Monday 19 March 2018

€86m on consultants and now Irish Water staff to get bonuses

Hogan failed to monitor spending in new utility

Minister for the Environment Phil Hogan.
Minister for the Environment Phil Hogan.

Paul Melia and Daniel McConnell

All staff in Irish Water are in line to receive bonuses this year, despite the fact that the state company has outlayed tens of millions on outside consultants.

An Oireachtas committee heard that employees will enjoy bonuses for meeting targets.

The revelation came as it emerged Environment Minister Phil Hogan apparently failed to monitor the spending of €86m on consultants in setting up the new company.

All 510 staff, with the exception of managing director John Tierney who earns €200,000, will be entitled to bonus payments for meeting specific performance targets.

It is understood that employees in Irish Water's parent company Bord Gais will also receive bonuses -- some of which will be paid out in the spring.

Company sources suggested the performance-related pay could be worth up to 6pc of an employee's annual salary, if based upon the existing scheme in Bord Gais. Middle managers on salaries between €60,000 to €80,000 could earn a bonus of up to €5,000, but only if they made the top performance grade.

Workers are ranked on a scale of one to five and the bonus is based upon their score. But sources said the exact mechanism for the bonuses was still being worked out and it was not clear when the first payments would be made.

Irish Water will have 510 staff by the middle of this year and 299 have been recruited.

Mr Hogan is now under increasing pressure to explain why so much money was spent by the new utility with little, if any, government oversight.

His department was given full details of the proposed spending as far back as last March, but Mr Hogan failed to ask officials for a detailed breakdown on services required to set up the company.

He defended his role, insisting last night: "I do not micro-manage what is happening in Irish Water."

The Oireachtas Environment Committee was also told that the watchdog -- the Commission for Energy Regulation (CER) -- was not aware of the spending on outside experts, with only officials in the Department of the Environment briefed fully on the multi-million euro contracts issued to global consultancy firms.

The spend on consultants represents almost half the total €180m start-up costs for Irish Water which will begin charging homeowners for their water from October, with the first bills to be issued the following January.

In a lengthy appearance before the committee, Mr Tierney insisted that the Department of the Environment knew from the "very outset" that outside consultants would be needed to set it up.

Documents presented to the committee show the department was informed, briefed and authorised spending as far back as mid-2012, with details of individual contracts provided last March.

To date, some 28 companies have been employed on contracts, and almost €86m is projected to be spent by the middle of next year. So far, €50m has been spent.

The disclosures appear to contradict comments from Junior Minister Fergus O'Dowd last weekend that he only learnt of the €50m spend to date during a radio interview with Mr Tierney last week.

They also come amid mounting pressure for more transparency in the organisation which has responsibility for collecting at least €500m a year in water charges from domestic customers.

In a statement the Depar- tment of the Environment said that while Mr Hogan was aware it would cost €180m to establish Irish Water, he was not aware of the spending on consultants. He would explain his role during a private members debate today, with officials providing additional information during a meeting of the Dail spending watchdog, the Public Accounts Committee, later this evening.

"The minister was aware of the overall budgeted cost but not the detail," a spokesman said.

"The minister will provide full details of the department's role during the private members debate this week, and officials will also provide details at the Public Accounts Committee meeting."


However, last night, Mr Hogan said he, and the Cabinet, had approved €180m for the establishment of Irish Water and said that the monies spent on consultancy were "not just written reports".

"There is a perception that this money (€50m) was being spent on accountancy and solicitors' reports. That is not the case. I do not micro-manage what is happening in Irish Water.

"We as a government set out the policy decision about the overall amount of money that was to be spent on setting up this particularly public utility company," he said.

Mr Tierney insisted that the Government was told "from the very outset" that consultants and experts to build and design specialist computer programmes, including billing systems, would be required.

"Bord Gais advised Government that this type of support was critical to deliver this programme and achieve the targets set in the demanding timeframe," he said.

It also emerged that the CER, which will regulate the water sector, was only given an overall statement on projected spending -- with a spokesman telling the Irish Independent it would adopt a more rigorous examination to spending in the commercial semi-state.

"The CER did not receive a breakdown of the sums paid to consultancy firms," a spokesman said. "Instead all that was provided was a list of spending under certain headings, such as IT, customer registration and customer billing.

"Only business function headings were provided and there was no breakdown of what was consultancy or non-consultancy related.

"The CER is now undertaking a more rigorous assessment of Irish Water's spending."

Mr Tierney said the bonuses for Irish Water staff would be less than those in utilities in other countries but he did not give details.

Further details of how Irish Water has been established also emerged. They include:

* As many as three former county managers are employed in the utility.

* A loan of €250m was drawn down from the National Pensions Reserve Fund to pay start-up costs and fund the metering programme.

* Some 510 staff will be in place by next May, with 299 already recruited.

* Some job losses are expected among local authority workers working in the water sector, but there will be no compulsory redundancies.

Committee members were furious about the lack of information made available prior to Irish Water appearing at the committee, with Fianna Fail environment spokesman Barry Cowen asking why detail was not provided to TDs who had asked parliamentary questions.

He said: "You've been afforded hundreds of millions of euro of taxpayers' money to set up Irish Water. I'm puzzled as to why I get no answers.

"It appears the only reason we're here today is because you answered a question from a radio journalist last week."

The Government has previously said that Bord Gais was chosen to establish and oversee Irish Water because of its utility expertise.

The company said that 55 staff worked on the Irish Water project, which resulted in savings.

Irish Independent

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