Monday 20 May 2019

How water charges became the deal-breaker for a new dawn

But demands for refunds look set to plague Kenny, write Philip Ryan and Maeve Sheehan

‘A half-baked utility might not frighten politicians. But the clamour of citizens angrily demanding their money back may well chill them to the core.’ Getty Images
‘A half-baked utility might not frighten politicians. But the clamour of citizens angrily demanding their money back may well chill them to the core.’ Getty Images

Philip Ryan and Maeve Sheehan

It was the night before the latest pointless vote for Taoiseach. Fine Gael TDs and senators gathered for their parliamentary meeting in their dedicated room on the fifth floor of Leinster House. Enda Kenny trundled in, working his way to the top of the room, a handshake here, a quiet word there.

The Fine Gael members settled in, expecting to hear from Kenny on the latest tortuous machinations with the Independents on their price for joining them in government. So there was surprise when Catherine Byrne, the party's parliamentary chairperson, announced an unexpected vote on water charges.

Hadn't we put all that to bed since they emerged wounded but walking from the general election, TDs wondered.

Byrne explained the party needed to solidify its commitment to water charges. Before they got on with the other business, she wanted all of those present to vote to show their support. It would be a show of strength when Fine Gael faced off Fianna Fail in the ongoing but going nowhere talks on how to form a minority government.

Having defended Irish Water in the trenches during the election campaign, Fine Gael parliamentarians weren't about to give up on it now. The motion passed by an overwhelming majority.

The news of the vote leaked back almost immediately to the Fianna Fail camp. "We were scratching our heads," a senior Fianna Fail figure said. "Why were they trying this brinkmanship before the talks even properly started?"

Even Kenny's loyalists struggled to understand his logic: "He was setting us up for a bigger fall by calling the vote," a Fine Gael minister said.

The next day's vote did not produce a Taoiseach. But Kenny edged ahead of Micheal Martin because not a single Independent backed the Fianna Fail leader for the top job. After weeks of stand-off, Martin had to end the posturing and accept supporting a Fine Gael-led minority government, albeit with conditions.

It was no secret that top of Martin's list of condition of government was likely to be Irish Water, the hated utility established under Fine Gael's then environment minister Phil Hogan, which came with €180m set-up costs and a further charge to the taxpayer in the form of quarterly water bills.

Martin brought his party into the General Election promising to abolish Irish Water and scrap water charges for five years.

Sticking to his promise wasn't just about saving face. Martin knew if he did not return to the Dail with charges suspended his party would be faced with near-daily votes tabled by Sinn Fein on abolishing them. He would be forced to vote for abolition and the government would fall.

"We weren't looking for a big victory over them. We just wanted a situation where the government would last beyond week one or two," a Fianna Fail source said.

Fine Gael knew this too. But to bow to Fianna Fail's demands would be a humiliation too far.

Armed with the overwhelming endorsement of his parliamentary party, Kenny made a show of facing down Fianna Fail on Irish Water and took it right off the negotiating table.

As the talks dragged on for the best part of three weeks in April, both sides were well attuned to the real politic.

On Kenny's side, Frances Fitzgerald, Michael Noonan and Simon Harris played the good cops. Leo Varadkar, Simon Coveney and Paschal Donohoe were the bad - countering the more flexible approach of their ministerial colleagues.

For the first few bouts, Fianna Fail's A-team still ran rings around them. Jim O'Callaghan, Charlie McConalogue, Michael McGrath and Barry Cowen were on orders to be at their most truculent best. "We gave them what they want but then they would come back for more the next day," one Fine Gael minister whined.

Fianna Fail, on the other hand, felt Fine Gael should be grateful. "We are the ones putting them into government but they didn't seem to get that," said a Fianna Fail source.

By last weekend, the deadlock on Irish Water was so entrenched that both parties began hinting at another general election. It turned out to be more brinkmanship. On Tuesday, they struck a deal.

Charges would be suspended for nine months, while a new "commission" prepares a report for the Dail on how Irish people should pay for water in the future. Unpalatable as this was, it was tolerable to Kenny and his team - if they didn't like what the commission had to say, the Dail could always vote against its findings.

To Fine Gael's dismay, the next day Fianna Fail came back looking for more. Now they wanted the commission to examine whether the utility should be abolished, and they weren't happy with the nine-month suspension for charges either.

