Aodhán Ó Ríordáin (Dublin North Central, Labour) | Oireachtas source

I thank Deputy McGrath for giving me the opportunity to address the issues associated with the Bill he has published. The provision of sustainable water services is of critical importance to citizens and the economy of our country. As Members will be aware, modernising and improving water services delivery in Ireland is a key policy objective in the programme for Government.

The establishment of Irish Water has been one of the most significant elements among a wide range of public sector reform measures achieved by the Government. The move towards the utility model will deliver major benefits to our people and to our economy in a number of ways, notably through providing a more structured and co-ordinated approach to the delivery

of water services on a national basis; achieving economies of scale in service delivery and more efficient procurement of materials and services; reducing unacceptable levels of waste from the drinking water distribution system with an estimated 40% of treated drinking water being unaccounted for prior to the establishment of Irish Water; and reducing the overall costs of delivering water services.

The establishment of Irish Water within Bord Gáis Éireann, which has now been renamed Ervia, was an important step in assisting the utility to leverage the existing core expertise available to Bord Gáis as a modern and efficiently run utility. Ervia and Irish Water estimate that establishing Irish Water within the BGE group has saved potentially tens of millions of euro. In the longer term, the establishment of Irish Water will lead to a more efficient service due to economies of scale, and to a higher quality and more resilient service due to increased capacity to invest and innovate.

The reform of water services is not only important to delivering better value for money to our citizens but is also critical to supporting economic development and growth. By 2030, the world is expected to need 40% more water than will be available. We are distinct from most countries due to the level of fresh water available, a benefit we can turn to our advantage by creating a world class water sector that can attract water-intensive industries such as ICT, pharma-chem and agri-food to Ireland. These industries already sustain well over 200,000 jobs between them.

This Bill aims to amend the Water Services (No. 2) Act 2013 to provide for the following: Irish Water to be subject to freedom of information legislation; creating a dedicated independent ombudsman for resolving disputes related to Irish Water; ensuring that Irish Water will not be transferred to private ownership or public private partnership without such ownership or partnership being put before the people via referendum; and requiring that the Minister direct Irish Water, within two years of its establishment, to provide for the provision of an insurance policy to all of its customers with respect to water leakage and damaged infrastructure.

A number of the proposals in this Bill have already been comprehensively dealt with through legislation introduced by the Government. First, the Minister for Public Expenditure and Reform, Deputy Howlin, included Irish Water under FOI legislation. The Water Services Act 2014 then included the requirement that any proposal to change the ownership status of Irish Water would first be put to the people. Protecting the interest of customers of Irish Water has been a high priority for the Government throughout the water reform process. To ensure this protection, the 2014 Act provided that the Commission for Energy Regulation, which had previously been assigned the function for water regulation, was required to establish a dispute resolution process for Irish Water customers.

I will now deal with the specific proposals contained in the Bill. Irish Water is already subject to FOI legislation. Under the Freedom of Information Act 1997 (Prescribed Bodies) Regulations 2014, Irish Water is been subject to the provisions of the FOI Acts from 17 July 2013.

In regard to the independent Ombudsman for Water, it was a policy decision of the Government to establish Irish Water as a public utility, and this is reflected in the legislation passed by the Oireachtas. The legislative framework the Government has put in place to establish Irish Water and the CER, as the economic regulator for Irish Water, means there is a robust process for the protection of customer interests and clearly demonstrates that the customer was at the centre of Government's thinking when framing the legislation. As can be seen from the extensive activity being undertaken by the CER, this process is operating effectively.

In addition, the CER has been given a specific statutory role under the Water Services Act 2014 in regard to dispute resolution for Irish Water customers. This will involve a similar service to that operated by the CER for the gas and electricity sectors, whereby it can investigate customer complaints that Irish Water has not resolved. I do not believe the creation of a dedicated independent ombudsman for resolving disputes related to Irish Water, as suggested in this Bill, is therefore warranted. Similar to the approach it has taken in the electricity and gas industries, the CER has also required Irish Water to submit a customer handbook outlining the minimum customer service standards it will provide to its customers. The customer handbook comprises Irish Water's customer charter, codes of practice and terms and conditions of supply.

Along with these measures, the CER will engage with both Irish Water and the Environmental Protection Agency to develop complementary complaints processes to ensure customers are directed in an efficient manner to the appropriate organisation with their complaint or query. In this regard, it should be noted that Irish Water is also subject to statutory supervision by the EPA and the Health Service Executive in respect of any environmental and human health aspects of its water services provision.

In regard to the ownership of Irish Water, it has been made very clear that the Government is totally opposed to the privatisation of public water services and there is no question of the service being privatised. The Water Services Act 2013 provides for the establishment of Irish Water as a subsidiary of Bord Gáis Éireann, conforming to the conditions contained in the Act and registered under the Companies Act. The Act provides that Irish Water is registered as a private company limited by shares under the Companies Act, with one share in Irish Water issued to Bord Gáis Éireann, now Ervia, and the remaining shares allocated equally between the Minister for the Environment, Community and Local Government and the Minister for Finance. As Ervia is a fully State-owned company, Irish Water is, accordingly, in full State ownership. Subsequently, an amendment introduced in the Water Services (No. 2) Act 2013 prohibits each of the three shareholders from disposing of their shareholding in Irish Water and thus places a statutory prohibition on the privatisation of Irish Water.

