Sean Barrett (Independent) | Oireachtas source

I welcome the Minister of State. I always look forward to his visits here, particularly in the context of the wide range of topics he is prepared to discuss with us.

It is going to be necessary for further information to be produced in order that some of the gaps to which Senator Daly refers might be filled in and I am of the view that a regulatory impact analysis is now required. We have discussed many of the principles but there is a need to get down to brass tacks. In view of the summer we have just had, one is prompted to ask why there is a problem with regard to water in Ireland. The OECD continually issues reports stating that water is scarce and that it must be properly priced and rationed. However, a great deal of it fell on Ireland during the summer months. If Ireland is the only country in the OECD which does not ration water, there might be a good reason for that. The problem in this country is that there has been a surplus of water in places such as Cork city, Glanmire and Dunboyne in recent years and this has led to flooding.

Some of the thinking relating to the Irish situation in respect of this matter is that little old ladies, widows, etc., take far too many baths, drink loads of water and are generally wasting large volumes of it. The evidence points to the contrary, however. If one removes the 60% for which the engineers are responsible - a great deal of which disappears out of the system - then it appears that there is no problem. There is plenty of water in this country but we do not always collect or trap it properly. This is what leads to flooding. I read an article in the Irish Examiner which was written by a retired engineer who questioned the entire rationale behind both metering and pricing. Single people, little old ladies and retired individuals do not consume much water. It is going to cost a great deal of money to install meters. People are going to receive a certain amount of water free of charge and I understand an announcement is due in that regard. Consumption will not be reduced because people do not actually use that much water. There have been indications that the State was going to order the most expensive meters. At the same time, people have been informed that they can save on up to 80% of the cost of having a meter installed simply by going to their local hardware shop.

Is the Minister of State in a position to indicate that the State will not be stung for millions of euro in respect of ordering meters of a particular type? Will he also indicate the level of price elasticity in respect of this matter? What will be the allowance with regard to free water? Have we targeted the wrong people? Would it not be better to leave the vast majority of homes without meters and not impose a charge on them because, in fact, there is no return to be had? In other words, has any consideration been given to allowing people to opt out of metering in view of the fact that there will be no return from it? Has an economic calculation been carried out in this regard? We are trying to change people's behaviour but there is no guarantee that we will be successful in this regard. I am concerned that this is an experiment which is going to cost a great deal to conduct.

When the Minister for Public Expenditure and Reform, Deputy Howlin, who served as Minister for the Environment in the 1990s, came before the House to discuss other topics, he stated that engineers were always willing to design huge projects but were never willing to address leaks in the system. Now it is being stated that water loss is being caused by retired people washing too much or drinking too much water. Perhaps this is a stereotype which we should abandon.

The Minister of State referred to the Commission for Energy Regulation, CER, the performance of which was discussed at the Kenmare conference approximately two or three years ago. The majority of the economists present at the conference indicated they were not very impressed by the CER's performance. At the time, electricity prices were extremely high and the regulator failed to challenge the large level of low productivity and the high cost base which obtained in what was then the ESB. We do not want a recurrence of what took place in the area of energy regulation in this instance. There is a need for a genuine counterweight in respect of any regulator.

As the Minister of State is aware, the relevant literature is full of information on cases of so-called regulatory capture where the customer is powerless and cannot really influence the regulator. There is no doubt that regulators are "captured" by producers. The term "independent regulator" is almost an oxymoron in the Irish case. The former Minister for Transport, Mr. Noel Dempsey, ordered the airport regulator to increase charges by 41%. He had to do this because the regulator was totally under the thumb of those it was meant to be regulating. This was an instance where the regulator was certainly not independent. The Health Insurance Authority, which is charged with regulating health insurance, is an in-house branch of the Department of Health. One of the Minister of State's colleagues established the Qualifications and Quality Assurance Authority of Ireland in the area of education. There are nine or ten people on the board of this authority, all of whom are appointed by the relevant Minister. In light of the fact that most universities have approximately 70 departments, when the legislation relating to establishing the authority was being debated we inquired as to how those nine or ten people were going to be in a position to regulate the research and other activities of those charged with teaching those 70 subjects.

I am concerned that part of the political incentive to set up new quangos and regulators is that this is basically another form of Government patronage. When the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, came before the House to debate the competition legislation, we asked whether the Competition Authority should not have power to say that particular regulators - particularly those which pass on price increases or whatever of 41% - are useless. We have a problem in this regard because we assume that regulators are independent when it is clear they are not. Typically, the consumer gets a bad deal as a result. When it comes to the regulator for the area under discussion, we do not want to make the same mistake that we have made on so many occasions in the past.

Reference was made to the fluoridation of water. As Members of the Oireachtas, we receive quite a number of representations on this matter. I have spoken to individuals from the dental schools in Trinity College and University College Cork and I am aware that, historically, this is a very strong health measure. Fluoridation of water supplies has been associated with great improvements in Irish people's dental health and led to the so-called decayed, missing and filled teeth index falling dramatically. Researchers found that fluoride was naturally present in water in Rathkeale, County Limerick, and that people in the area have very healthy and strong teeth.

If there is new research which casts doubts on the established wisdom, it should be examined. I certainly recall previous research which indicated that one would have to consume gallons of fluoridated water before experiencing any adverse health effects. Moreover, fluoridation has proven dental health benefits. Dentists are always telling us that it helps to reduce dental bills, even though cutting their bills is not something which one might expect any professional to favour. Perhaps the new authority will take it upon itself to re-examine the issue of fluoridation.

As to whether the new system will lead to cost savings, we will need to see the proof. The Minister of State indicated that the majority of staff at the new authority will remain in the direct employment of local authorities for a considerable period. That is a matter of concern given the finding in the McLaughlin report of substantial layers of superfluous management in local authorities. In addition, we do not yet know what the pricing model will be in respect of water charges. There must be a clear quantification, in advance of the establishment of the new authority, of the costs associated with the new system and the benefits that will arise from it. In particular, given the generally unsatisfactory experience with regulators in this country, measures must be put in place to ensure the new authority is not captured by the sector it is appointed to regulate in the wider public interest.