Alan Kelly (Tipperary North, Labour) | Oireachtas source

I know the man well. He is a good man. Irish Water must engage with its customers in a new way and with a new style. The brand of Irish Water must be repositioned in the public mind.

Despite some protests, the metering programme is being successfully rolled out, with some 458,000 meters already installed, which will benefit overall water conservation and allow customers to manage their usage. It is important to remember the reason Government authorised the most ambitious metering programme of its kind. Metered charges are the fairest form of water charges. In metering 1.1 million homes under the first phase of the domestic metering programme, we are linking usage with cost recovery. The OECD has stated that usage-based charging is the fairest form of charging. The Government agrees. Through metering, customers can manage and control their water usage more effectively. International evidence suggests metering can reduce customer usage by 10% to 15%. Customers and Irish Water can also tackle leakage through the domestic metering programme. It is believed that at least 5% of the 49% of leakage in the water distribution network is on the customer side. Installing meters helps identify customer side leakage and will help Irish Water to achieve its objective of halving the national leakage level.

Under the domestic metering programme spanning the country, a meter is installed every 30 seconds. No other country is metering on such a scale. The programme is providing 1,300 people with employment, 84% of whom are from one of three social inclusion categories: the unemployed; employees of SMEs; graduates or school leavers or apprentices. This far exceeds the Government's target of 25%, set in February last year. The domestic metering programme is providing much needed employment across the length and breadth of the country, representing the kind of economic stimulus and infrastructural investment for which many on the Opposition benches and elsewhere have been calling.

Irish Water has already demonstrated the benefits a more national approach to water services and infrastructure a national utility can produce. It has placed greater focus on deficiencies within the water system such as leakage, water quality, lead piping and infrastructural planning. It has adopted a new approach to asset management, in particular central strategic planning based on accurate asset performance data. It wants to plan investment consistently across the asset base rather than on large scale, one-off investments. An example of this is the proposed Ringsend waste water treatment plant upgrade, an alternative approach to a treatment plant extension which will save the company €170 million in capital investment.

Irish Water is also working on the centralisation of procurement of supplies such as chemicals and energy sources, which will result in significant savings for the company. Its 2014 to 2017 transformation plan, agreed with the local authorities in the context of the service level agreements, contains new initiatives in the areas of standardised, digitised systems for work and asset management and inventory management capability.

I would like to turn now to the issue of the funding model for Irish Water. As I outlined earlier, water services and infrastructure have been underfunded for many years. This is no longer tenable. The Government has agreed on a funding model that will allow subvention of Irish Water to help the public offset some of the direct cost of funding water services, while also designing the model in a way that allows Irish Water to operate commercially. This will allow Irish Water to borrow money for capital expenditure from capital markets and should see an increase in capital expenditure averaging €100 million in each of the years 2015 and 2016, in comparison to some €350 million this year. An increase in capital investment is one of the objectives of the Government's reform programme. We will achieve this next year.

As in other OECD countries, domestic water charges form an important part of the funding model for water services. Over the years ahead, economic regulation will drive operational efficiencies in water services to ensure that charges remain affordable for customers. It was important for the Government to set parameters for this regulatory period to guide the transition from the old funding model to the new regime, and particularly to focus on affordability. The subvention to Irish Water ensures that the Government's objective of the average charge being less than €240 per annum is achieved. Some €537 million will be provided to Irish Water in 2015, in the main to cover the free allowances.

The Government recognises that the poorest and most marginal in society must be protected from water poverty. Water poverty is a real challenge of which we must all remain acutely aware. To this end, the Government is providing a number of significant protections and reliefs to assist households in meeting their charges, including the provision to every household in the country of a free allowance of 30,000 litres per year; an additional free allowance to cover the normal consumption of water supplied and wastewater treated per child in primary residencies in the State; the capping of charges for people with high water usage due to certain medical conditions; a €100 water support payment for all recipients of the household benefits package; and free fuel allowance and water charges income tax relief at the standard rate on water charges up to a maximum of €500 per household per year. This will provide relief of up to €100 per household per annum when claimed in the following year and the Government is examining what support can be made available for those who are not entitled to income tax relief or the water support payment. For social and environmental reasons, there is no standing charge on domestic water charges. This will benefit those living on their own.

In addition, the exceptional needs payment system will continue to be available for people experiencing severe financial difficulties.

The introduction of a new charge is difficult for any household, and the Government instructed the regulator in July to provide certain supports to ensure ease of transition. An important support provided for in the regulator's decision is the capping of charges at the unmetered rate for the first nine months of charging. Metered homes have now an incentive to reduce usage since 1 October as their bills can be lower than the assessed level but in recognition of the challenge in changing behaviour and usage patterns, bills will not be higher than the relevant assessed level for those nine months.

The regulator was also instructed to provide for retrospective adjustment of charges, including provision for a rebate, if assessed bills are higher than metered usage would warrant.

As stated earlier, Irish Water is also expected to implement a free first fix policy early next year. This will help those households with leaks to address problems that can cause significant customer-side wastage of water. The Government is providing €51 million in funding for this scheme, on which the regulator will hold a public consultation shortly. In the interim there will be supports to ensure that households identified through the domestic metering programme as ones with leakages will have their bills capped until the issue of leakage is comprehensively addressed.

Through the various supports and reliefs available from Government, I believe that a fair, equitable and affordable charging system is being produced.

It is critical that Irish Water performs as the Oireachtas and the public expect. Government recognises a number of concerns have arisen in the context of getting Irish Water fully up and running and will move to address these - none more so than the complexity of the charging regime.

As stated earlier, the establishment of a unified Ervia-Irish Water board presents an opportunity to reinvigorate the organisation to become significantly more customer focused in its operations and communications. The Ervia Group and Irish Water are actively reviewing their communication strategy to reflect better the needs of all stakeholders, including elected Members.

I also recognise that the particular pay model in the Ervia Group has been the subject of much comment. This model, which was applied by Ervia rather than being created by Irish Water itself, provides for part of salaries to be placed at risk and this element of pay is only earned subject to performance. One of the first actions I will be asking the new board to do is to review the application and operation of this model in Irish Water, particularly in its start-up phase.

I would like to add one more detail. There were reports at the weekend of in excess of €188 charges for a second call-out after people have had their first leak fixed for free through Irish Water's first fix policy. I would like to express a personal view-----

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