Malcolm Noonan (Carlow-Kilkenny, Green Party) | Oireachtas source

I move: "That the Bill be now read a Second Time."

On behalf of the Minister for Housing, Local Government and Heritage, Deputy Darragh O'Brien, I am happy to have the opportunity to outline the Bill before the Dáil. The purpose of the Bill is to separate Irish Water, also known as Uisce Éireann, from its parent company, Ervia, and establish it as a stand-alone national authority for water services. The Bill delivers on the programme for Government commitment to retain Irish Water in public ownership as a national stand-alone regulated utility.

The Minister for Housing, Local Government and Heritage is the majority shareholding Minister for Ervia, which delivers strategic national infrastructure in the areas of gas and water through its subsidiaries Gas Networks Ireland and Irish Water. The establishment of two separate State companies to operate the gas network and develop our water services provides the optimal solution to meet the future challenges of decarbonising our energy supply and modernising our water services. The decision to separate Irish Water from the Ervia group is in the best strategic interest of the water services and gas networks businesses.

Following legal separation, the remaining Ervia-Gas Networks Ireland business will predominantly, both in terms of activities and revenue, be the operation, maintenance and development of the gas networks and the interconnectors that are in its ownership. Separately, my colleague, the Minister for Environment, Climate and Communications, Deputy Eamon Ryan, is developing legislation to provide for the integration of Ervia with its subsidiary, Gas Networks Ireland, so as to become a single entity, namely, Gas Networks Ireland. That legislation will be presented to the Houses of the Oireachtas in due course.

The Bill is about separating Irish Water, the subsidiary, from its parent, Ervia. It does not deal with the transformation process and the movement of local authority services staff to Irish Water. That is a separate and distinct policy process being progressed in parallel. The 2021 policy paper on water sector transformation charts the course for completing the institutional reform programme by fully integrating water operations within the organisational structure of Irish Water. The transformation of Irish Water into the publicly owned national water services authority has the potential to create new jobs and training programmes. The framework for future delivery of water services identified through the engagement at the Workplace Relations Commission, WRC, which concluded on 24 June 2022 will now enable Irish Water to work in conjunction with local authorities and current water services staff to complete the integration of public water services into its own organisational structure by 2026.

The matter of a referendum on water will continue to be considered in conjunction with any anticipated referendum on housing arising from the deliberations of the Commission on Housing.

The Bill provides that Irish Water will be known only as Uisce Éireann and it outlines the character of Uisce Éireann - the national authority for water services. The Bill provides for a change in the share ownership arrangements such that the shares in Uisce Éireann are held by both the Minister for Public Expenditure and Reform and the Minister for Housing, Local Government and Heritage, similar to the approach for other State-owned bodies. A new non-executive board of Uisce Éireann and its chief executive are now being prescribed in primary legislation rather than in the constitution of Uisce Éireann. The Bill provides for enhanced accountability and auditing arrangements such that Uisce Éireann will be subject to a dual audit both by the Comptroller and Auditor General and its commercial statutory auditor under the Companies Acts. It also provides that Uisce Éireann will be accountable to the Committee of Public Accounts. The Bill removes Ervia's functions relating to water services. Provisions for the transfer from Ervia to Uisce Éireann of those staff, rights and liabilities, contracts and records which relate to functions of Uisce Éireann are also included.

I will now elaborate on the provisions of the Bill. It is a relatively short Bill comprising three Parts, 30 sections and one Schedule. It is largely a technical Bill.

Part 1, covering sections 1 to 4, inclusive, addresses preliminary and general matters. These include the Title of the Bill, arrangements for bringing the Bill into operation and standard provisions. It also includes, in section 4, specific provisions of existing legislation that are being repealed so as to facilitate the separation of Irish Water from Ervia. The primary legislation governing the establishment of Irish Water are the Water Services Act 2013 and the Water Services (No. 2) Act 2013, with other water services Acts being also relevant.

Part 2, which takes in sections 5 to 26, inclusive, will provide for the reorganisation of Uisce Éireann. This is the most substantive part of the Bill and it provides that Uisce Éireann will no longer be a subsidiary of Ervia. Section 5 provides for Irish Water's name change to Uisce Éireann. Section 6 provides that Irish Water will cease to be a subsidiary of Ervia and that the existing shares will be cancelled. When Irish Water was established in 2013 as a subsidiary of Ervia, shares were vested in the Minister for Housing, Local Government and Heritage, the Minister for Finance and Ervia, and it is these shares that are now being cancelled.

