Dáil debates

Wednesday, 17 September 2014

Ceisteanna - Questions - Priority Questions

Irish Water Establishment

2:30 pm

Photo of Barry CowenBarry Cowen (Laois-Offaly, Fianna Fail)
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1. To ask the Minister for Environment, Community and Local Government the level of spending on set-up costs for Irish Water that was signed off on 22 October 2013; the information that was given to the Economic Management Council on the level of consultancy fees; and if he will make a statement on the matter. [34559/14]

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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I thank the Ceann Comhairle's office for facilitating this. I congratulate the Minister and Minister of State on their new roles.

Photo of Alan KellyAlan Kelly (Tipperary North, Labour)
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It is a very youthful team.

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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We cannot argue with that. As both the Minister and the Minister of State are very honest, straight-talking politicians, I hope they can level with the public in regard to the level of spending on the set-up of Irish Water that was signed off on 22 October 2013 and the information that was given to the Economic Management Council on the level of consultancy fees. I hope they can inform the public, who will receive their first water bills in the next number of weeks, as to the level of knowledge the Minister's predecessor and the Economic Management Council had on 22 October 2013.

Photo of Alan KellyAlan Kelly (Tipperary North, Labour)
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In advance of the enactment of the Water Services (No. 2) Act 2013, the Commission for Energy Regulation, CER, did not have full economic regulatory powers in regard to the water sector, but did have powers to advise the Minister. In that context, on 22 October 2013, my predecessor approved a request from the Department to seek advice from CER on new costs arising in the establishment of Irish Water. The purpose in seeking this advice was to ensure that the costs were of benefit to customers in the long term and that forecast expenditure was reasonable. In regard to the establishment costs, the request included broad headings for expenditure of €150 million plus a contingency of €31 million, but did not distinguish between in-house and external provision. The Deputy will appreciate that, for Cabinet confidentiality reasons, I cannot divulge details of discussions at the Economic Management Council, which has the status of a Cabinet committee.

The establishment of Irish Water is an integral component of the Government’s water sector reform strategy and involves major organisational change. The establishment of a high-performance utility will lead to lower costs and improved services in the future, providing much better outcomes for customers and the environment. There is a need to incur up-front costs in order to secure these benefits. The CER has reviewed the establishment costs and in its proposals, published in July 2014, it has indicated that it proposes to allow Irish Water the vast bulk - some €172.8 million - of the costs proposed.

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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It has become common knowledge that on 22 October, despite what he has said, the Minister's predecessor was fully aware of the set-up costs for Irish Water to the tune of €180 million. Does the Minister think that figure is fair? He seems to suggest it is.

In County Roscommon, more than 30,000 households are on a boil-water notice and there is not the required level of investment in infrastructure to ensure that people's basic right to have running water in their homes is fulfilled. Now the Minister seems to think that expenditure in the region of €180 million is okay, and €86 million out of that €180 million is to be spent on consultancy fees.

I certainly do not think this is a fair figure to be used in the setting up of Irish Water.

2:35 pm

Photo of Alan KellyAlan Kelly (Tipperary North, Labour)
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I want to point out to the Deputy that there are legacy issues relating to the setting up of Irish Water. The Deputy's party was in government long enough to know what they are. One of these legacy issues is the fact that the people of Roscommon do not have a water service that is appropriate. It is disgraceful that this was left the length of time that it was and that there was no investment to ensure that people had the water services they deserved.

The establishment costs of Irish Water have been examined by the CER, which assessed them in great detail. The CER permitted an allocation of €172.8 million and said that it felt €8 million was not required, so the vast bulk of the establishment costs were accepted. One must also look at it in comparative terms relating to the setting up of a utility of this scale and size. If one looks at it in a comparative context involving other jurisdictions, one will see that the actual establishment costs are on a par with those incurred in other jurisdictions, or in some cases better. I must come back to the decision by the CER relating to its estimate of the establishment costs. The CER has accepted that €172.8 million is the requirement, and if that is its judgment I have no reason to doubt it.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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Does Deputy Troy wish to ask a further supplementary question?

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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So the Minister is saying that he agrees with the assessment? The Minister talks about legacy issues-----

Photo of Alan KellyAlan Kelly (Tipperary North, Labour)
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The CER is an independent regulator.

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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Why then did his predecessor feel the need to mislead a committee in November 2012 and say that the set-up costs would be €10 million? When he appeared on "Prime Time" on 14 January 2014, why did he say he was not aware of this? If the set-up costs are so reasonable or understandable, why did the Minister's predecessor feel the need to mislead the public in terms of what he knew about the setting up of Irish Water?

The Minister talks about legacy issues. Can I remind him that the Government is now in its fourth year of office? The people in Roscommon to whom I have spoken over the past number of evenings have been on a boil-water notice for the past 12 months. This problem has been resurrected in particular areas in Roscommon in the past 12 months. Why does the Minister think that €180 million should be spent on a super-quango at a time when people cannot have treated water running through their taps?

Photo of Alan KellyAlan Kelly (Tipperary North, Labour)
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The Deputy said people had been on boil-water notices for the past 12 months. In some cases, they have been on boil-water notices for up to 12 years, so to have the Deputy throwing that out, given his background, borders on the ridiculous. The reason this utility was set up was to have a framework whereby we can invest in water provision for the future and ensure that this ridiculous situation never happens again.

I am concerned about a number of things. First, the Deputy made statements about the previous Minister misleading people. Those are big statements that need to be justified. The second issue is that Deputy Troy is saying he does not accept or believe the independent regulator, which has made its judgment regarding the set-up costs of this utility. Of course I accept the regulator's decision, and it would be appropriate if Deputy Troy did so as well.