Ms Maria Graham:

In overall terms, the Irish Water business plan talks about €1.1 billion in operational efficiencies, of which this proposal is one element. From our perspective, this must mean efficiencies to the State. When we talk about savings, our expectation is that the savings that are made by Irish Water are not made by placing costs on local authorities. We are looking at it from the State's perspective. A claim of a saving of €70 million per annum therefore means a €70 million saving to the State and the Exchequer. I mentioned in my opening statement that as this process moves forward we are conscious of the impact of the proposals on local authorities. Obviously if they are left with stranded costs in areas that currently funded, that would impact on other local government sectors. Throughout this process we have consistently tried to ensure that when water services were transferred from local authorities, their costs were met by Irish Water. Irish Water is fully meeting payroll costs, pension costs and a contribution to our overheads. Costs we are consistently meeting include loans taken out by local authorities before Irish Water, non-commercial loans, the cost of asset transfer, and funding offices for local authorities' water services transition offices. We have brought back commercial rates under the Water Services (No. 2) Act 2013, but the local authorities have received compensation. We have been trying to ensure that there is a level playing-field on this issue.

Our examination of other options was mentioned. A member asked about the assessment process. The speaker is correct in that when the service-level agreements, SLAs, were initially negotiated, the idea came from the independent assessment, which recommended a shorter period for the SLAs. In 2013, the period of commitment became 12 years. That was reflected in the Water Services (No. 2) Act 2013, which gives the potential for them to be renewed and also provides for some review mechanism. With all that has been happening in this are over the last several years, that has been under ongoing review. In regard to the models that have been examined, Mr. Grant and Quinn will talk more about their experience of the SLA. The experience from both sides is pertinent. Obviously there are two parties to the SLAs. They are contracts.

I made reference to a stand-alone company. The Government has not decided to separate, but we have consistently ensured that any decisions do not pre-empt that happening at some point in the future, if that was in the best strategic interests of both water and gas. From the outset it was very important to show that we were leveraging the experience of a utility, because a new utility from the gas sector was a big thing to set up. People have been working very well in that regard.

In regard to the local government sector I have spoken about the financial aspect. Certain functions were taken from local authorities in 2013. That came from an independent assessment. It looked at a range of issues and models and recommended that there should be a single utility. That is what we have implemented in the Water Services (No. 2) Act 2013. As I said, the SLAs were recommended as a transition mechanism within the independent assessment, but they evolved throughout the process. This process is not about taking functions away from local authorities, because statutory responsibility rests now with Irish Water from beginning to end. That is irrespective of the fact that Irish Water has service-level agreements with local authorities and local authority staff are operating on the ground. The operation from the beginning to the end is the legal responsibility of Irish Water. Within the accountability which was described at the outset of this meeting, when something goes wrong or people are not happy with the service, the Oireachtas and the Department expect to direct their questions at Irish Water. The transformation and evolution of the utility does not really take a function away from local authorities. It is about determining the best mechanisms for Irish water to deliver on its statutory responsibilities in the future.