Irish citizens deserve quality water service – Kelly
Issued : Wednesday 5 November, 2014
Speaking during Seanad Statements on Irish Water
Go raibh maith agat a Cathaoirleach. I’m pleased to have this opportunity to contribute to this timely debate on Irish Water. The scale of the endeavour to set up this utility is enormous and was severely underestimated. While the timelines may have been dictated by the Troika, we all accept at this stage that they were simply two ambitious. I fully accept this. While I was not a member of cabinet at the time, it is important that as a Government we acknowledge that errors were made – the timelines, the complex nature of the charging structure and poor communications by Irish Water. We must now take steps to address them and we will.
The timelines have led to confusion, uncertainty and huge frustration for the public. Again, I fully accept this. As a Government, it is time for us to listen and we are doing that. We are working on a package to bring the necessary certainty and clarity to the charging structure so that the public do face water charges which are modest and affordable. Many people are preparing for bills in the region of €500, €600 or €800. Based on the package we are bringing in, nobody will be paying these levels for their water. Let me repeat that, nobody will be paying these levels for their water services.
I fully acknowledge there have been failures in communication. Irish Water have correctly and appropriately apologised to its customers and elected members for this and are taking steps to remedy it.
The transformation programme underway in Irish Water is significant. It involves both funding and organisational changes. Each of these would be significant undertakings in their own right. We made many mistakes throughout this process as a Government, but establishing Irish Water was not one of them.
Public Utility
Let me address first and foremost, the reasons why we have set up Irish Water and why I believe it will deliver long term benefits for Irish taxpayers and its customers.
Running water services through 34 local authorities was wholly inefficient. Imagine what the ESB would be like if it was divided into 34 separate companies all developing their own plans independently and little or no integration of planning or investment. Power shortages would be a regular occurrence and there would be calls on Government to rationalise this system.
That is what we have had in the Irish water system. If I could cast peoples’ minds back two years ago during the last web summit in Dublin. There was a water restriction in operation across Dublin.
Investors who were coming to town were not able to take a shower when they went back to their hotel in the evening. Is that the message we want to send out as a country?
Put simply, if the previous situation continued, our operational costs would be out of line with other countries and the burden of this cost would be borne completely by the Irish taxpayer. Furthermore, it is difficult to make soundly based investment decisions through a fragmented system which does not have a national and regional perspective on the condition of water services infrastructure and the overall priorities for investment and planned maintenance. It is this reason we have over 800 kilometres of water pipe in Dublin that is over 100 years old.
However, I will say this to the members present – local authorities should be retained as an information source on local water services. They have community connections that Irish water simply has not developed and are better equipped to communicate locally in the events of floods, mains bursts or other water related incidents.
There has been huge emphasis on the start-up costs of Irish water. I accept it was a mistake to refer to all of this as ‘Consultant Costs’.
All of these costs were assessed by the utility management experts in Commission for Energy Regulation and found that 95% of these costs were justified. Again that is not the opinion of the Government or me as Minister; it is the express opinion of the independent regulator.
Independent regulation is an important element of the utility model, as it ensures that Irish Water’s costs are scrutinised and that challenging efficiency targets are set. A major element of operational costs of water services relates to energy and consumables (chemicals for treatment of water etc), and already this year, through a national procurement of goods and services, Irish Water has made savings of €12 million.
All citizens nationally deserve the same quality water service, and we need particularly to address situation of people who are on boil water notices. This Christmas, many of those households in Roscommon who not been able to drink their water
The utility has already adopted a new approach towards asset management and capital projects planning. Evidence of this is the targeted €170 million saving through the proposed Ringsend waste water treatment plant upgrade as an alternative to plant extension. That is the cost of Irish Water’s establishment saved in one strategic decision. Let me just repeat that, in one project, Irish Water will save the entirety of its start-up costs.
