Alan Kelly (Tipperary North, Labour) | Oireachtas source

I am pleased to have this opportunity to contribute to what is a timely debate, as I am sure we will all agree. The scale of the endeavour to set up this utility is enormous. I want to say this quite publicly because when I became Minister I wanted to show this. It was completely underestimated. It is time to hold hands up and admit that. While the timelines may have been dictated by the troika, we all accept at this stage that they were overly ambitious and unachievable. One cannot do things in two years which really will take five or six years in my opinion. I fully accept both of those. I fully accept that the scale of this project, which is the largest utility created in the history of the State, and the timelines associated with doing it were wrong.

While I was not a member of Cabinet and was not part of that decision-making process, I am now and I am responsible. I hold my hands up and admit that errors and mistakes were made regarding both of those. The complex nature of the set-up, the way that was dealt with, the charging structure and the communications of Irish Water were not what they should have been. We must now take steps to address all those issues in an open, honest and frank way, and I have to take responsibility for leading that charge.

The timelines have led to confusion, uncertainty and huge frustration for the public. Again, I fully accept this. It is time for the Government to listen and to ensure we have learned from those mistakes. We need to bring about a utility that is fit for purpose and that can develop a quality water supply for future generations. That is the critical issue. We need to develop a utility that can develop our water system for future generations. I am the father of young children; I know the requirement we have. In ten years we will have issues all over the country if we do not do something about it. We already have serious issues all over the country as it is.

As a Government, we are working on a package to bring the necessary certainty and clarity to the charging structure in particular, which has been an issue of huge frustration. I want to ensure clarity that when the public are facing into charges they are modest and affordable. Based on the experience of my clinics in County Tipperary - in Nenagh, Roscrea, Thurles, Clonmel, Tipperary Town etc. - and from what I hear from all my colleagues in the Labour Party and across other parties, including my Government colleagues in Fine Gael, there are people who are worried about preparing for potential bills in the region of €500, €600, €700 or €800. Let me be quite clear on this; this is essential. Under the package the Government is preparing, nobody will be paying these levels of charges in any way, shape or form. They will be modest and will be set out over a defined period. Nobody will be paying such charges for their water services or anywhere near that.

I fully acknowledge there have been huge failures in communication. I am personally trying to improve on that. I have to lead from the top, as the Minister with responsibility. Along with its parent company, Irish Water needs to ensure it communicates correctly and appropriately.

Irish Water has apologised to its customers and elected representatives throughout the country for the failures of the past. Many steps have been taken to rectify the position and I hope to hear from some Senators that they have witnessed the relevant changes being implemented in a positive way.

The transformation programme under way in Irish Water is significant. It involves both funding and organisational changes. Each of these is important undertakings in its own right. As a Government, we made many mistakes throughout the process. As a former Member of this House, I always like to engage in quite open debate with Senators. I acknowledge that mistakes were made but establishing Irish Water as a utility was not one of them. The latter was not a mistake; it was and remains the right thing to do. That is why I say to Senators that we need to support Irish Water.

I wish to address, first and foremost, the reasons we have set up Irish Water and why I am of the view that it will deliver long-term benefits for taxpayers and its customers. Operating water services through approximately 34 local authorities - this number changed over the years - was wholly inefficient. This was despite the major efforts made by those authorities and the people who worked for them, many of whom I know. Imagine what the ESB would be like if it was divided into 34 separate companies all developing their own plans independently, with little or no integration of planning or investment. It would not be future-proofed - it is as simple as that. Power shortages would be a regular occurrence and there would be calls on Government to rationalise and improve the system. This is what we are doing in the context of Irish Water. In other words, we are rationalising and improving the system for the future. If I could ask people to cast their minds back to two years ago, when, on the previous occasion on which the very successful web summit was held in Dublin, there were severe water restrictions in place across this great city. Some of the largest and most powerful investment companies in the world sent their representatives here on that occasion and these individuals were faced with the fact that water supplies were restricted each night. Hotels could not provide water for people to take showers and restaurant owners were restricted in terms of how they could use water on their premises. That is not the type of message we need to send out from this country to anyone.

To put matters simply, if the previous situation had been allowed to continue, our operational costs would be out of line with those of other countries and the burden of these costs would be borne completely by taxpayers. Furthermore, it was difficult to make soundly-based investment decisions through a fragmented system such as that which previously existed and which did not have a national and regional perspective on the condition of water services infrastructure and the overall priorities for investment and planned maintenance. Essentially, this is the reason that over 800 km of the water pipes in Dublin are well in excess of 100 years old. However, I will say this to those Senators who are present for this important debate that we need to reassess the role of local authorities. I am of the view that they need to be retained as a source of information and that they are a key cog in the wheel relating to local water services. As the Minister with responsibility for local government, I assure the House that this issue is being addressed. Local authorities have community connections which Irish Water has not developed and which it will not develop very quickly. They are also better equipped to communicate locally in the event of burst mains, floods and many other water-related issues.

