Oireachtas Joint and Select Committees
Tuesday, 7 February 2017
Joint Oireachtas Committee on the Future Funding of Domestic Water Services
National Federation of Group Water Schemes
I must read a note on privilege. I draw the witnesses' attention to the fact that, by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee.
However, if they are directed by it to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or an entity by name or in such a way as to make him, her or it identifiable. Any submission or opening statement submitted to the committee may be published on its website after the meeting.
Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.
At the request of the broadcasting and recording services, witnesses and those in the public Gallery are requested to ensure that for the duration of the meeting their mobile phones are switched off completely or switched to aeroplane, safe or flight mode, depending on the device, and not just put on silent mode.
I welcome Mr. Colm Brady and Mr. Brian MacDonald from the National Federation of Group Water Schemes. They have submitted copies of their statements which have been distributed to members. I invite committee members to ask questions.
I welcome our guests and thank them for making themselves available today. We all have our views on what constitutes excessive usage. I appreciate the Commission for Energy Regulation will be tasked with setting the figure. The witnesses specifically referred in their submission to the importance of a dissuasive argument for those who are prone to wasting water, or even to determine whether people are wasting water. What are the views of the witnesses on the level at which this should be set?
We have a very obvious question of fairness, particularly to those who provide their own water supply, such as group water schemes throughout the country. They provide a significant saving to the Exchequer. In the long term, it is most likely cheaper for them to provide the water supply to their communities than for the State to do so in certain instances. Otherwise, I would argue, group water schemes would not exist. How do we square this circle? How do we deal with the basic inequality we will have if the current arrangement is adopted through the expert report, with regard to people paying for excessive usage versus those in private group schemes who will pay a charge regardless? I understand there is State subvention, and this has been restored as of the suspension date to 2015 levels. I know the witnesses are calling for additional subsidies, and it is in the report which is helpful no doubt to group water schemes. What are the views of the witnesses on this?
Do the witnesses believe it is possible for private group schemes to provide the service the State provides in housing estates throughout the country cheaper than the State provides it? Do they have a view on how this would be achieved? I am sure they can appreciate we have spoken to the commission, Irish Water, NewERA and departmental officials on numerous occasions in recent years, where the total cost of the provision of the water and the wastewater networks throughout the State has been highlighted. All the while, hundreds of thousands of people already pay for water and their local community water services. With very few exceptions, certainly in the advice with which we have been provided, I have seen examples of excellence in the service provided by group water schemes, no more than by State providers.
Do the witnesses have a view on the ongoing sustainability of the group schemes they represent?
Mr. Colm Brady:
I will deal first with the second issue on fairness and equity. I presume the Deputy is talking about Irish Water and other service providers versus the group water scheme sector. As mentioned in our submission, since the late 1990s when domestic water charges were abandoned on the public water supplies, the group water scheme sector has been getting a subvention towards the cost of supply and treatment of domestic water services. That has been in place since then. Group water schemes come together as a group, assess their own individual overall costs, assess what they can get through the subsidy and then agree among themselves as a group with the leadership of the committee of management or board of directors as to what they are prepared to contribute directly towards the costs of their group water supply scheme.
That subsidy has been reviewed a number of times since then. We have a partnership arrangement with the Department of the Environment, Community and Local Government, as it was, and now the Department of Housing, Planning, Community and Local Government. We review that on behalf of the schemes with that Department. In all instances we have had a good relationship with the Department and found that it takes our views on costs into account. That review has always been an upward review, apart from the time when domestic water charges were reintroduced when we had a reduction in that subsidy.
Irrespective of what comes out of this process, whether it be a charge based on excessive usage, a charge that is based on a charge that is there currently but suspended, or no charge at all, we would expect to sit down with the Department. We have received assurances from the Department, and I am sure all the people here would give us the same assurances, as to what this committee would recommend.
We have been given assurances that we will get a review of that subsidy and that situation. We have flagged, and we always would flag, additional charges that have arisen since the previous review in 2008. We refer to some of those charges here and we would expect those additional costs to be taken into account in any review. The equity arises in the operation and maintenance cost. We would expect that equity would continue to apply through that process.
Group water schemes have been getting capital grants towards the capital costs of new group water schemes and upgrading old group water schemes. The old group water schemes I am talking about in were installed in the 1960s, 1970s and 1980s. Those group water schemes were effectively in a mess in the late 1990s and were the subject of a European Court of Justice case. There had always been grants for the group water scheme sector, but at that stage the grants were significantly increased. A serious amount of work was done under that rural water programme, as it was, again in partnership with the Department and local authorities through the national rural water services committee. That work has been done.
