Dáil debates

Thursday, 11 December 2014

Water Services Bill 2014: Committee Stage (Resumed)

 

2:05 pm

Photo of Barry CowenBarry Cowen (Laois-Offaly, Fianna Fail) | Oireachtas source

I seek to oppose this section which deals specifically with water charges on dwellings. My amendment is in response to the outcry of the public and the Opposition against the legislation governing the establishment of Irish Water and the charging mechanism to be put in place by the CER, Commission for Energy Regulation under direction from the legislation and the Government. The CER carried out a consultation process and on foot of the consultation and a submission by the Government, it proposed a charging mechanism which does not meet with the approval of the Opposition or the public. As a consequence there has been a sea-change and a Government climb-down across many areas but specifically with regard to the charging mechanism. The Government has overturned its initial commitment which leaves the role of the CER contrary to what was initially expected of it, in that it was to be the watch dog for the consumer. Its remit was to fix prices last summer and in two years' time and upon its instruction thereafter. The Government intervened based on the failure to inform adequately the CER of the type of support there may be for such a charging mechanism. Most important, since the legislation was introduced in the House and guillotined in December last year, throughout that period until the publication by the CER of an indication of the sort of pricing, the public was left fretting and uninformed. It was left to us and others to read the legislation and read between the lines of the legislation and eventually to give the people some indication of the astronomical figures that would ensue in the proposed charging mechanism.

This is an effort by the Government to save political face. It would like to believe it has succeeded but I do not believe that to be the case. It was obvious that the Government had to admit its absolute failure in this whole sorry process and rather than come out with one hand up it should have come out with two hands up. It should have admitted failure and succumbed to the request for an immediate review by the relevant committee and by the Comptroller and Auditor General into the process since its inception and into the massive loss of public funds with no commitment to the capital investment required.

Yesterday the Minister for Health, Deputy Leo Varadkar, admitted that since the troika left these shores he and his Government had become arrogant. He admitted to the fact that he and his Government were not listening. The final outlandish admission made by him at approximately 1.30 p.m. yesterday was that he could not understand how the people had become so exercised about this issue and why they were marching on the issue of water charges when they should be more interested in engaging with the Government and with their representatives on the subject of jobs, for example.

Of course they continue to engage with their representatives in a wide range of areas. They have become totally exasperated by the way in which the Government saw fit to introduce this model in the first instance, in its rush to have a charging mechanism and revenues in such a way that it could give the impression, by virtue of a 1% tax cut, that people were better off. Nothing could be further from the truth. That admission should have been accompanied by a willingness to step back and start the process over again. I and others have stated on a continual basis since it was first mooted that the concept and model of Irish Water were wrong. It was ill-thought out and a rushed process, and because of this we find ourselves where we are today.

During the past 12 months, the Ministers, Deputies Varadkar and Kelly, former Minister, Mr. Hogan, and the Taoiseach would have had us believe the reason for such immense quangos as Irish water and such outlandish and expensive charges was because we had to instil in the public a conservation ethos and commit to investment programmes in a broken network because of the failure on the part of the previous Government to invest in the system. I acknowledge that the system is not fit for purpose, but I also acknowledge there has been much expenditure by recent Governments. In the first ten years of this century €4.8 billion was spent.

We acknowledge and accept the system and network need to be updated and reinstated and the Dublin situation must be addressed. This being the case, one would think the Government would have said it could not charge for a system which it acknowledges is not fit for purpose and informed the public of the investment programme, and its costs, which needs to be put in place. It is ironic and amazing to think we have gone through two Bills such as one we have today but we still have not had published in the public domain a short, medium or long-term capital investment programme which would seek to prioritise the investment required and state where it is required, when it will be provided and how much it will cost. We have not heard Irish Water commit to the Garryhinch project to solve the situation in Dublin or the costs associated with it. Is something else being investigated which contradicts all of the expense, processes and preparations which went into making it available? During the course of a debate here some weeks ago, when the Minister introduced the motion to give effect to the charges, with this legislation further to it, the Taoiseach assured the House, when questioned by me through the Chair, that the programme would be available before the end of the debate. The debate has come and gone and we still do not have a detailed roadmap of the prioritisation of the capital investment required. The only commitment given was earlier this year, that approximately €1.6 billion would be spent in the next three years, including this one. That is not a penny more than what was committed in the previous programme, under which the local authorities carried out investment. It needs to be similar to the National Roads Authority in that priorities on primary schemes, secondary schemes and group schemes need to be put on the table.

Those on group schemes and rural schemes need to be reassured that the investment by the Department and Government will continue to assist them. Their biggest fear, which despite the protestations of the Government they continue to have, is that we are heading down the road of privatisation. In the event of this being the case, nobody would seek to purchase this end of the network because it would not be seen to be profitable. This commitment must be given and must be seen in writing and the funds associated with it need to be put in place. I am concerned about whether this is possible. It probably is not possible until such time as the EUROSTAT market test has been approved.