To copperfasten this prohibition, the Water Services Act 2014 provides that any proposal by a future Government for legislation that would involve any change in the State's ownership of Irish Water, as outlined, would require approval by both Houses of the Oireachtas and subsequently any proposal would have to be put to the people via a plebiscite before such legislation could even proceed. Also, there is a further statutory provision which safeguards water services infrastructure in public ownership. Section 31(12) of the Water Services Act 2007 prevents Irish Water from entering into any agreement or arrangement with another person which involves or may involve the transfer of assets and infrastructure from Irish Water to that person.

In regard to an insurance policy for customers, it is not the function of Irish Water to provide any type of insurance policy for customers in terms of leaks or damaged infrastructure. Under the Water Services Act 2007, responsibility for repair and maintenance of the internal water distribution system from the main stopcock to the house and within the house rests with the homeowner. This is similar to the situation with other utility services, such as gas or electricity. The proposal in the Bill to change responsibility for internal repairs and maintenance would have significant implications from a financial perspective for Irish Water and could have wide-ranging impacts for other utility service providers. I do not believe, therefore, that the proposal in the Bill is an appropriate approach to take on this issue.

This morning's debate provides an important opportunity to remind the House of the significant progress that has been made in implementing the Government's water sector reform programme. This programme is based on three pillars: the establishment of a national utility to provide water and waste water services on a national basis; the establishment of a sustainable funding model for water services, underpinned by domestic and non-domestic water charges and the ability of the national utility to borrow from capital markets to increase infrastructural spending, and to increase annual expenditure from approximately €300 million per annum when Irish Water was established to at least €600 million per annum; and the introduction of independent economic regulation of Irish Water, which has been assigned to the Commission for Energy Regulation.

With each new challenge in our public water system that Irish Water confronts, the underlying need for reform becomes increasingly clear and justification for reform becomes stronger. Public water services were and remain in need of change in the way they are delivered, as does the way they are funded. The previous system of providing water services through local authorities was not working properly, despite the best efforts of the dedicated and experienced staff involved. Local authorities were restricted in their ability to borrow, so they could not invest adequately in the system. The time taken to make decisions to invest was often slow, bureaucratic and inefficient. Planning for new water services largely stopped at the county boundary, so there was limited opportunity to achieve economies of scale on a regional or national basis.

We saw and continue to see the results of this fundamentally flawed approach in almost every city, town and county. There are major issues around the quality of water supply and the capacity of the existing system to supply treated water in the quantities needed by households, business and industry. For example, there are almost 20,123 people on boil water notices from 21 supplies, and more than 955,000 people depend on drinking water supplies that are at risk of failing the required standards. Almost half the water treated, at significant cost, escapes through leaks and is unaccounted for. For example, Irish Water was able to establish that 22 households were leaking over 1 million litres a day into their driveways. That is enough to serve the daily needs of the town of Gorey.

There are 44 towns where largely untreated sewage is running into our rivers and seas, including popular seaside towns such as Cobh, Youghal and Bundoran. This cannot be allowed to continue or it will be hugely damaging to our vital tourism sector. In Dublin, more than 800 km of piping is over 100 years old. There is an insufficient water supply for the greater Dublin area. Earlier this year, Irish Water published a project need report, which identified that projected demand for water in Dublin alone is expected to increase by over 50% by 2050. This is far beyond the capacity of the existing sources which serve the region.

Nationally, our population is increasing, our economy is growing and our climate is changing. These realities bring new demands and challenges for our water system, the reality that a single national utility is best equipped to manage. By 2030, our river basin management plans will have been reviewed a further three times and the quality of our water bodies will have to be improved. Our rivers, lakes and other water bodies need greater protection, not just for the protection of public health and our natural environment, but to ensure that our thriving tourism industry can continue to prosper under the banner of Ireland's image as a clean, green country.

The three pillars of reform - a national utility, a new sustainable finding model and the introduction of independent economic regulation - have been implemented and are leading to major changes in how we plan and deliver water infrastructure and services. Irish Water has introduced fundamental reforms to the planning and delivery of water services. It has adopted a new approach to asset management, for example, which has resulted in a significant change of approach to infrastructural delivery. Central strategic planning is now based on accurate asset performance data and full control of all investment decisions. The utility is now planning investment consistently across the asset base rather than large-scale, one-off investments. An example of this is the proposed Ringsend waste water treatment plant upgrade, where an alternative approach to a treatment plant extension will save the company €170 million in capital investment. The utility has also standardised certain operational procedures, leading to benefits in performance and energy costs. It is conducting plant and process audits, which are identifying repair needs, assisting in planned maintenance programmes and providing for efficiency scoping. It has introduced utility systems to manage spend, improve value for money and capture the condition and performance of water services infrastructure.

Under the service level agreements, annual plans and the 2014-2017 transformation plan, Irish Water has begun implementing other initiatives that will standardise and modernise operations, asset management, customer service, procurement improvement, and assets data intelligence. Examples of this are the hand-held devices that council staff will be given so that they can be given work orders quickly to fix water problems and report back when they are completed, and the single national laboratory service for testing water samples. The greater economies of scale which are possible through having one national utility rather than 31 separate local authorities have resulted in €12 million in procurement savings in the company's first year alone.

In the area of electricity supply, a major cost in the production of water, Irish Water's current renewable and efficient energy initiatives aim to reduce costs by 33% by 2020.

In April 2014, Irish Water became the main contact point for customer queries and reports regarding water supply outages and water quality through its customer call centre.

See this speech in context