Without fear of contradiction, I can say that at this stage the group water scheme sector, through that grant aid process, is probably in a better position from an infrastructural point of view than Irish Water. All the reports we have seen to date indicate that Irish Water is in need of serious investment in order to bring its infrastructure up to date. We are ahead of the posse there and have achieved that through that grant aid. We would expect that grant aid to continue through the process if that level of support is there for Irish Water and its capital costs.
Group water schemes contribute towards the initial capital costs and the capital costs of any improvements and replacement infrastructure. It is a programme that is very focused on getting value for money and only replacing infrastructure where it is needed. Around all that, through that rural water programme, the whole area of metering came into play big time.
Group water scheme committees of management would have been iffy about metering in the beginning. Through the process of metering, and I mean individual meters for tens of thousands of members across hundreds of group water schemes right around the country, it immediately became very evident that most or at least a very high proportion of the excessive usage or leakage, whatever we want to call it, was on the consumer side of the meter, particularly when the contribution mechanism based on volume of usage came in. Through that, the usage and demand came down. The amount of infrastructure required also came down, such as reservoir storage. There were instances where projects for planned reservoirs could be abandoned because of the reduction in usage. That was one of the savings. There was a saving for operational maintenance costs since the more water put through a system, the more maintenance required. That has come about through all that. Group schemes would say, without contradiction, that universal metering as a management tool and as a water conservation tool on their group water schemes, combined with a reasonable charge on usage over and above a free allowance, has been the single driving force behind the overall transformation of the sector.
I will address excessive usage and what it constitutes. Our research on the group water scheme sector, and we can only deal with the thousands of members on group water schemes that we talk about, shows that the average usage of a household would range from about 120 cu. m to 150 cu. m per annum. That would be based on metered usage in the context of a metered water charge over a particular free allowance.
I am sorry to interrupt Mr. Brady. He has been giving really valuable information and that is why I have let him roll on for over ten minutes but I also want to give others an opportunity to come in, if I may. Please keep the answers as tight as possible. We have less than half an hour left.
Mr. Brian MacDonald:
I will come in on the issue of sustainability. I think it is a very good question. We still have issues to resolve. We have a lot of very small rural water supplies out there. We are working with the Department and it is very much a partnership approach. It is actually 20 years ago this month since the co-operative, collaborative approach to subsidy arrangements was made for group water schemes. One of the major focuses of the National Federation of Group Water Schemes in the time ahead is to ensure sustainability and we have begun a process of rationalisation within the sector. We are not content with being as good as Irish Water. We want to be better than it. There is evidence out there that a lot of schemes have attained that and we are going to continue on that road.
I thank the group for making the presentation. It was most impressive and useful. The main recommendation of the Expert Commission on Domestic Public Water Services and the duty of this committee thereafter is to find a funding mechanism to deal with the implementation of that. In recommending that the State become the main customer for provision of domestic use, it also, to inform Deputy Farrell, recommends and asks that we seek greater parity and equality for those who fund that from their own resources in addition to State help and assistance. That point has to be made. It is our duty and what we want to do. We want to get some information from the witnesses that allows us to be in a position to make a recommendation that can close that gap. It has not been closed in recent years, I would add.
I have some specific questions to help to do that. Has the National Federation of Group Water Schemes calculated the estimated cost per household of a group water scheme bill? In other words, what is the average bill throughout the country? Has it calculated that and can it be made available to the committee? How much would complete subsidisation of group water schemes cost per annum, to equalise completely with the public provision? What is the current average subsidy per group scheme from the State? How does that equate to the customer, the end user?
In other words, what is the average subsidisation in respect of each user? We will end up with subsidisation if we proceed along the road in respect of public supply and we did not compare that with existing subsidisation of the rural sector so that we can seek to address parity, if necessary. The agreement we reached with Fine Gael put a pathway in place to deal with this issue and allow the Government to continue to function so as to deal with many other pressing issues, as we saw last night, for example. Can the witnesses confirm that grant aid was reinstated when we suspended charges? Did it increase because a commitment was given that it would increase? As authors of the agreement, we need to know to ensure that what we were seeking at that time, namely, to ensure greater parity and equality, has been achieved. This committee has a greater responsibility to ensure greater parity and equality in the event of it making a recommendation to the Dáil for its acceptance.
