End of the line for Irish Water?

    Radio Producer and Presenter John O’Donovan argues that its time to wind up Irish Water.

    Eurostat , the EU statistics agency has today decided that the Governments spend must remain on the states exchequer balance sheet. This means we will face into an additional €500 million added to the national debt, the assumption up to now by the Government was that it would pass the Eurostat assessment, even though they had factored the cost into its Spring Statement. In what the Government could have expected to be a positive day for the Irish Water project, has now highlighted the unmitigated disaster it has been from day one. The view of the Government that it could keep Irish Water off the states balance sheet was wildly naïve to say the least and in truth nothing more than a colossal folly. The idea that the €100 ‘conservation’ grant would convince Eurostat that more than half its operating costs would be derived from income ‘earned’ from customers was bizarrely optimistic and unlikely ever to be a stunt that would succeed.

    Eurostat confirmed this afternoon that Irish Water had failed the Market Corporation test due in the main to the Governments considerable control and that it is a non-market entity that ‘should be classified inside the Government sector’. This approach was taken provisionally by Eurostat in April when the report was initially expected, however, conveniently enough for the Government this final classification has taken place when the Government is in ‘Summer recess’ and this serious matter cannot now be discussed in the Dail chamber. How Alan Kelly, Enda Kenny and Joan Burton among others could maintain with a straight face that Irish Water would pass the test is beyond belief when you examine the criteria. It shows a huge degree of incompetence and lack of understanding of quite obvious and elementary conditions, that one must seriously believe that the Government is completely out of its depth and that The Minister for Environment, Alan Kellys position is surely untenable. Minister for Finance, Micheal Noonans assertion today that there is ‘no crisis’ after today’s assessment of Irish Water, shows how completely out of touch this Government is with the reality of the situation.

    The key elements of Eurostats sector classification of Irish Water are very critical of the Government and their approach to the troubled utility. They criticise ‘considerable Government control over Irish Water, in particular board appointments and operations’. They believe this is merely a transfer of existing local Government staff and assets. They are critical of significant Government funding and funding, ‘mainly in the form of operational grants and capital funding’. They have major concerns over the capping of fees and ‘the lack of economically significant prices’. And in what was most obvious to anyone in recent weeks they highlight ‘the fact that the quantitative criterion is not met…that sales must cover at least 50% of the production costs’, ‘This is further amplified by the high number of households not paying their bills’. When it became clear that only 43% of household customers has paid their first bill, this was clear to everyone, yet the Government parties in unison claimed it was a ‘solid start’, while the misguided and oblivious Minister Kelly claimed he was ‘hugely satisfied’ and proclaimed it was an ‘extremely good start’, clearly Eurostat were far from in agreement with Alan Kelly. Minister Kelly has shown himself to have failed abysmally in his stewardship of the Irish Water project and completely misunderstood the Eurostat measurements associated with the classification of Irish Water.

    When the country was bankrupt and in no position to be able to borrow on the international markets, Irish Water was conjured up as a way of passing the EU’s markets corporations test, this was a slight of hand method to keep the cost of the maintenance of the water systems off the books. Since we are now no longer pariahs on the international bond markets and are no longer controlled by the Troika, this is no longer an issue and the Government should really face up to the fact that this woeful ‘experiment’ is no longer viable or necessary. Furthermore, the very model of Irish Water from day one has been flawed in every level of its implementation and its dissemination of information amongst the public.

    Simply put, Irish Water was a means to charge people for their water, without improving or upgrading the distribution network first, it was an entity that was primed for privatisation and now it is one that must be put out of its misery before it costs the Irish taxpayer and the state any more wasted funding. Irish Water must be consigned to the deep and distant past alongside the e-voting machines and the local authorities should regain control of our water system. The distribution system should be maintained and upgraded by borrowing at low interest rates on the international bond markets and direct progressive taxation before future metering is considered at all and any future privatisation should be ruled out completely.

    Irish Water has been nothing but a bonanza quango, with inflated salaries, massive outlays and millions wasted. The public has had enough, only 43% of Irish waters customers have paid their bills and on the back of what we have heard today it is high likely that the figure will be less the next time the bills are totted up. It is a flawed and broken experiment that has failed abysmally and can no longer be allowed to hoover up any more of the taxpayers money and exchequers revenue. As it stands now, Irish Water owes €850 million, the Environment Minister, Alan Kelly has agreed to allow them borrow another €550 million and into Budget 2017 we are facing into another €500 million in national debt on the shoulders of the taxpayer. It is high time to scrap Irish Water now before any more money is wasted on this shambolic entity, it’s a failed and wasteful gamble that now needs to be stopped and wound up.

    John O’Donovan, Radio Producer & Presenter, Lecturer in Journalism & Media communication in Griffith College Dublin and Dun Laoghaire IADT.

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  • Korhomme

    Interesting stuff about ‘off balance sheet’ finances.

