Phil Hogan (Carlow-Kilkenny, Fine Gael)

I move amendment No. 2:

To delete all words after "Dáil Éireann" and substitute the following:

notes that:

- the programme for Government provides for the introduction of a fair funding model to deliver clean and reliable water which will involve the installation of water meters in households and move to a charging system based on usage above a free allowance;

- the Government is committed to funding the metering programme in the most cost effective way possible;

- the programme for Government also proposes the establishment of a new State-owned water company, Irish Water;

- the memorandum of understanding between Ireland and the EU and IMF which commits Ireland to undertaking an independent assessment of the establishment of such a company and to the introduction of water charges during the period of the agreement;

- volumetric water charges will provide households with an important incentive to reduce their consumption of water, thus reducing the operational costs faced by local authorities in providing water services and providing longer term savings in relation to capital investment requirements;

- proposals for the establishment of Irish Water will be considered by Government before the end of 2011; and

recognises

- that the establishment of Irish Water as a State-owned company will provide an opportunity to create efficiencies and cost savings in the delivery of water services in Ireland and to address problematic issues, such as unacceptable levels of leakage, at a national level;

- the capital intensive nature of the work required to install meters to over one million households has significant job creation potential;

- the continued high level of capital investment in the water services sector in recent years, involving Exchequer expenditure of €4.6 billion over the past decade;

- the Government's commitment to protect our water resources and our environment, to meet EU standards for drinking water and wastewater treatment and to provide critical infrastructure that will ensure ongoing support for economic development through the provision of €435 million in 2011 to fund the ongoing provision of water services infrastructure;

- that the Water Services Investment Programme 2010-2012 provides for substantially increased investment on network rehabilitation works which will considerably improve our ability to reduce rates of unaccounted for water;

- that the water framework directive provides a comprehensive, legal framework for the management of water quantity and quality.

I welcome the opportunity to speak to this motion. The amendment highlights the Government's plans to reform the management and delivery of water services in Ireland.

Providing access to safe and clean drinking water is of critical importance to me and to the Department. Extensive investment in water services in recent years along with increased regulation and more robust supervision of supplies has brought about a situation where drinking water supplies in Ireland are of a very high standard. This is borne out by the steady improvements in drinking water quality which have been reported on by the Environmental Protection Agency. We are fortunate also, unlike many other countries, to have available substantial water resources from which we can draw our drinking water supplies. However, while water may be relatively abundant in Ireland, the cost of treating raw water to the standard of a food product, which I would remind the House is the standard required of national legislation, is not cheap. Nor is the cost of operating waste water treatment plants to treat the water discharged to our public sewers so that we avoid serious pollution to our rivers, our lakes and our seas.

The State has invested heavily in water services infrastructure in recent years with total investment exceeding €5.6 billion over the past decade through my Department's water investment programmes. This investment was important in ensuring compliance with the European directives on both drinking water standards and urban waste water discharges and improving water supply to keep pace with population growth and economic needs. The Government is continuing to give priority to investment in this area. A provision of €435 million is being provided this year to fund the ongoing investment in water services infrastructure. This investment is required not only to expand infrastructural capacity, but also to upgrade our water supply distribution network to tackle uneconomic levels of leakage and improve operational efficiency. I accept that there remains a major problem with leakage from the distribution network and I am determined that this level of so called unaccounted for water will be reduced.

Ireland has a diverse water supply system, with over 950 public supplies producing some 1,600 million litres of water daily through a network of 25,000 kilometres of pipes. The extent of burst water mains places a particular focus on the vulnerability of the water distribution system, in particular given its age, the high levels of leakage in the system and the lack of investment historically in mains rehabilitation. The current water services investment programme, which runs to 2012, provides for increased investment in critical mains rehabilitation with contracts to the value of €320 million set to commence over the next year. This is more than double the investment of €130 million in water conservation measures in the entire period from 2003 to 2009.

As I have already stated, the increased investment in new treatment plants for drinking water and waste water has increased the operational costs for local authorities. More stringent environmental legislation and rising energy prices have also contributed to the increase in costs. Continuing previous policies of providing free water, with no incentive to manage usage, is clearly not sustainable.