Section 9 provides that the new shareholding arrangements, such as the new shares in Uisce Éireann, are issued to the Minister for Housing, Local Government and Heritage and to the Minister for Public Expenditure and Reform. There will be no change to the Water Services Act 2014, which prevents a current or future Government from initiating any legislative proposals that would seek to transfer Irish Water from public ownership unless such proposals are first approved by a majority vote of the Irish people in a national plebiscite. Section 9 also outlines the character of Uisce Éireann as the national authority for water services, with responsibility for the functions assigned to it by or under the Water Services Acts 2007-22.

Sections 7, 8, 10, 12 and 13 contain technical amendments relating to the functions of Ervia which are being removed.

Section 11 provides for the appointment of Uisce Éireann's non-executive board and its chief executive. These provisions are now prescribed in primary legislation rather than in Uisce Éireann's constitution, so as to enhance transparency and accountability and to reflect the approach in other State-owned bodies. The chairperson and other Uisce Éireann board members will be appointed by the Minister for Housing, Local Government and Heritage with the consent of the Minister for Public Expenditure and Reform. One director will be nominated by the Irish Congress of Trade Unions. The Uisce Éireann board will have no more than ten directors, including its chairperson and chief executive officer, serving for a period of five years, with a possibility of reappointment for one more term. Each director may serve a maximum of two terms. Since 1 January 2022, Irish Water has largely been operating as a separate stand-alone utility while remaining subject to overall governance by the Ervia board. The Ervia board will continue to remain the ultimate governing authority for Irish Water until the enactment and commencement of the Bill, which we hope to achieve by 1 January 2023. At that time, the Uisce Éireann board will be the governing authority.

The Minister, Deputy Darragh O'Brien, intends to appoint Mr. Tony Keohane as the chairperson designate of the board of Uisce Éireann. Mr. Keohane is currently the chairperson of the Ervia board, a role that he has held since he was appointed in July 2016 following the independent competitive process undertaken by the Public Appointments Service at the time. On separation, Mr. Keohane will cease to be the chairperson of Ervia and he will be appointed as chairperson of the enduring Uisce Éireann board for the remainder of his current term of appointment, that is, until 21 June 2024. This appointment is critical as the new Uisce Éireann board transitions from being governed by its parent, the Ervia board, to being a fully independent board. Mr. Keohane has gained significant experience of being chairperson of the Ervia board and involved in governing the outgoing executive Irish Water board. His experience will be essential in ensuring continuity at a time when Uisce Éireann is undergoing significant changes, including the separation and the transformation process. He is best placed to steer the Uisce Éireann board on its new course. In accordance with the code of practice for the governance of State bodies, Mr. Keohane will make himself available to the Oireachtas Joint Committee on Housing, Local Government and Heritage to discuss the approach that he will take to his role as chairperson and his views about the future contribution of Uisce Éireann. Arrangements are currently under way to appoint a new Ervia chairperson through an independent competitive process being undertaken by the Public Appointments Service.

Similar to the chairperson, the Minister, Deputy O'Brien, also intends appointing some other existing Ervia board members to the enduring Uisce Éireann board on separation. A public appointment process is already under way to identify candidates to fill vacancies on both the Uisce Éireann and Ervia boards. It is intended that both boards will include members with the appropriate skills and competencies necessary, as well as overall compliance with the code of practice for the governance of State bodies and its annexe on gender balance, diversity and inclusion. This will ensure a smooth transition for the new board of Uisce Éireann.

The appointment of the current chief executive officer of Irish Water is prescribed in Irish Water's constitution, whereas section 11 of the Bill provides for such an appointment in the future.

Since 1 January 2022 Niall Gleeson has been the CEO of Irish Water. He will continue as CEO and ex officio director of Uisce Éireann for the duration of his appointment. The Bill provides that future CEO appointments will be made by the board of Uisce Éireann with the consent of the Minister for Housing, Local Government and Heritage. Terms and conditions of such appointments will be determined by the board with the approval of the Minister for Housing, Local Government and Heritage and the consent of the Minister for Public Expenditure and Reform.