    Does this apply to all the wheezes that governments use to hide debts? The UK has lots of PFI (Private Finance Initiatives) and student ‘loans/fees’ which are also off balance sheet. Does anyone know about these and other schemes? Are they compliant?

  • Onetwothreefour

    Now, John makes some valid points. But, as a lecturer in teh journalizm, would he not give a quick proof read before publishing?

  • the rich get richer

    Dodgy Politicians trying to fatten up a publicly owned resource so that they could hand over the fatted goose to their Chums.

    Don’t you love it when “a cunning plan of thieving politicians doesn’t come together ”

    Hopefully the thieves are thwarted at least temporally.

  • chrisjones2

    Why not sell it?

  • Robin Keogh

    Jesus Chris…din’t be encouraging another civil war !

  • Robin Keogh

    Its an unbelievable cock-up of extraterrestrial proportions. Almost one billion has been poured into it and not one leaking pipe fixed. How on earth Kenny and co ever believed it could deliver is beyond sane consideration. We must be the laughing stock of the world. AGAIN !!

  • gendjinn

    Now think of the weapon FF gets when the inquiry reports back in late 2016 or early 2017…. Has the possibility of derailing an SF led govt in 2021.

  • the rich get richer

    It wasn’t a cock up it was an attempt to steal a publicly owned resource.

    The plan was to spend a lot of public money and then to hand it over to handily placed thieves (“to privatise”)

    It was Thievery and Fraud.

  • mickfealty

    Compliance is an issue that gets picked up by the Audit Office Korhomme, and therefore unlikely to be an issue.

    Value for money less so. NI Water pulled out of an aggressive court action against one large supplier because it had restructured a key executive level function out of the business and found that without that resource it could not proceed any further.

    You don’t need to sell it for it pass the Eurostat test for independence, it just needs to be genuinely off balance sheet like the publicly own Scottish Water or the mutual structure in Wales. But it does need an income of its own.

    My own view I’d that some form of charging and metering is necessary. The ‘tragedy of the commons’ disaster (http://tinyurl.com/ncs365k) that’s befallen what might loosely be called Ireland’s water infrastructure proves that just leaving it to already cash strapped county councils is insufficient unto the day that’s in it.

    Those happiest are either on independent district schemes of have their own bore holes.

    People need to get over the idea that Water is free. That’s the delusion that’s led to the tragedy in the first place. However it is dealt with, the problem won’t go away regardless of what happens to Irish Water.

  • chrisjones2

    SF policy?

  • Jag

    How much will water charges be in Northern Ireland by the end of 2015? £300 average per household, raising around £200m in revenue?

  • mickfealty

    I wish people would choose their words more carefully.the problem with hyperbole is that it robs the actual words of their actual meeting, which has the habit of inviting others not recognise when things like thievery and fraud do actually happen.

  • barnshee

    Where is my water bill ? I can`t seem to find it and SF have said I`ll never have to pay one.

  • barnshee

    Compliance has nothing to do with it. PFI, Student loans etc are all designed to move the problem into the future- when theose responsible will not be around to be held accountable and others will pick up the bill.

  • Korhomme

    Thanks. I was aware of how PFI works, but as it’s ‘off balance sheet’, I just wondered. And this off balance sheet can also be seen as a way to pull the wool over peoples’ eyes. It’s a bit like saying the basic rate of income tax is 20%, forgetting the 12% of NI on top for those at work—the real rate of tax on employees is 32%.

  • Korhomme

    Thanks Mick. See also my reply to barnshee, above.

    I do agree with the charges for water; I don’t expect my electric (or gas) to be free, even if in NI the charge supposedly comes out of the (unreconstructed) rates.

  • Jag

    Check your letterbox in Oct/Nov, because that’s the inevitable outcome of Westminster’s stance on the province’s budget.

  • Robin Keogh

    Lets not get carried away now. Water charges were the Brain child of Fianna Fail (or should I say Brain Fart) they spent 12 years in government during the richest days this state ever experienced but let the water infrastructure fall into disrepair. The current government are just following their lead despite Fianna Fails MONSTER U turn. Citizens have en masse decided not to pay it so the entire thing is a fiasco.

  • Robin Keogh

    SF policy like every other party policy is against privitising irish water.

  • mickfealty

    What’s wrong with Water Charges again Robin?

  • Robin Keogh

    Dublin, unlike Stormont has wide ranging powers to raise revenue fairly to pay for Water infrastructure, rather than stripping already hard pressed families of cash many of them simply do not have. Simple really.

  • Robin Keogh

    What enquiry?

  • Brian Walker

    well, I have to pay my dues to Thames Water, a French owned local monopoly similar to all English utilities. The water companies are regulated by Offwat and there is constant political and public pressure to make their tariffs more transparent. They can raise capital in the markets, thank goodness, for the level of new investment needed is huge. Sooner or later Irish water provision north and south will be similarly provided.

  • mickfealty

    Erm, no.

  • Robin Keogh

    Erm, yes.

  • gendjinn