There has been huge emphasis on the start-up costs relating to Irish Water. I accept that it was a mistake for the latter to be referred to as "consultant costs" on a couple of occasions in public. All of these costs were assessed by the utility management experts in Commission for Energy Regulation, who found that 95% of them were justified. Again, this is not the opinion of me, as Minister, or the Government, rather it is the express opinion of the independent regulator. Independent regulation is an important element of the utility model because it ensures that Irish Water's costs are scrutinised and that challenging efficiency targets are set. A major element of the operational cost of providing water services relates to energy and consumables such as chemicals for the treatment of water, etc. Already this year, through a national procurement of goods and services, Irish Water has made savings in excess of €12 million. That is the type of change a utility of this nature can bring about.

All citizens nationally deserve the same quality of water services and we must address - as a matter of urgency - the situation of people who are on boil water notices. It is completely insane that such notices have been in place in many counties for in excess of ten years. Some of these notices are in place in my county but in this regard I refer to Roscommon and other counties in particular. The current position cannot continue to obtain.

Irish Water has already adopted a new approach towards asset management and capital projects planning. Evidence of this, which needs to be aired publicly, is the targeted €170 million saving through the proposed upgrade of the Ringsend wastewater treatment plant, which I visited yesterday, as an alternative to extension previously proposed by Dublin City Council. As a result of this development, the plant will be able to treat the wastewater of in excess of 2.1 million people as opposed to 1.65 million as is the case at present. The €170 million, which relates to one project, is a major saving. It is ironic that it equates to the set-up costs relating to Irish Water in their entirety.

Historical under-investment mean that we have a water services system which is failing both customers and taxpayers. The level of investment required to bring our systems up to date runs to billions. It is expected that we will need to invest between €600 million and €1 billion in water infrastructure each year. The new funding model, which includes domestic water charges, allows us to address these legacy issues and provide new infrastructure for the future. I am excited about this new infrastructure. I travel throughout the country receiving representations from Senators and meeting members of local authorities, both collectively and individually, fellow Deputies and Government colleagues. Everywhere I go, there is a need to improve the infrastructure relating to water. To be frank, some issues relating to said infrastructure across have only come to light since Irish Water was established. Those issues relate to many local authorities and they would not necessarily have been placed overtly in the public domain.

As a commercial utility and similar to the ESB and Bord Gáis, Irish Water can borrow from the markets. In broad terms, if Government support is not more than 50% of Irish Water's operational revenue, then it will be considered under EUROSTAT rules to be a commercial undertaking. This is critical because it will mean that debt raised by Irish Water to fund capital will not count as part of Government debt and will be more favourable in terms of the general Government deficit than would be the case with moneys obtained through direct Exchequer funding. The Commission for Energy Regulation, CER, has permitted Irish Water to spend up to €1.77 billion on its capital programme in the period ahead if funding can be accessed. We simply must access such funding because we could not afford to provide the necessary level of investment through the traditional model without significant budget impacts in terms of taxation or cuts to other areas of spending. In political terms, we can all argue about the percentages, etc., involved but that to which I have just referred is a fact. It is for the reason I have outlined that we need to move to a system where funding will come directly from those who use this precious and expensive resource. The latter will create a real emphasis on the need for sustainable use of said resource.

Through the domestic metering programme, we are already seeing an emphasis on identifying customer-side leakage, which accounts for some 5% of the national leakage rate of up to 49%. Before Irish Water was created, the latter percentage was assessed as being much lower. This emphasis on reducing leakage has never before been seen and will be accompanied by a customer focus on conservation and sustainable usage in the long term that should reduce consumption by an estimated 10% to 15%.

I assure the public that the Government is working to bring clarity to how much people will pay for water. Changes in charges are coming about. Charges will be modest, fair and affordable. Householders will have certainty within the next two weeks or less about how much they will pay and those facing the greatest challenges from water charges will receive adequate affordability supports. Payment options and so forth will be flexible.

Preceding these statements on Irish Water, the House had an intense debate on the issue of privatisation. I watched it from outside. This is an emotive issue. Given my political lineage, privatisation is not something that I would tolerate or in which I believe. The commitment to public ownership of water services was enshrined in the 2007 legislation and reaffirmed in the legislation passed last year. I wish to be clear - Irish Water will remain in public ownership, full stop.

The public has the right to honest debate on this issue. There is no evidence to support the propaganda of a privatisation agenda. Devoid of any substantive argument, however, many people are still propagating this myth. Both Houses and all parties have stated that they are in favour of public ownership. If any individual in either House believes that we should privatise Irish Water at some point - I have met no one, nor do I believe I will even though I could be wrong, who believes this - will he or she please say it so that we might get a feeling for the percentage of people in question? My party would never agree to such a thing. Fine Gael has publicly stated that it would not. Sinn Féin has publicly stated that it would not. Fianna Fáil has stated publicly that it would not. Many Independents and smaller parties have done likewise.