Capital investment
Historical under-investment means that we have a water services system which is failing both customers and tax-payers. The level of investment required to bring our systems up to date runs to billions. The new funding model, which includes domestic water charges allows us to address these legacy issues and provide new infrastructure for the future.
As a commercial utility, Irish Water can borrow from the markets similar to the ESB and Bord Gáis. 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 will mean that debt raised by Irish Water to fund capital will not count for Government Debt and will be more favourable in terms of our general government deficit that funding through direct Exchequer funding.
The Commission for Energy Regulation have permitted Irish Water to spend up to €1.77 billion on their capital programme over the period ahead if funding can be accessed. We simply could not afford this level of investment through the traditional model, without significant budget impacts in terms of taxation or cuts to other areas of spending.
For this reason we need to move to a system where funding coming directly from those who use it, thus creating a real emphasis on sustainable use of this precious, expensive resource. Already through the domestic metering programme, we are seeing an emphasis on identifying customer-side leakage, which accounts for some 5% of the national leakage rate of up to 49%. This is an emphasis on reducing leakage never seen before in Ireland, and will be accompanied by a customer focus on conservation and sustainable usage in the long term that should bring consumption down by an estimated 10-15%.
A Cathaoirleach, let me assure the public that the Government is working to bring clarity about how much people will pay for water. Charges will be modest, fair, and affordable. Householders will have certainty in the next two weeks over how much they will pay, and there will be adequate supports to ensure that those facing the greatest challenges from water charges have receive affordability supports. Payment options will be flexible.
Privatisation
The commitment to public ownership of water services was enshrined in 2007 legislation, then reaffirmed in the legislation passed before the end of 2013. Yet the scaremongering continues. Irish Water will remain in public ownership, full stop.
The public has the right to honest debate. There is no evidence to support the propaganda of a privatisation agenda. Devoid of any substantive arguments, Opposition politicians have resorted to this propagating this myth. All parties in both Houses support public ownership of water infrastructure. Everyone should acknowledge this and put the public at ease.
Engagement with public
In parallel with the Government’s work on water charges, Irish Water must improve its engagement with customers and public representatives. Already it has adjusted resources in its customer call centre so that the public receives quicker response times when calling to register or seek information. This reallocation of resources has already resulted in average customer response times dropping to below 20 seconds.
Irish Water is also strengthening its engagement with elected representatives. It has opened dedicated phone lines for Oireachtas members and councillors and this evening will see it host its first weekly clinic for Oireachtas members, an important outlet for members to receive information on behalf of constituents about issues such as capital improvements, drinking water quality or customer registrations.
The establishment of a unified Ervia/Irish Water Board presents an opportunity to reinvigorate the organisation so that it becomes significantly more customer-focussed in its operations and communications. The Ervia Group and Irish Water are actively reviewing its communication strategy to better reflect the needs of all stakeholders, including elected members. I also recognise the particular pay model in the Ervia Group has been the subject of much comment. One of the first actions the new board should consider is whether or not this payment model is appropriate for Irish Water.
Conclusion
A Cathaoirleach, 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 this new, national utility based on good customer service and reliability. It is a vision for a well-funded public system so the utility can upgrade public water supplies, achieve low leakage levels and adequate levels of waste water treatment, to protect public health in the decades ahead, and to keep our rivers, lakes and coastal waters free of pollution, helping to maintain Ireland’s image as a clean, green country that continues attracting a growing number of tourists.
It is a vision for a water secure country, notwithstanding the challenges of a rising population, economic recovery and climate change. A water secure country in the context of global water demand likely to exceed supply by 40% by 2020. An Ireland with security of water supply that will guarantee current and future competitiveness for industries such as agri-food, ICT and pharma-chem, which combined, provide well over 200,000 water intensive jobs in Ireland. A security of supply that will attract further water intensive industries to Ireland as other countries experience growing water shortages, thus creating further prosperity into the future.
I look forward to meaningful contributions in this debate, as building for a successful of Irish Water is key for the future of our water services. Go raibh maith agat.
