Phil Hogan (Carlow-Kilkenny, Fine Gael) | Oireachtas source

Following the decision by the Government in December 2011 to establish Irish Water, on the basis of an independent assessment conducted by PricewaterhouseCoopers, my Department launched a public consultation process to inform development of the implementation strategy on the reform programme. Almost 300 submissions were received, including a submission from the ESRI. All of these were taken into consideration in developing the implementation strategy published in December 2012.

The submission received from the ESRI concluded that the establishment of the new utility is an opportunity to achieve significant efficiency gains, which will result in lower costs to the taxpayer. The submission noted that the independent assessment indicated that staff numbers would decline over time, and commented that the transfer of staff from local authorities and the terms and employment of staff and services should be at the discretion of the new company.

The model adopted allows Irish Water to build up its own internal capability as it considers appropriate, with competitive processes that draw on expertise within the sector for some roles. Irish Water has entered into service level agreements, SLAs, with each of the 34 authorities for the provision of specified services. Staff in local authorities conducting work under these arrangements will remain local authority employees. The SLA reflects the transformation agenda required for the sector, with provision for annual service plans which will set out required performance, budgets and headcount. The actual headcount which will be required over the period of the agreement is intrinsically linked to the levels of investment within the sector in automation, rationalisation and infrastructure and operational upgrades. The establishment of Irish Water will lead to improved efficiency and effectiveness of water services delivery, and progress in this regard, leading to staff reductions, will be closely monitored in the context of annual service plans. It makes far better sense to accelerate and improve investment in, and management of, water services assets through a single efficient model rather than attempting to replicate systems through over 30 separate local authorities.

We are reforming our water services to address significant deficits and weaknesses in the current system. In particular, 18,000 people on public water supplies have a boil-water restriction or other restriction in place; remedial action is required on 16% of supplies at risk, covering almost 1 million people, including large schemes such as those in parts of Dublin and Cork; there are significant supply constraints in Dublin; unaccounted-for water is unacceptably high, at 40%; the European Commission has launched a pilot infringement in regard to 80 treatment plants.

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A total of over €1 billion in capital and operational expenditure is required per annum for the provision of water services. This level of investment simply cannot be met through the existing model, without significant cuts to other public services - for example, education and health - or significant tax increases. The Irish Water Utility Model will facilitate new investment, and charges determined through the user-pays model, based on metered usage above a free allowance, will reflect the greater efficiencies and reduced operational costs that a single utility can be expected to deliver.

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