I accept the motion that was passed by the Seanad and the House's right to do so. I welcome the debate, as it is appropriate. While I will not rule such a referendum out, given that this is an issue of public concern, I will make two remarks. First, the manner in which the Seanad voted today must be digested. I will bring that message to the Taoiseach and the Tánaiste. It is my duty to do so. I will speak about it with the Cabinet. Second, we must consider other issues. For example, were we to hold a referendum on Irish Water, would we also need to hold a referendum on many other utilities? A broader debate on this question may be necessary. I am not claiming to have all of the answers. Although it is possible that we should not do so, could the Oireachtas use other mechanisms to give the assurance and clarity that people need if we are to close out any thought, however minuscule, of a privatisation agenda?

In parallel with the Government's work on water charges, Irish Water must improve its engagement with customers and public representatives. I have stated this publicly, realising the level of engagement that local authorities have had with communities about water services down the years. I was a part of that mix myself for many years. Importantly, Irish Water needs to fill that role in a way that supports the work of public representatives. It has already adjusted resources in its customer call centre, which I hope to visit in the coming days, so that the public receives quicker response times when calling to register or seek information. This re-allocation of resources has resulted in average customer response times dropping to below 20 seconds. Irish Water is also strengthening its engagement with elected representatives in other ways. It has opened dedicated telephone lines for Oireachtas Members and councillors. This evening will see it host its first weekly clinic for Oireachtas Members in the AV room, an important outlet for Members of both Houses to work with Irish Water, ask questions and get clarity on behalf of their constituents about many issues. In particular, I invite Senators to consider the issues of capital improvements and how to improve drinking water quality. Future capital investment in Irish Water has been underestimated. The scale of that investment will be colossal, but the critical elements are where the investment will go, how we will prioritise projects, how we will ensure that, for example, raw sewage no longer flows into the Avoca river in Arklow and what the timelines will be. This covers small and medium-sized issues all the way up to the significant water requirements of the conurbation that is this great city and its surrounding counties in respect of which I will have to make major decisions on how to supply water so as to ensure an adequate supply. Dublin has an excess water capacity of between 1% and 4%. It should have an excess water capacity of 20%. During the summer or when the weather otherwise affects supply, there is trouble. That is what happened two years ago.

The establishment of a unified Ervia-Irish Water board presents an opportunity to reinvigorate the organisation so that it becomes considerably more customer-focused in its operations and communications. This is a significant opportunity. I have stated publicly that the board needs expertise. I expect to see changes on the board. I am working intensely with my colleague, the Minister for Communications, Energy and Natural Resources, Deputy White, in that regard. I will speak with him again today. I expect to see advertisements for the board in the near future. The Government will identify the types of people required on such a board and ask anyone who is interested to apply through the new public appointments process. We will assess who are the best people to support this vital utility.

The Ervia group and Irish Water are actively reviewing their communication strategy to reflect the needs of all stakeholders better. I also recognise that the particular pay model in the Ervia group has been the subject of much comment and criticism. The new board's first action will be to deal with issues that are in the public's consciousness concerning pay structures and bonuses. As Minister, that current situation is not something I tolerate. If mistakes have been made, we must fix them. The board will be mandated to do so in whatever way it must.

The Government's vision is for a country in which every household connected to the public water system has a high-quality, reliable water supply and a relationship with the new, national utility based on good customer service and reliability. We need to get to that point. I will not stand here and claim that all mistakes will be wiped out overnight, as I do not want to give hostages to fortune. Mistakes will probably be made, but all I am concerned about is that they are honest mistakes and not of a scale that results in hardship.

It is a massive utility.

It is a vision for a well-funded public system in order that the utility can upgrade public water supplies, achieve low leakage levels and provide adequate levels of wastewater treatment to protect public health in the decades ahead and to keep our rivers, lakes and coastal waters free of pollution, thereby helping to maintain Ireland's image as a clean, green country, which is absolutely central to the Government's desire to promote tourism. This is essential from a tourism point of view and I certainly speak on this issue with some knowledge given my previous employment. It also is a vision for a water-secure country, notwithstanding the challenges of a rising population, economic recovery and the real concerns with regard to climate change. It will be a water-secure country in the context of global water demand being likely to exceed supply by 40% by 2020. It will be an Ireland that has a security of water supply that will guarantee current and future competitiveness for industries such as agrifood, ICT and the pharmaceutical and chemical industries, which combined provide well over 200,000 water-intensive jobs in Ireland. Such security of supply will attract further water-intensive industries to Ireland as other countries experience growing water shortages, thus creating further prosperity for this country. Ireland hopefully will address these issues quicker than anywhere else.

I genuinely look forward to the ensuing debate. My Department, my colleague, the Minister of State, Deputy Coffey, and I, as well as every member of the Government, will take on board the decision the Seanad made today, as well as the contributions Members are about to make in this regard. This subject matter is of great importance and it is critical that the Government makes the right decisions in this regard into the future. I am determined to promote the fact that this utility is needed but that it is needed for the right reasons. This is about the future, about water provision and about ensuring that future generations will have what this generation has had as we improve the services. While mistakes have been made, the Government will ensure that into the future, they will be addressed and we will have a utility of which everyone can be proud and which can deliver for the country. I again thank Members for their invitation.