Sunday 25 September 2016

Setting up a utility the right way

Stephen Donnelly has eight salient points future administrations should heed to avoid Irish Water-type fiascos

Stephen Donnelly

Published 05/04/2015 | 02:30

'A proposal to merge the 34 water authorities should have been developed by then minister Phil Hogan.' Photo: Frank Mc Grath
'A proposal to merge the 34 water authorities should have been developed by then minister Phil Hogan.' Photo: Frank Mc Grath

There's a lot to be learned from the Irish Water saga. Here are a few things that future governments might take away.

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1. Do the math - first. To date, it still hasn't been possible to get a detailed financial plan for the establishment of Irish Water. Over the course of the past 18 months, the numbers have moved around, frequently - capital investment levels, cost savings, off-balance sheet requirements, household charges, and so on. You wouldn't be given a loan to open a sweet shop with the lack of financial information available on Irish Water.

When establishing a multi-billion-euro public utility company, create a detailed financial plan, and then move to point 2.

2. Talk to parliament. Parliament was ignored when it came to Irish Water. Great effort was expended to treat the Dail and Seanad with contempt, and to let TDs and Senators know this. An example: the refusal to allow parliament to debate the legislation setting Irish Water up. A detailed financial plan should have been brought to the environment and finance committees, for discussion.

Take ideas and concerns from government and opposition TDs and Senators on board - this would have led to a better utility company, and at least some buy-in from the opposition.

3. Talk to everyone else. TDs and Senators weren't consulted, nor was anyone else - councillors, county council officials, households, businesses - we're all invested in getting the water system sorted out, and we're all going to have to pay for it. That deserves a little consultation, right? It might have helped surface the fact that some people simply don't have the money to pay, for example.

ICT advances make widespread public consultation quick and fairly cheap; use it.

4. Don't do secret deals with public money. It is becoming increasingly likely that sweetheart deals were done right at the start of the Irish Water journey. For example, 12-year service-level agreements have tied the hands of Irish Water in terms of finding savings. The result - jobs that don't exist anymore will still be funded.

5. Don't threaten people. First there was the 'trickle' threat. Thankfully, there was so much political and public outrage that the Government backed down on it. Then there was the 'we'll take it out of your wages' threat. Though it looks like there's no legal basis for that one, so the Cabinet has gone off to ponder it. This week there was the 'if you don't fix the leaks we can use enforcement powers' threat.

Stop the threats; if everyone thinks your idea is rubbish, maybe it is.

6. Save money where possible. As a rule of thumb, mergers of large organisations look to cut the cost base by about a third. Scottish Water hit 40pc. It's entirely likely that the same level could have been achieved with Irish Water. The potential for savings, by merging 34 disparate entities into one, is large. These savings should have been pursued, with the money saved reinvested into the water system. This would have avoided the need for water charges, or any other new taxation, while still upgrading the system.

Run public services efficiently, and don't treat public money like confetti.

7. Don't patronise people. There is a belief, held by some in Dail Eireann, that when people don't agree with government policy, it's just because they don't understand it. So they explain it to them, in simpler terms. On Irish Water, they explained, for example, that water isn't free. The people just needed to understand that all those reservoirs and treatment plants and pipes and engineers cost money - and if they just got that into their confused, protesting heads, then they'd be cool with water charges.

People can deal with more than sound bites - stop treating them like idiots.

8. Be wary of foreign agendas. The original memorandum of understanding for the 'bailout', between the European Central Bank and Ireland, contained just two demands for structural reforms. One of them was that we start charging households for water. In the middle of trying to avert a collapse of the entire eurozone banking system, charging for water in Ireland managed to be front of mind for Europe's Central Bank. At a time when one in eight Irish children now regularly experience hunger, the Troika was okay with sinking €539m into the ground for water meters. Does that strike anyone as a little odd?

Rest assured - the case for privatisation of water will be made, and probably not by an Irish government.

Put these things together, and we could have had a different approach: A proposal to merge the 34 water authorities should have been developed by then minister Phil Hogan and presented for consideration to the body responsible for the raising and spending of public monies - Dail Eireann. The plan should have included detailed financial estimates and significant cost savings, with those savings being reinvested into upgrading the water system. The body politic should have taken those discussions around the country, to see how people felt about them, then fed this back into parliament and government policy.

A final proposal should then have been developed, which would most likely have seen the following: No household water charges, no protests, no wasting of hundreds of millions of euro of public money, no individuals scared at what was going to happen to them when they couldn't find any more cash for this latest charge. And lots of additional investment in the water system.

Sunday Independent

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