Fergus O'Dowd (Louth, Fine Gael) | Oireachtas source

I am pleased to be here again today to discuss this very important issue. I acknowledge that we had a very important debate over a number of days here in the Seanad and I believe many of the issues were dealt with there. I thank the Members for their views and I hope the replies to their questions provided transparency.

Water charges have arisen from an agreement with the troika done by the previous Government. In December 2010 they agreed that in advance of the introduction of water charges, the Government would undertake an independent assessment of transfer of responsibilities for water service provision from local authorities to a water utility and prepare proposals for implementation as appropriate with a view to starting to charge in 2012.

When we came into government we negotiated that and, unlike the Fianna Fáil and Green Party Government of the day, we ensured that the charging would commence from 2015, retrospective to the last quarter of this year. I am grateful for this opportunity to address the House on the issue of the costs associated with the establishment of the company.

When the legislation was debated in both Houses last year I outlined the accountability of Irish Water or Uisce Éireann to the Oireachtas, as set out in the legislation. I highlighted the scope of Members to use the committee structures to the fullest extent to reinforce this accountability. Furthermore, on the last evening of the debate, on Wednesday, 18 December, I read into the record the comments of the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, who had stated that the Freedom of Information Act would apply to Irish Water. I repeated this in my comments on the day - they are on the record - about transparency in terms of freedom of information.

The other question that arose was the fact that the annual report would come before the Oireachtas every year and there would be an opportunity for all Members to debate it. There would also be an opportunity for the Oireachtas to debate fully all aspects of the water services investment programme. In other words, what was and was not planned and what was in and what was not in would be a matter for discussion in the Oireachtas. I also said that representatives from Irish Water could be brought in to any Oireachtas committee at the drop of a hat - I believe they were the words I used - to ensure accountability and transparency at every stage of its involvement.

Critical to all of this is the fact that the company is an important public utility. This is the first time a utility of its size and importance has been set up within 18 months. The establishment of Irish Water is a long-term investment that will deliver the necessary water service infrastructure and quality of service required to meet legal compliance, demographic and industry needs. Managing our water resource effectively will provide us with a key competitive advantage in investment. As I have said repeatedly, that is critical to meet the needs of population and economic growth. For example, water is particularly important to the information and communications technology, pharmaceutical and food industries. We have had a debate in the House on the situation in the greater Dublin area, the potential shortage of water from 2020 onwards and how it is critical to ensure a proper water supply in this region.

We need to address long-standing compliance issues as well. In 2011 some 36% of our wastewater treatment plants did not meet effluent quality standards. Indeed, the European Commission has initiated pilot infringement proceedings against Ireland.

Last week, John Tierney attended the Oireachtas Joint Committee on the Environment, Culture and the Gaeltacht and the Committee of Public Accounts to outline the total budget for the establishment of Uisce Éireann, which had been submitted to the Department of the Environment, Community and Local Government in September 2012. Mr. Tierney also detailed the processes by which the Department, in consultation with others, exercised control over the programme expenditure. He outlined that a key Uisce Éireann objective was the achievement of significant operational and capital efficiencies of €1.1 billion in the period 2015-21.

The total budget for the establishment of Uisce Éireann is €180 million, which includes a contingency of €30 million. The budget is being funded by a commercial loan from the National Pensions Reserve Fund. The overall budget was outlined as part of the funding issues considered by the water reform sub-committee of the Cabinet sub-committee on economic infrastructure.

The budget has also been examined by the Commission for Energy Regulation. The CER is the authority that regulates all costs. Any expenditure that Irish Water or Uisce Éireann may make on any issue must be proofed and agreed to by the energy regulator. If that is not the case and if all the funds or moneys that the company spends are not deemed to be reasonable and appropriate, then they cannot and will not apply to any consumer. The commissioner was asked for his opinion. The opinion he gave was that most of the proposed establishment costs appeared to be reasonable and could be expected to result in value for money from a customer perspective. The commission has also advised that the activities undertaken by Uisce Éireann are core to delivering the objective of a national integrated water service provider with all its associated benefits. The commission will be conducting a more in-depth view of all the costs during 2014 because now it has the legal authority and statutory powers to do so. The Department has put in place arrangements to ensure that commitments made in 2014 will meet the tests of cost reasonableness and value for money for consumers. NewERA, the CER and the Department of Public Expenditure and Reform are involved in these processes.

Bord Gáis Éireann tendered at European Union level for external provider services to support the delivery of Uisce Éireann and water services reforms. Following its establishment, Uisce Éireann entered into several fixed price contracts arising from the tender processes undertaken by Bord Gáis Éireann. The main contracts are as follows: IBM has three separate contracts totalling €44.8 million for customer and asset management systems; Accenture has three contracts totalling €17.2 million for the development of business and operational systems; Ernst & Young has one contract totalling €4.6 million for services relating to finance, governance and regulation; and KPMG has two contracts totalling €2.2 million for quality assurance services. In addition, there are contracts for legal services with A&L Goodbody and McCann FitzGerald totalling €3 million. The total budget for all the service contracts is approximately €85 million.

The Secretary General of the Department of the Environment, Community and Local Government also addressed the Committee of Public Accounts last week and was able to clarify that no Exchequer funds were provided to either Bord Gáis Éireann or Uisce Éireann in 2012 or 2013. The Department has worked closely with NewERA, Bord Gáis Éireann and Uisce Éireann to ensure that the costs arising in putting the company and its systems in place will be far outweighed by the benefits over time to consumers, the economy and the environment. The Department has recognised from the outset the need for independent scrutiny of the position by the Commission for Energy Regulation and has ensured that the oversight arrangements put in place have been designed to feed in to this process and ensure, ultimately, that the costs arising must provide value for money for the consumer. Again, I thank the House for the opportunity to address Members and I look forward to hearing the contributions during the debate.