Even Noonan, the sleeping giant, was roused to anger. The talks ended with the acting finance minister telling Fianna Fail where to go: "He said we weren't going to roll over and told them to go talk to Sinn Fein if [abolishing Irish] water was so bloody important," a talks source said.

Leo Varadkar weighed in on RTE Radio the next day, dismissing Fianna Fail's readiness to cause an election over Irish Water as "ridiculous".

It was a calculated gamble on Varadkar's part. After his considered outburst, he returned to the Fine Gael den braced for a kicking but instead drew praise. "It was accepted that it needed to be said," said a source.

Fianna Fail protested weakly. The next day, the negotiations finally moved on from Irish Water to issues such as housing. These were "mere formalities", sources said. By evening, a joint press release announcing a deal for the formation of a government circulated around the jaded media in-boxes.

The detail has yet to be revealed.

But delightful optics of a deal the day after a kicking from Varadkar went some way towards soothing the smarting hides of Fine Gael. Having pushed them into voting their allegiance to the very issue that he later offered up in sacrifice to Fianna Fail, Kenny left his troops swinging in the wind, more demoralised than ever, and further tarnished his own fast-discolouring reputation within the party.

Exasperated backbenchers are not the only ones who have taken it on the chin for Irish Water.

The fudge on Irish Water that allowed Fine Gael and Fianna Fail to form a minority government has won a reprieve for taxpayers on water charges. But it will also leave taxpayers waiting possibly many more years for a properly working and funded modern water infrastructure.

Both Fianna Fail and Fine Gael sidestepped the fundamental issue of how we pay for and protect one of the State's most precious resources, by tossing the hot potato on to a yet-to-be appointed commission that possibly won't report until the next government is through its almost certainly short reign.

Alan Kelly, the Labour acting minister who is left holding Irish Water as his acting Taoiseach conspired to do it down, declared grandiosely last week that Irish Water fudge was "the triumph of mediocrity over modernism".

Rising in the Dail, he said suspending or abolishing water charges was "political, economical and environmental sabotage".

Fianna Fail could have made a stand over issues such as mental health or rural Ireland but instead chose a charge that "costs householders on average €3 per week".

Then his piece de resistance: law-abiding people who paid their bills will have to get their money back. And Fianna Fail and Fine Gael would have to tell them when and how. Irish Water had told him that almost 70pc of householders had paid for water charges - a figure Irish Water won't confirm.

A half-baked water utility of uncertain future might not frighten the politicians. But the clamour of thousands of dutiful citizens angrily demanding their money back may well chill them to the core.

Micheal Martin came at it from the other direction: rather than refund the 950,000 people who did pay ("dangerous" and "risky"), the government would have to pursue those who didn't.

Either way, Irish Water refunds will most likely come back to bite both parties unless a fair solution is found.

The new Public Water Forum, set up under the auspices of the water regulator and chaired by Dr Tom Collins, will consider this consumer inequity at its next meeting later this month.

Its most recent meetings have ironically been taken up with writing to political groupings as part of a broader consultative approach to find out where each stands on the fundamentals of water: how we pay, public or private. The parties have until this month to respond.

The Department of the Environment has separately totted up figures on what abolishing Irish Water would cost last week.

The taxpayer would have to come up with €1.7bn to bung the short fall from borrowings in its €4bn capital investment plan. Abolishing water charges alone would cost €1.4bn in lost revenue over five years. Calling short the metering programme would mean that leaks would go undetected, delays to the repair system, and impact on the incentive to conserve water.

The political leaders have got much of what they wanted. Kenny will stay in power - until his colleagues think it is timely for him to leave -and Micheal Martin remains happily outside government, all thanks to his hard line on Irish Water.

After the General Election, Adrian Kane led a delegation of 10 trade union activists to a meeting with Fianna Fail's Timmy Dooley. They were fed up with the "language" being used by Fianna Fail to describe Irish Water.

Kane, a Siptu organiser for Irish Water employees, said: "what we asked them to do was to stop using inflammatory language in talking about Irish Water. Once you lower the tone with terms like 'shambolic' and 'bloated', you open the door for other people to disrespect the company from the ground upwards."

The union reps want a referendum to ensure water remains a public utility, a "polluter-pays" charging principle that targets those who use more than they need to. At that meeting, Kane said, they asked Fianna Fail to clarify its policy on water: "We have yet to find out what it is."

Sunday Independent

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