Sunday 18 February 2018

Flood of water charges coming

THE FOGGY DEW: The Ha'penny Bridge. Photo: Ken O'Halloran
THE FOGGY DEW: The Ha'penny Bridge. Photo: Ken O'Halloran
Over half the senior management staff in Irish Water have been recruited from local authorities
Richard Curran

Richard Curran

WATER is on everybody's mind in the opening days of 2014 as we brave the winter deluge of rain and floods.

But last week also saw a new State company take charge of the supply of fresh water into our homes and businesses. As the trickle of news emanates about the early days of the new commercial State company, I fear we are all going to be completely hosed when it comes to the price we pay for water in the years ahead.

Setting up a new national water company is a good idea. It doesn't make sense to have 34 cash-strapped bodies providing water for a growing population.

It also makes sense that consumers should pay for water as they use it. Unfortunately, somebody has to pay and the creaking state of parts of the water infrastructure highlights the need for big investment.

But we haven't really set up a brand new water authority that will provide fresh water to households and businesses in the most cost-effective way. Several facts reflect a "business as usual" feel about all of this. The only big noticeable change this year will be the installation of a meter and a follow-up bill.

Responsibility for water supply switched to Irish Water on January 1, 2014. But the local authorities will continue to supply the water, under contract from Irish Water, with the same staff, management etc, for a kind of transitional period of 12 years.

The staff needed to run an effective and efficient water supply service should have transferred over to the new company.

Those who were not needed would have to be let go.

We now have over more people working on water in Ireland than we did six months ago. Surely we should need fewer. Getting the private sector to install the meters was an efficient thing to do, but other than that, the approach is flawed.

A number of senior management at the new company were hired from the local authorities.

It is only natural that the organisation would draw on existing expertise in Ireland, but only four of the nine-person team charged with improving the service were recruited externally.

Half of the 203 staff recruited so far have come from local authorities.

'Why is it not enshrined in legislation that

Irish Water cannot charge people for a below-standard product?'

Families will get their first water bills in a year from now. What can they expect? Figures of around €300 to €350 per year have been touted around. But they are paying for Irish Water already, with the diversion of the property tax payment going towards the sector.

You can also forget what the bill is in 2015 because a combination of massive water investment and obvious inefficiencies in the model, all point towards major increases in the following years.

It costs around €1bn per year to treat fresh drinking water in Ireland. In 2009, 41.5pc of that water was unaccounted for, suggesting it is most likely lost in leaks. This was twice the OECD average.

In the Dublin area, the River Liffey is pretty much maxed out and large new water solutions will have to be found for a growing population.

In the UK, where a botched privatisation left households screwed, companies made super profits. People living in lower population density regions pay more.

Prices increased by an average of 102pc in the 10 years after privatisation in 1989, and by another 100pc in the following decade.

Irish Water will not be allowed disconnect people for non-payment, which seems fair. But in the UK, a sizeable portion of the water bill covers the cost of all those who do not pay up. The same will happen here. In Britain, some people cut back on their water use to reduce their bill, but found their annual charge was still rising because lots of people just won't pay.

Irish Water will not reap super profits, but it is a commercial State company that will have to financially justify itself. The greater its inefficiency, the higher your water charges will be.

There is another issue here, and that relates to quality. Surely, you cannot charge people for a sub-standard product.

An Environmental Protection Agency report found that last year it was forced to issue 42 boil water notices and restrictions affecting about 50,000 people.

In Roscommon, 15,443 people have to boil water before they can drink it because of concerns over a cryptosporidium outbreak.

Four legally binding directives were issued over supplies in Laois and Wexford last year and Mayo County Council was prosecuted for failing to act.

Environment Minister Phil Hogan has assured the public that the Government retains the right to issue directions and order Irish Water to waive charges in cases where homes are put on 'boil water' notice.

That is all very well, but why would a government minister need to get involved? Why is it not enshrined in the legislation that Irish Water cannot charge people for a below-standard product?

There is a genuine opportunity here to provide a better service for Irish business and households and fix many of the problems inherent in the water sector. It may have been chosen for expediency, but the model is a recipe for inefficiency and we could all end up paying for it.

Talk of capital bubble is way off the mark

THE gap is widening between house prices in Dublin and the rest of the country, the latest figures show. Some think this is a new bubble in the capital, others think it is wonderful news of a re-invigorated property market.

It is neither.

The number of houses changing hands in Dublin remains quite small. It would only be a bubble if it were financed through excessive borrowing. If more houses come on the market in Dublin in 2014, the rate of house price growth will probably slow.

If you exclude the Dublin phenomenon, house prices in general are doing exactly what they should be doing -- stabilising, bumping along the bottom, with gradually more of them changing hands in some areas.

We should hope to see more houses being bought and sold -- and stop obsessing about the prices.

Forget the Trojans, motivate civil slackers

PUBLIC Expenditure and Reform Minister Brendan Howlin couldn't have chosen a worse time to talk about bonuses for civil servants.

He may have a point about some people having to do "Trojan" work -- but surely the best way to deal with that is to tackle those who aren't doing enough?

Howlin did also talk about punishing the poor performance of those in the civil service who are not pulling their weight, but as ever, the problem is who decides.

The old civil service bonus system was deemed a failure after a 2012 review found the performance of only 0.08 per cent of those eligible to be "unacceptable" and a miniscule 0.84 per cent were found to be in need of improvement.

While the bonuses are supposedly designed to reward extraordinary performance, all but four people who applied for bonuses between 2002 and 2007 received them.

Typical awards under the old scheme were of similar size, suggesting that not only had everybody exceeded expectations in their performance, but they exceeded them to roughly the same degree.

Why pay bonuses when there is no evidence of a mass exodus from the civil service to private enterprise? If anything, more people are moving in the opposite direction.

What business -- that is broke -- would look to reward the better performers with more money, as a priority, instead of focusing exclusively on those who are not putting their shoulder to the wheel?

Irish Independent

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business