Phil Hogan (Carlow-Kilkenny, Fine Gael)

I did not interrupt the embarrassed Senators. We need for a more fundamental shift in the way water services are organised and funded in Ireland. I cannot be more clear in what I said. It is important to acknowledge the considerable efforts of the local authorities to improve services but last week we saw restrictions imposed by Dublin City Council and other Dublin local authorities on the water resource we have. People must understand water is a finite resource. It is not the Government's intention to discard the expertise and knowledge built up in the local authorities. On the contrary, we want to ensure that expertise and knowledge are being deployed strategically and efficiently to meet the significant challenges facing the sector. The adoption of river basin management plans last year marked an important step in the implementation of the EU water framework directive and provides the strategic direction for much of our future actions and investment in the sector. The move to a river basin catchment approach to water resource management will require greater co-ordination in the planning and delivery of all aspects of water services. The establishment of Irish Water, the new State-owned water company, is a priority for me and the transfer of functions from local authorities to the new company needs to be carefully managed. My Department is overseeing an independent assessment on the establishment of the new company, Irish Water, which will be completed this year. This will examine the optimum role of the new company and assist in defining the functions to be assigned to it. The assessment will also make recommendations on how specific areas of work are to be transferred from the local authorities to the new company. The independent assessment, which is to include detailed implementation issues, will be completed by the end of October this year. After that I will be able to bring proposals to the Government on the establishment of that new entity, Irish Water, before the end of 2011.

We have invested heavily in improving our water services and even in the current difficult economic position the Government is continuing to give priority to investment in this area. A provision of €435 million is being provided from the Exchequer this year, and this investment is required not only to expand infrastructural capacity but also to upgrade the water supply distribution network to tackle uneconomic levels of leakage and improve operational efficiency.

We have a very diverse water supply system, with over 950 public supplies producing some 1,600 million litres of water daily through a network of 25,000 km of pipes. The extent of burst water mains places a particular focus on the vulnerability of the Irish water distribution system, in particular given its age, the high levels of leakage in the system and the lack of investment historically in mains rehabilitation. The focus of Exchequer investment in water services in recent years has been on ensuring compliance with the European directives on both drinking water standards and urban waste water discharges, as well as improving water supply to keep pace with population and economic needs, with total investment exceeding €6 billion over the last decade.

The current water programme provides for increased investment in critical mains rehabilitation with contracts to the value of €320 million set to commence over the period of the programme. This represents more than double the investment of €130 million in the last programme period from 2003 to 2009. This investment is essential to address the unacceptable levels of leakage from our water mains, or so-called unaccounted water. We cannot continue to tolerate a position which allows such high volumes of water, treated to a high standard at great expense, to be unaccounted for.

The cost of providing water services in Ireland has increased significantly. Increased investment in new treatment plants for drinking water and wastewater has increased the operational costs for local authorities. More stringent environmental legislation and rising energy prices have also contributed to the increase in costs. It is clear that the previous policies of providing water free, with no incentive to manage usage, is not sustainable. The OECD published a report in 2010 that specifically highlighted the difficulties being caused by our failure to charge households for water based on usage. The OECD noted that Ireland's failure to install water meters gives households zero incentive to save water or to minimise waste in the form of leaking pipes, running taps and other wasteful uses such as the unnecessary use of garden hoses.

The OECD also advised that the failure to measure water use perpetuates the public's low awareness of consumption levels and the real cost of water services. The OECD went on to observe that water metering will also remove the inequity between households. A house with large gardens, for example, or even a swimming pool will pay significantly more than a smaller household with average consumption. The OECD concluded that the absence of water metering contributes to a lack of incentives in the planning system and in building regulations and practices to focus on the water economy, with rain water harvesting an example. I see the introduction of water charges through metering as an essential water conservation measure to deal with a finite resource and to help businesses and households have a good quality water supply. It will also ensure we have plentiful water to help in attracting inward investment to the country in the years ahead, and it will provide essential employment opportunities for our people.

We recognise there are weaknesses in the current funding model for water services. The programme for Government provides for the introduction of a fair funding model to deliver clean and reliable water. A new system of water charging for households on public water supplies will be introduced based on usage above a free domestic allowance from 2014.

International experience is clear in showing that water metering can achieve significant reductions in consumption. In Denmark, a reduction of 12.6% in household consumption was achieved in the period between 1996 and 2007 following the introduction of water meters, with the promotion of water saving devices. I recently attended a conference in Croke Park where a speaker from Southern Water in the United Kingdom highlighted how universal water metering in the Isle of Wight had reduced consumption from 160 litres per person per day to 124 litres per person per day, a reduction of more than 20%. Research carried out by the Dublin local authorities estimates average customer side leakage at 65 litres per property per day and, in some locations, this could be significantly higher. Evidence from the National Federation of Group Water Schemes suggests much of the water lost from the group water scheme through leakage is on the customer side, where metering is helping to reduce leakage.

The installation of water meters will ensure leaks can be identified and fixed, and metering will therefore achieve significant reductions in the volume of water required to be treated every day and lead to savings in the operational costs of delivering water services and in deferred capital expenditure. Moreover, it will lead to other environmental benefits, such as reduced abstractions from our rivers and lakes and in reduced carbon emissions from lower energy consumption.

In line with any significant policy issue submitted to the Government, the potential impacts on low income households and other vulnerable groups will be taken into consideration. As set out in the programme for Government, all households will be provided with a free allowance of water, with charges only applying to usage above that allowance. My Department will also be developing a public awareness campaign to inform households of actions which can be taken to reduce their consumption and hence the cost of the water being used.

The creation of Irish Water and the introduction of a system of water charges based on usage will transform the provision of water services in Ireland. In these difficult times, we must deliver our services and use our resources more efficiently; by delivering on the commitments in the programme for Government, we can ensure this happens. To put it at its mildest, it is disingenuous for the Fianna Fáil group of Senators to table this motion and conveniently forget what they had previously, while part of the Government, committed us to doing. The new Government will implement its own proposals for water services reforms in a much more considered manner than our predecessors ever managed to. I ask the Fianna Fáil Senators to withdraw their motion and save themselves political embarrassment in doing so. This will ensure that the political honesty expected in the Upper House will be maintained.