The extent of the challenges we face is highlighted by reference to recent weather events. Just six months ago we experienced a sustained period of exceptionally cold weather, with some of the lowest temperatures ever recorded in Ireland, together with heavy snowfall. The subsequent rapid thaw which occurred over the Christmas period caused pipes to burst across the country and resulted in widespread water shortages. This week, as a result of very different weather conditions, the Dublin local authorities have issued warnings that they may need to restrict water supplies during the summer unless there is an increase in rainfall in the coming weeks. These climatic events highlight how finely balanced our water supplies are and they emphasise the need for focussed and strategic reform of the way we manage and deliver our water services.

The Government also recognises there are weaknesses in the current funding model for water services. The programme for Government provides for the introduction of a new fair funding model to deliver clean and reliable water. A new system of water charging for households on public water supplies will be introduced based on usage above a free allowance.

Ireland is unique in the developed world in not charging households for water services. Our unique position on this matter looks more untenable when we consider the increasing costs we are facing. In its environmental review of Ireland in 2010, the OECD highlighted the difficulties being caused by our failure to charge households for water based on usage. The OECD noted that Ireland's policy of providing water in the absence of charges gave households no incentive to save water or to minimise wastage. The OECD advised that the failure to measure water use further perpetuates the public's low awareness of consumption levels and the real cost of water services, and that a better understanding of costs could in itself promote some reduction in consumption. Moreover, the OECD pointed out that water metering removes inequities between households and ensures households using less water will pay less.

The OECD also concluded that the absence of water metering contributes to a lack of incentives in the planning system and building regulations and in practices, such as rainwater harvesting, that would focus on the water economy. The report of the group on green enterprise opportunities in 2009 highlighted that the introduction of volumetric charges would create a market for water efficiency goods and services, with future export potential.

International experience is clear in showing that water metering can achieve significant reductions in consumption. A recent delegation to my office from the National Federation of Group Water Schemes indicated that significant reductions in consumption were due to the fact that they already had meters. When households understand that they can manage their water bills through reducing consumption, they are provided with the necessary incentive to do so. In Denmark, a reduction of 12.6% in household consumption was achieved between 1996 and 2007 following the introduction of water meters, along with the promotion of water saving devices. The Walker report, prepared for the British Government and published in 2009, estimates that water metering in the UK has the potential to achieve a reduction of approximately 16% of average household demand through reduced personal consumption and reduced customer side leakage. At a recent conference on water metering, a speaker from Southern Water in the UK highlighted how universal water metering in the Isle of Wight had reduced consumption from 160 litres per person per day to 124 litres, which is a reduction of more than 20%. This clearly highlights the very real potential to create major savings in the annual expenditure on providing treated drinking water, and reducing the consumption of a finite resource.

However, there is another important reason metering is needed. Reducing wastage of water supplies should not be seen as a choice between water metering and water mains rehabilitation. Research carried out by the Dublin local authorities estimates average customer side leakage at 65 litres per property per day, and could be significantly higher in some locations. Evidence from the National Federation of Group Water Schemes, which has been a strong advocate of water metering, suggests that much of the water lost from the group water schemes through leakage is on the customer side. The installation of water meters will ensure that leaks can be identified and fixed.

Metering will achieve significant reductions in the volumes of water that are required to be treated every day and will lead to savings in the operational costs of delivering water services and in deferred capital expenditure. My intention is that the metering programme will begin in early 2012 and will be largely completed over a five-year period, although I expect to see significant progress in the first three years. The labour intensive nature of the works has the potential to create significant employment opportunities.

This domestic metering strategy will also offer a great opportunity to develop a new water conservation industry, again creating significant employment opportunities. There is no reason water should not be collected and reused in the same fashion as electricity is captured from wind or the sun. Businesses save thousands of euro off their annual water bills with conservation measures and the right technology. Similarly, households are also able to collect rainwater and treated grey water for suitable uses such as flushing toilets and wash-up facilities. The Department will be examining the possibilities to exploit the opportunities highlighted in the report of the group on green enterprise in this area.

As with any significant policy issue which is submitted to the Government, the potential impacts on low income households and other vulnerable groups will be taken into consideration. I am acutely aware that the economic decline overseen by the previous Government has made life harder for most households throughout the country. As set out in the programme for Government, all households will be provided with a free allowance of water and charges will only apply to usage above that allowance. The Department will also be developing a public awareness campaign to inform households of actions which can be taken to reduce their consumption and hence the cost of the water being used.

