could pose problems down the line.

And so it has come to pass - but not for the reasons cited (adding to costs), but because Europe takes the view that Irish Water and the city and county councils are essentially one and the same when it comes to the water network.

And guess what? Eurostat didn't fall for the line that the €100 grant was for anything other than compensating people for having to pay water bills.

Dressed up as a "water conservation grant", it has taken the view that this is a payment to Irish Water. As it was intended, but never admitted.

Clearly, legitimate questions can be asked of the competence of the Government in how it approached the establishment of Irish Water. Setting up the utility was always going to be a mammoth task, and the Coalition appears to have taken the view it was better to rush into it, be swayed by opinion polls and public disquiet, rather than take their time and get it right and stick by its decisions.

This lack of leadership may come back to haunt the parties at the ballot box, as indecision implies weakness.

While the utility may be going about its daily business in an effective manner, trying to invest and make the system fit for purpose, it's not independent.

It's an arm of the State, a "heavily subsidised public monopoly", or "non-market entity controlled by government".

You can put lipstick on a pig, but it's still a pig.

Irish Independent

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