Mr. Colm Brady:
In respect of the Deputy's final point regarding confirmation that the grant aid has been reinstated, there are two different type of schemes. There are schemes that get water from Irish Water and those that produce, treat and supply their own water. In respect of the schemes that got their water from Irish Water, prior to the introduction of charges, the subsidy was €70 per household. This reduced to €40 per household from 1 January 2015 when the charges for domestic water supply were introduced.
Mr. Colm Brady:
It was reduced when the charges were introduced. Subsequent to the charges being suspended, it was brought back up to the same level. It was the same for the privately sourced group water schemes with the basic subsidy of €140 being reduced to €95 and subsequently restored to €140. The subsidies were restored in full from 1 January 2016.
In respect of the maximum limits on capital grant aid, the current capital grant is €7,650. It was increased by €1,000 for new group water schemes possibly two years ago but in the past 12 months, it was increased by €1,000 for existing group water schemes. That is a cap. One does not get €7,650 unless the cost of one's project is over the full cost of €9,000 per household.
Mr. Colm Brady:
Per household, and one made a contribution of 15% towards those costs for the scheme. That is where the figure of €7,650 comes from. That is an increase in capital grant aid. I do not have the calculations relating to subsidy costs per annum. In respect of the subsidy, including the costs of administration on the local authority side of the subsidy and the rural water programme and some other minor elements of that, the overall subsidy for the group water scheme sector is about €21 million to €22 million.
We need to be able to drill down here to get the average group scheme subvention. Knowing the average bill, we want to find the average subvention in respect of each household. It is not a problem if Mr. Brady does not have that information with him today but the committee would like to have it.
I also wish to emphasise that, whatever the outcome of the committee, there has to be absolute parity between those in group or private water schemes and those not in them. That is probably the priority for all of us in this particular discussion. One of the things I was interested in asking about, and again a written response is fine, is the gap between the subvention and the actual cost. If the subvention is €70 per household, what is the total cost of the scheme and what is the difference?
Exactly; just to emphasise it.
Likewise, with the capital grants, if a constituent in a large urban area of Dublin builds his or her own home, there is a cost to connect to the water mains. Currently he or she has to pay the local authority and Irish Water and those costs are now increasing. In South Dublin County Council, people have to pay i€3,000, €4,000 and, sometimes, €5,000 now. I would be interested to hear more from Mr. Brady in his detail written response about what kinds of works those capital grants go towards. What do they cover? What do they not cover? This will allow us to try to make a comparison between the capital cost for a household in a group water scheme in rural Ireland versus those in an urban area.
Mr. Brady's submission also referred to the reduction in consumption, which in some cases was between 60% and 80%. I would be interested to know if that was a result of the detection of leaks, whether inside the private property or otherwise, or a change in behaviour and a reduction in usage. Has Mr. Brady any data on that?
Some of us in urban areas in Dublin still have group water schemes. My experience is that some very much like being in group water schemes and do not want that to change. They want equity and parity in terms of whatever outcome there is for others. However, I also deal with people in group water schemes who would prefer to be in the public water system. The difficulty, of course, is that historically the local authority was not able to fund the work, so in a sense they are outside the public water scheme but not by choice. How reflective are those two experiences of Mr. Brady's affiliates? Is there a desire among some to retain their current position but, obviously, to improve its funding? Do others want to be part of a public water scheme or does it depend on the circumstances and the funding that would allow it?
Mr. Colm Brady:
For the most part, where there are people prepared to do the work and manage the schemes on behalf of the members, there are those in group water schemes who would like to remain in them. There are quite a number of group water schemes that have made the decision or are waiting to make a decision to apply to be taken in charge by Irish Water, as it is now, under the terms of the Water Services Act. We have worked with Irish Water and the Department, in a partnership way, to develop protocols and procedures in this regard. Those protocols and procedures are as good as finalised at this stage and work has started on taking over those schemes. Obviously, those involved in the schemes would like to move this forward more quickly. We will work with the Department and Irish Water to do that but, of course, funding comes into all of this.
On the reduction in demand, it was a combination of leakage and change in practices, but it was all down to the fact that, whether they fixed the leak or changed their practices, with the volumetric charging in place they were going to have a cost. Even I, in my situation at home, came across a leak that I would not have come across only for my having a meter in place. It could potentially have cost thousands over years. As I knew it would happen and was aware of the implications for the environment and every other thing, I made sure to fix the leak.