The programme for Government agreed between Fine Gael and the Labour Party also provides for progressive and considered structural reforms of the water services sector in Ireland. These reforms are important elements of the Government's strategy for restructuring the semi-state sector under our NewERA plan. Our intention is to have a modern, adequately resourced water services sector which will manage and deliver critical infrastructure to support economic recovery and employment creation. There is a need for a fundamental shift in the way water services are organised and funded in Ireland. However, it is important to acknowledge the considerable efforts of the local authorities to improve the services they have provided to consumers in recent years.

It is not the Government's intention to discard the expertise and knowledge which has been built up in the local authorities. On the contrary, we want to ensure that expertise and knowledge is being deployed strategically and efficiently to meet the significant challenges facing the sector. For example, the adoption of river basin management plans last year marked an important step in the implementation of the EU water framework directive and provides the strategic direction for much of our future actions and investment in the sector. The move to a river basin catchment approach to water resource management will require greater co-ordination in the planning and delivery of all aspects of water services. Ireland's plans were published in July 2010 and will be updated again in 2015. These plans set out the quality status of water bodies, the environmental objectives for those water bodies and the measures which will be necessary in order to achieve the objectives. Out of eight river basin districts, there are three cross-Border international river basin districts. There has been very positive engagement with Northern Ireland in developing these cross-Border plans and we will continue to work closely with our counterparts in Northern Ireland to ensure that we meet the shared objectives set out in the plans. I will meet the Minister for the Environment in the Northern Assembly on 1 July to discuss those plans.

The landscape of water management is set to change in Ireland as we begin the implementation of the plans. There are many players involved, from Departments, State agencies and local authorities through to local groups and representatives of various water users. Discussions have begun between the main players on the governance arrangements that will best achieve the objectives of the river basin plans and thus, the best possible environmental outcomes. Integrated river basin management challenges existing administrative models and requires us to find new ways of working together.

Reducing consumption of drinking water reduces the need to abstract water from the natural environment. In regard to the suggestion for the establishment of a water and sewage authority to ensure that water quality and environment standards are met, this role is currently being fulfilled by the Environmental Protection Agency, which has statutory powers to ensure that we adhere to water quality standards.

The Government's NewERA plan provides for the establishment of Irish Water, a new State-owned water company. This is a priority but I am aware that the transfer of any functions from local authorities to the new company needs to be carefully managed. The Department is overseeing an independent assessment on the establishment of Irish Water which will commence shortly. This assessment will examine the optimum role of the company and assist in defining the functions of that company. The assessment will determine the most effective assignment of functions and structural arrangements for delivering high quality competitively priced water services to customers, both domestic and non-domestic.

The independent assessment which will include detailed implementation issues will be completed by the end of October this year. I will then be in a position to bring proposals to Government on the establishment of Irish Water before the end of 2011.

The Government has been clear that Irish Water will be a State-owned company. Its establishment does not represent the privatisation of water services nor the creeping privatisation of water services or any other course of action to bring water services into private hands. Irish Water will modernise the delivery of water services. The outcome of the independent assessment, the high levels of unaccounted for water and the low collection rates for commercial water charges are just two areas which could be improved by being addressed at a national level.

The creation of Irish Water and the introduction of a system of water charges by meter will transform the provision of water services. In these difficult times, we need to deliver our services and use our resources more efficiently and effectively. By delivering on the commitments in the programme for Government, we can ensure that this happens. We will ensure that we have a modern adequately resourced water services sector and we will support economic recovery and the creation of employment opportunities.

Some matters arose in the contributions of the Sinn Féin Deputies on which I wish to put the record straight. I assure Deputy Stanley that with this Fine Gael-Labour Party Government, the people will be able to sleep soundly in their beds. We will tell the people the truth about the cost of water provision and how we will deliver a good quality product, which is recognised as a finite resource. We will tell them that we do not want to impose more income taxes but that we want a water services infrastructure provided and paid for on a pay as one uses basis. That is the most essential water conservation objective of any government and I am surprised that Deputy Stanley and others who spoke did not acknowledge that.

At least Sinn Féin stated explicitly in its motion how it would fund all these water services, namely, from general taxation. It wants to increase taxes on workers because that is the only way within the current EU-IMF agreement that it would get the money to roll out these provisions. Sinn Féin wants to increase taxes on workers to pay for an essential service such as water. We oppose that measure.

Sinn Féin, rather than the Government, is putting its hand in the pockets of workers and ordinary people by making that assertion.

See this speech in context