Sections 14 to 16 provide for enhanced accountability and auditing arrangements for Uisce Éireann. Section 14 deals with the final accounts and annual report of Uisce Éireann as a subsidiary of Ervia in circumstances where the appointed day is not 1 January 2023. Section 15 inserts provisions on Uisce Éireann's accounts and annual report after the appointed day when Uisce Éireann will no longer be a subsidiary of Ervia. Section 16 provides that Uisce Éireann will be accountable to the Committee of Public Accounts. Uisce Éireann's CEO and chairperson will be nominated persons to give evidence to the committee.

The effects of these sections are that Uisce Éireann will in the future be subject to a dual audit by both the Comptroller and Auditor General and its commercial statutory auditor under the Companies Acts and that Uisce Éireann will be accountable to the Committee of Public Accounts. This dual role arises due to the provisions of the company's legislation, Irish Water's governing legislation and the Comptroller and Auditor General's legislation. The heightened levels of accountability and transparency applying to Uisce Éireann are commensurate with the level of Exchequer funding of the company. In view of the introduction of complex accountability and auditing arrangements for Irish Water the Minister, Deputy O'Brien, is anxious to ensure that the legal separation takes effect on 1 January 2023.

Sections 17 to 22 are further technical amendments removing Ervia's functions under the Water Services Act. In order to establish Uisce Éireann as a stand-alone company certain staff, records, rights and liabilities must transfer from Ervia to Uisce Éireann. Since 1 January 2022 Irish Water has largely been operating as a separate stand-alone utility while remaining subject to overall governance by the Ervia board. This operational separation included the transfer and assignment of employees from Ervia to Irish Water with the full transfer to be completed on legal separation as well as the separation of the existing IT applications, integrations, data, infrastructure and networks as well as contracts and licensing arrangements. These steps effectively achieve the incorporation of all staff and all business support services together with the financial accounting obligations related hitherto to the Irish Water business directly thus enabling it to become operationally independent of Ervia to facilitate a smooth transition to Uisce Éireann becoming a stand-alone entity. Separation and novation of framework agreements and contracts are expected to be completed by the end of 2022.

The Bill makes the necessary provisions for a smooth transfer through the provisions in sections 23 through to 26. Section 23 provides for the transfer of certain Ervia staff designated by the chief executive to Uisce Éireann. It protects the terms and conditions of service of the staff transferred. Section 24 provides for the transfer of rights and liabilities from Ervia to Uisce Éireann and the preservation of contracts. Section 25 transfers liability from Ervia to Uisce Éireann. Once Ervia and Uisce Éireann are legally separated, Ervia will no longer be liable for legal proceedings relating to Uisce Éireann. Section 26 provides for the transfer of relevant records from Ervia to Uisce Éireann. In the case of joint records that relate to both Ervia and Uisce Éireann, Ervia will be required at Uisce Éireann’s request to transfer a copy of that record. To provide for surety for Uisce Éireann, the Bill provides that the Minister may make regulations in relation to the transfer of records. Ervia and Uisce Éireann are in the process of drafting appropriate data sharing agreements that meet GDPR requirements.

Part 3 which takes in sections 27 to 30 and the Schedule, inclusive, is the final part of the Bill. This part deals with consequential amendments to other legislation. Sections 27, 28 and 29 contain technical amendments to the Water Services Acts so as to reflect the end of Ervia’s role relating to water services and the change in ministerial shareholding of Uisce Éireann. Section 30 and the Schedule provide amendments to 11 enactments in order to reference Uisce Éireann by its own name rather than being referenced as a subsidiary of Ervia.

I am thankful to the Oireachtas Committee on Housing, Local Government and Heritage for the detailed pre-legislative scrutiny that was afforded to the general scheme of the Bill in September 2021. I am glad to say the majority of the recommendations set out in the committee's report are reflected in this Bill. Since 2013 Irish Water has carried out its water services functions under the umbrella of its parent company, Ervia. This Bill allows Irish Water – Uisce Éireann – to function as a stand-alone national authority for water services.

I look forward to Deputies' contributions and the progress of the Bill through the Houses.

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