That is what we are experiencing all the time. The other questions have been asked.
Mr. Brian MacDonald:
On the specifics, we reckon that about half the leakage on any distribution main was found on the consumer side of the connection. It was not quite half in some cases and more in others. The level was pretty high in some schemes, and there was very high usage. As members will see from the submission from the federation, there is a lot more pipework in a group water scheme per household than there is for households under Irish Water. Therefore, the measure was essential. Obviously, the bulk meter did a significant job in identifying sections of main posing a problem. The tendency in the local group scheme was to believe the system was leaking like a sieve, leading to the view that the pipework should be replaced. Replacing the pipework would not have actually solved the problem because most of the loss was not in the pipe at all but on the consumer side of the connection. We could not have identified that without the individual meters. That explains what we very much tend to favour. At a number of seminars we had recently, we asked group scheme administrators which of all the technological advances of recent years has been most significant. Without exception, they replied it was the introduction of individual metering.
I thank the delegates for their submission and for attending. I read Rural Water News. There is a very important editorial in it that is written in bold by the delegates. I agree with it very much. It states that to ignore the group water scheme subsidy arrangement introduced originally when public domestic water charges were abolished in the late 1990s leads to a one-sided debate and an unnecessary and unhelpful urban–rural division on the water issue. The good news, it states, is that advance payments at the restored subsidy rate were paid out to schemes in mid-December by way of a supplementary payment. For me, that is very important because there has been an attempt to create an urban–rural divide, which is not at all helpful. Those of us who campaigned against water charges did so for everybody. Is it fair to say the fortunes of those on group water schemes, in terms of the amount they end up paying out of their own pocket, have fluctuated in line with those of people in the public water scheme, albeit not to a point of complete fairness because I do not believe such a point exists? When water charges were abolished, the subsidy was introduced. When water charges were reintroduced, the subsidy was cut, and when water charges were suspended, the subsidy was increased again. Have the interests of those on group water schemes not fluctuated together with those in the public scheme?
Mr. Brian MacDonald:
That is actually true. Following the report of the expert panel, there was a tendency to present those on group water schemes as victims. We do not see ourselves as victims. We have worked under various Ministers from various parties, and the Department has consistently been a huge boon to the scheme. That was not being reflected in the commentary immediately after the report of the expert panel. All sides of the House recognise that the schemes are doing a job.
The subsidy associated with the group water scheme is, of course, predicated on the existence of free water, as they call it, on the public side. We do not take issue with that. We do not take issue with the recommendation that it be financed through the public Exchequer. Clearly, many schemes could not function without subsidisation at present. It is important to us but we have to come back to what Mr. Brady mentioned in respect of our relationship with the Department. We have total confidence because, over the years, a partnership arrangement developed in which the concerns of the group water scheme sector have been reflected. We see what is happening on the public sector being reflected. In the review of subsidisation in 2013, a set of principles was agreed. We would certainly be up to submitting them. Among them is the principle that equity will always be maintained for the group water schemes sector. Therefore, we are very confident that the Houses will reflect that.
That is very helpful. To follow up on that, I have a point related to some questions already asked. If we arrive at a position in which those under Irish Water do not have any charges, we must have an arrangement whereby, at least in terms of current expenditure as opposed to capital expenditure, those in group water schemes do not end up paying charges from their own pockets. Some of Deputy Barry Cowen's questions were on figuring out how much that would cost. The question on the average bill for an individual is very important.
I have heard that the average charge, with the subsidy, would be around €100, €120 or €140. Is that in the right ballpark? If subsidies were doubled, at a cost of €25 million, we would probably be able to eliminate current charges. What is the experience of the witnesses in regard to this question?
Mr. Colm Brady:
We will come back to the Deputy on the average charges because we do not have the figures to hand. On the question of eliminating charges, because of the success of the model until now, I cannot see group water charges going back to a situation where they do not have a direct contribution from members, agreed on the basis of usage. The Deputy is right that a doubling of the subsidy would mean an extra €20 million or €21 million for the group water scheme sector.
Mr. McDonald set out the principles, which are fair treatment between drinking water consumers and the public group water sectors; recognition of particular cost structures and networks; subsidies continuing to be tied to conditions which support customer charters, compliance and optimal management; ensuring the combination of capital grants and operational subvention to provide schemes with the capacity to sustain drinking water quality improvements; arrangements which are as straightforward as possible and which recognise the scale of the sector; and promoting water conservation and source protection. We are confident that those principles will apply in any review of the subsidy. Our organisation was founded back in 1997 on parity and equity and we have fought for those since then. We have worked with the Department and with successive Governments and Ministers, we have been very successful and we expect to continue with that success. We are delighted that the expert commission recognises that and we are delighted with the response we are getting from this committee and the fact that its members are also concerned about equity and parity.
