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

The programme for Government contained commitments in respect of a comprehensive programme of reform of the structures for delivering State services which included plans for the overhaul of the delivery of water services. The Government's programme of reform of water services is a vital step towards ensuring the sustainability of Ireland's water resources. The people of Ireland deserve first class water services and a system in which the drinking water they are supplied with is safe and wholesome. It is also critical that wastewater be treated effectively to avoid causing pollution to watercourses and beaches. We also need to ensure there is security of supply in order to attract investment in towns and cities throughout the country. This is also critical to economic growth as a reliable water supply will promote economic competitiveness and, in particular, can assist in promoting and attracting water-intensive industries such as ICT, pharma-chem and agrifood companies.

The programme for Government recognised the need for modernisation and committed to the introduction of a fair funding model, the establishment of a new water utility, Irish Water, and the implementation of a fair charging system based on usage above a free allowance. It is clear that the Government is delivering on these commitments. In July 2013 Irish Water was established as a subsidiary of Bord Gáis Energy which has saved €80 million to date. Moving from the previous fragmented approach, where water services were provided by 34 separate local authorities, is an important milestone in the reform programme. We cannot continue with a situation where €1.2 billion of taxpayers' money is being spent each year, with 40% of the water leaking away into the ground. Irish Water will provide a co-ordinated national approach, with a focus on reducing operational costs and achieving economies of scale in service delivery. A co-ordinated national approach will allow major cost savings through achieving economies of scale in service delivery and for targeted reduction of the unacceptable levels of treated drinking water being lost through the water mains. The integrated utility model being put in place by Irish Water will provide the basis for the new utility to borrow from the capital markets, in the same way as other utilities, fund an accelerated capital programme and address infrastructural deficits.

Fianna Fáil's solution, of course, is to continue as we are and ignore the need for greater expenditure. It fails to point to where it will get the money to provide for a more ambitious capital programme. Would it be through higher taxes on income or through cuts in expenditure in the areas of health, education or social protection? It cannot have it every way. This is the model we have taken in order to borrow money so as to ensure we can continue to invest to ensure job creation, stability and growth on the basis that we will not increase taxes on work or incur additional cuts in expenditure over and above what is included in the troika agreement.

In July 2013 Irish Water commenced work on the domestic water metering programme. The installation of meters provides for a fair way of charging households for water services. People will be charged based on what they use and provided with an incentive to use water efficiently. The international evidence shows that where meters are introduced, savings in excess of 10% can be expected. This is a major capital project which will see water meters installed in over 1 million homes by 2016. It is also an incredibly ambitious programme, with the level of meter installation far in excess of that for similar programmes being undertaken by water companies in other parts of the European Union. For example, Southern Water in the United Kingdom is implementing a 500,000 meter installation programme over five years, while up to 450,000 meters will have been installed by Irish Water in the first 17 months of its programme. Notwithstanding this, the roll-out of the metering programme has taken account of supply chain availability, quality control, health and safety issues and the practical need to minimise disruption to pedestrians and motorists. Already, over 200,000 meters have been installed by Irish Water since the commencement of the metering programme. The programme has also had a significant employment spin-off, with 1,150 jobs created so far. Irish Water made a number of social inclusion commitments at the outset of the programme and, as a result, 57% of the jobs created have gone to SMEs, 22% to people who were previously on the live register and a further 8% to graduates, apprentices and school leavers. Irish Water has committed to accelerating the metering programme such that it will be completed in mid-2016 rather than at the end of that year. This will mean that up to 450,000 meters will be installed by the end of 2014, a very significant achievement, and that approximately 1.05 million meters will be installed by mid-2016.

Approximately 300,000 properties are not being addressed as part of the current programme. They include apartment blocks and other multi-occupancy buildings, houses with shared service connections and properties where the connection to the mains cannot be identified. In order to increase metering penetration, Irish Water commissioned a study to examine ways of metering these categories of property. My Department is exploring with Irish Water the potential to include a new phase which could involve metering approximately 48,000 apartments identified by the report as being feasible for cost-effective metering. In addition, a programme will be finalised in the coming weeks to allow customers to "opt-in", where the householders know or can identify a connection point.

Water charges for households will be introduced on 1 October 2014, with the first bills to be issued after 1 January 2015. In order to protect the interests of customers, the Government has established an independent economic regulator for water services within the Commission for Energy Regulation. The role of the regulator is set out in the Water Services Acts 2013 and the legislation specifically requires the regulator to perform its functions in a manner that best serves the interests of the customers of Irish Water. Under the legislation, Irish Water's tariffs must be set out in a water charges plan which will be subject to the approval of the regulator. The regulator will undertake extensive public consultation before making a final determination on the level of tariffs. Last month the regulator commenced a public consultation process on the structure and design of tariffs for both households and non-domestic users. The regulator will be undertaking further consultations in June before announcing the details of the tariffs in August this year.

The regulator also has wider role in customer protection. Under the Water Services Act, Irish Water is required to prepare and submit codes of practice to the commission. These codes of practice will address matters such as standards in Irish Water's services; billing by Irish Water; methods of payment; the provision of information for customers; and the standards of service customers should expect. The regulator also has the power to direct Irish Water to prepare a code of practice on any matter the regulator considers necessary to protect the interests of the customers of Irish Water.

Is it not refreshing to have some honesty in politics at last and clarity on this issue of water charging? Paddy now knows what the charge will be. It is galling to listen to the hypocritical cant from people like Deputy Niall Collins who talked about cynicism. Fianna Fáil invented the words "political cynicism" and is stating the complete opposite to what its leader signed the country up to when he signed the memorandum of understanding in 2010. Earlier today the Government agreed the details of the funding model for Irish Water, including a range of measures to support the affordability of water charges. First and foremost, the subvention to be paid to Irish Water in 2015 and 2016 will be conditional on the average domestic charge per household not exceeding €240 per year. Each household will receive a very generous allowance of 30,000 litres of drinking water and a corresponding wastewater allowance each year. An additional free allowance up to 38,000 litres per annum will be provided for households for each child under the age of 18 years.

This is based on a child's normal consumption of water but the level of consumption underpinning the allowance will be verified by actual metering data. The result of the additional free allowance for children is that water charges will effectively only apply to adults. Those free allowances and affordability measures will continue post-2016.

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