I am also concerned that the Government is committed to this model by virtue of the fact it will not spend up to 50% subvention in the system as a whole and has made alterations in this proposed legislation to assist Irish Water pass the EUROSTAT test. At present the Government subvention is 44%. At what level of non-compliance from the residential and commercial sectors will the 44% move closer to 50%? Is the Minister convinced and satisfied the estimation of commercial rates applicable to local authorities from Irish Water is right and correct at €60 million, and included in this legislation is a mechanism by which this bill will not fall on the table of Irish Water? As I stated to the Minister during previous questioning, I am not convinced that correct or sufficient estimation or valuation has been carried out on the networks throughout the country to state the savings in this regard are €60 million. The revenue or income expected from local authorities throughout the country in the coming years from this source has been pulled from under them, with the guarantee it will be included in the central allocation. There is no guarantee and there is nothing in the legislation to prove this is the case and I would like to see this.

I have asked the Minister for further clarification on the €60 million as I believe it is only an estimate. The Valuation Office has only carried out evaluations in Dublin and Waterford and no other part of the country can be sure of the value of assets which are now assets of Irish Water or what rate would have been applicable to them. During the course of the first Water Services Bill, it was widely acknowledged the value of what was being transferred to Irish Water could well have been up to €11 billion, and I did not hear anybody openly contradict this figure. If it is to be contradicted, I want it backed up with scientific evidence and proof it is the case.

It is quite obvious the Government will not take on board my requests, but it is only right and proper, in the event of a motion or amendment such as this succeeding, that one asks what is being offered as an alternative. In this area I state there should be an immediate review by the Comptroller and Auditor General into the entire process since it began with regard to a lack of value from consultants, despite the outlandish costs, the secrecy in the way it was set up and the use of the Economic Management Council.

The use of the Economic Management Council was at the expense of the other members of Cabinet who, when they were made aware that up to €80 million had been spent on consultants, showed surprise at the very fact. I remember stating publicly I felt they were feigning surprise, but we now know they were not at all feigning surprise because they had been kept in the dark by the Economic Management Council, which has gained so much power and momentum under the Government's tutelage then was ever there before. This is to such an extent that members of Cabinet cannot be fully accountable for decisions made in the name of the Cabinet, which is a grave situation in which to find ourselves and not one we support, considering the democratic nation in which we live and to which we aspire.

What ensued from this was €172 million in set-up costs, including the €85 million, and €500 million ploughed into the contracts for metering. Now we see the conservation element is minimal, given the water charges mechanism put before us. If and when the meters come into use, will they be obsolete? The water meters and standards associated with them which were installed over the past five years have been deemed to be obsolete by those carrying out the re-installation throughout the country now. Who is to say this will not be the case in five years time? We have also had household charge funding being ploughed into Irish Water.

4 o’clock

That was up to €500 million as well. There is the whole top-heavy nature of the quango which is oversubscribed in the provision of management within the company. Many people who assumed responsibility for well-paid jobs within it had already retired from the public sector with fine payments, pensions and so forth. In recent weeks we have had the revelation that, one month from the granting of the tender, the estimate for the provision of water meters was €100 million out.

We have yet to receive a commitment from the CER on the commercial sector. He has not assessed the costs associated with it with a view to arriving at a conclusive charge for the commercial sector, the farming sector and the industrial sector. Those sectors remain in the dark as to what their costs might be. They may feel, because of the reduction in income generated by this legislation, they might be in for a hike. As I said earlier, there is free provision of water - despite its quality - for those under boil water notice in the residential sector, but it is not free for the commercial sector. They are the ones in the small towns and villages, and in rural areas who are finding it very hard to sustain their businesses in recent times. The last thing they need on top of the commercial rates - which have not been overhauled in any shape or form despite the Government commitment to do so - is local authorities being forced to collect fees and charges at variance with the costs of providing that in addition to the residential element they have to pay for anyway.

I have spoken at length on this issue in its entirety over many months. I am glad in the first instance that the Government acknowledged that it has failed in this regard and that it has made many mistakes. However, despite all the mistakes it admits, the one mistake it will not accept was a mistake is the setting up of Irish Water. That was the biggest mistake and everything else that ensued thereafter was obvious considering the rush to put that in place without preparing adequately, and because of that, we find ourselves in the bind we are in.

Therefore I believe it is appropriate to have a full review and audit led by the Comptroller and Auditor General. We should not throw good money after bad in this regard, which I believe will happen. I have no doubt that in the future there will be a review and we will learn much more about this process that has been to our detriment. I am saying that it should be done now or soon in order for a proper system to be put in place and in order for a proper programme of investment to be recognised by the public as being in the pipeline, so to speak. Only when we have a system that is fit for purpose and a system that is renewed and caters for the future well into the years to come will it be fair, proper and right to ask people to make a contribution over and above the general taxation, as they do at present.

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