I note what delegates said on the success of metering for group schemes in terms of reducing demand and contributing to conservation and sustainability. It is very important for the committee, in its deliberations, to have some understanding of a typical bill for a person on a group water scheme. If we are to be treated fairly and equitably, which is what we all want and which is a recommendation of the expert commission, we need an understanding around those figures. There will be realism about our recommendations as to how this may be subsidised by the State. I acknowledge the work done by group water schemes on supply maintenance and the treatment of their own water supplies and this needs to be continuously maintained and subsidised. We will have to come up with recommendations to the Dáil on how we can treat group schemes fairly in relation to others on public water supply. It is a very important point and I ask the witnesses to come back to us, either with averages or typical bills.
Since the establishment of Irish Water, have the witnesses seen much consolidation among members? Have there been many examples of taking in charge? I am from Waterford where there were a substantial number of individual schemes and there has been some consolidation.
Mr. Colm Brady:
There are two examples of consolidation. One is within the sector itself with group water schemes amalgamating to generate economies of scale and the Senator referred to the other example, which is consolidation with Irish Water. Many group water schemes supplied by Irish Water have considered asking the latter to take them in charge and there is provision under the Water Services Act 2007 to apply for this.
Mr. Brian MacDonald:
There are approximately 200 schemes that have requested taking a charge. I think that is the key issue, and hopefully that will be progressed. There is a long lead-in period to it, getting all the ducks in a row. That is likely to begin, we hope, sooner rather than later, because many of the schemes are orphan schemes which are in a diabolical state with no committee of management. Sometimes they are connected to one another. There is a lot of work to do there, but the federation has been working closely with Irish Water and with other stakeholders, including the Department, to progress that as soon as possible.
In terms of equity and fairness, I think no Oireachtas committee will ever put a value on the time and voluntary effort that the committee members of the federation have put in over many years to the provision of water in our communities, and I do not know how we can square that circle in terms of acknowledging the value of that input. It is a pity that the Right to Water campaign was not here today. It was invited by this committee but it failed to send delegates. It is a pity that it is not here to listen to the contributions the members of the federation have made to society and their communities.
Mr. Colm Brady:
-----group water schemes have worked in a largely voluntary capacity. The other issue in regard to that, and where charges in group water schemes can rise, is that in order to comply with drinking water regulations it is no longer sufficient to operate group water schemes in a voluntary capacity. There is need for professional, paid management and caretakers to meet these regulations, and we are working with the group water schemes again. We have a lot of management structures in place. That is just one of the areas where there might be an increase in costs associated with that.
I would like a bit more time to expand on some of these questions. Is it true to say that prior to the introduction of the rural water programme the management of group water schemes was quite haphazard and varied significantly from scheme to scheme? Some schemes had paid staff to actively manage the consumption of the scheme. Quite a lot of schemes had none. The figures in regard to consumption and things like that are quite skewed because the first active look at the consumption figures on schemes was in conjunction with the major capital investment under the rural water programme.
Mr. Colm Brady:
It would have been based on actual consumption on those particular schemes, but I take the point. Effectively, group water schemes were put in the ground on day one. They were left to their own devices for the most part, and they were being funded entirely by the members of the group water schemes. The people operating those schemes did a serious job in the context of the resources and time they had available to them. It was for the most part a voluntary effort by very good volunteers. Volunteers can manage group water schemes very effectively. The point I am making is that the public health issues in the regulations do not allow the schemes to continue in that capacity into the future but there will always be a place for volunteers in group water schemes.
I am not disputing the work or doing anything to denigrate the work that people do in a voluntary capacity in group schemes but the point that I am making is that we are not really comparing like with like. The group water scheme sector has done a huge amount of work in improving the quality and standard of water on their supplies. With regard the information that we have asked for in regard to the average cost of schemes, it is important for the work of the committee to actually link that to the individual schemes and the type of treatment that is on the scheme. Many schemes would have simple disinfection whereas other schemes would have quite detailed dissolved air floatation, DAF, machinery which would mean different costs. It would be useful for the committee if the average costs were actually tied into the type of treatment used in the schemes.