Saturday 19 January 2019

We're back to a system that doesn't encourage conservation

Taoiseach Enda Kenny
Taoiseach Enda Kenny

Stephen Kinsella

With Irish Water, we have managed to achieve the worst of all possible worlds. The Government's credibility has been damaged, the public is enraged, the much needed water conservation and infrastructural investment will not take place at the scale required, and we have another padded semi-State entity on the State's books.

All of this from the Government that was going to bring us real, true reform following the third economic meltdown since the Republic was created.

Welcome to Irish politics. Where satire is never, ever enough.

There are 1.65 million households in this country. Not all of them have drinkable water. Many households have issues with lead levels and cryptosporidium, many rivers are filled with raw effluent because the treatment plants do not exist to purify the water. Ireland has not invested adequately in its water system for decades. Given these obvious policy issues you would think even charging everyone a flat fee for water would not be that contentious. But no.

The Government is attempting to do a good thing by introducing a vehicle to increase investment in this water network. The logic behind setting up a vehicle like Irish Water is, ahem, water tight.

The good idea, sadly, has been marred by more cock-ups than a Benny Hill marathon. Not only do I have no confidence in the people running our Irish Water, I wouldn't let them run a till in a chip shop. At least in a chip shop there's clarity over prices.

The communications disaster aside, up until very recently the provision of water to these 1.65 million households was not charged on a per-unit basis but paid for from general taxation. It costs around €1.3bn per year of taxpayers' money to provide this service to all households.

Under the previous system, my neighbour could go on holidays for two weeks, say, leave the taps running to avoid their pipes freezing, and come back with no penalty to themselves for their actions. Metering is without doubt the right thing to do.

Regardless of how you slice it, and no one dispute this, Ireland's water system needs more investment, of about €800m to €1bn per year for a decade, to bring it up to EU average levels of water loss and safe water provision for every single one of the 1.65 million households in the country. Irish Water estimated it needed €1.77bn just for the next two years in its capital investment plan and that isn't going to happen now and it will get an estimated €1.2bn over the next two years.

With operating costs of €900m per year and a capital investment of €600m per year, Irish Water just won't have the funds to do the job of work required under the new scheme announced by Minister Kelly yesterday. Irish Water's business plan and financial structure will need to be completely re-written over the next few weeks and months as well.

Result? After years of planning, tens of millions spent on consultants and protests attended by hundreds of thousands, as well as the whole of Government fixated on getting together a workable package for weeks, we have an expensive and under-resourced system which does nothing to encourage conservation, all at the same time. My neighbours can stick their taps on again with no penalty.

The measures announced by Minister Kelly do lay to rest three fundamental issues about water provision: first that it will eventually be privatised; second that charges will creep up over time, and third that personal information will be gleaned and sold out. But regardless of the clarity of these measures, as an economist covering the story for months now, having read all the documentation and listened to Minister Kelly's speech, I don't know precisely how much I'm going to be paying in my own house.

How's that for clarity?

Irish Independent

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