Wednesday 26 October 2016

Dan White: The time has come for the Government to scrap Irish Water

Alan Kelly
Alan Kelly

With the Irish State able to freely borrow once again and the problems at Irish Water showing no signs of ending, the time has come for the Government to scrap the troubled utility and take its borrowings back into the national debt figures.

How the Government must wish that Irish Water, the utility it established to run the new paid-for water regime in 2013, would simply go away. Every day seems to bring a new Irish Water horror story.

Figures released last week showed that less than half of all households, just 46pc, had paid their water bills. These figures were released at almost the same time we learnt that 3,000 customers hadn't been able to pay their water bills due to mistakes made by Irish Water. This was followed by allegations that Irish Water had been "cold calling" householders who hadn't paid their water bills - allegations which have been denied by Irish Water.

Now it has emerged that Irish Water, which already owes a massive €850m, has been given permission by Environment Minister Alan Kelly to borrow a further €550. This will push Irish Water's borrowings up to €1.4bn.

Just when it seemed that things couldn't get any worse at Irish Water, the news broke that the company's staff will be demanding pay increases of between 2.5pc and 3.5pc when a pay freeze ends in December. Honestly, you just couldn't make this stuff up!

Given all that he has endured at its hands, Mr Kelly wouldn't be human if he didn't occasionally harbour the desire to scrap the company and go back to the drawing board with water charges. While this might seem like an extreme course of action, it is exactly what the minister should do.

No-one denies that Ireland's water and sewerage system is a complete and utter mess. Decades of under-investment mean that the system is quite literally falling to pieces with an estimated 49pc of all water leaking into the ground. It has been estimated that merely reducing water leaks to "acceptable levels" will cost in the region of €5.5bn by 2021.


Back at the start of the decade when the country was going bust and the Troika were running our affairs there was no question of the Government being able to borrow this money itself. So Irish Water, supposedly a stand-alone utility, was born. It would charge households and companies for their water and then borrow the money needed to upgrade the water distribution system on the security of these revenues.

With the Government desperate to keep the huge cost of upgrading the water network off the national debt figures, Irish Water was born. Irish Water was constructed with the aim of passing European statistical organisation Eurostat's "market corporations test" By passing the Eurostat test, Irish Water's borrowings would no longer be included in the national debt figures.

That was then and this is now. Almost five years on from the bailout and the Irish Government can once again borrow freely on the international bond markets. It no longer needs a device such as Irish Water to keep the cost of upgrading the water distribution network off of its own books. This gives the Government a unique opportunity to remedy some of the mistakes which it made when it established Irish Water.

The first thing one needs to do after making a bad mistake is to own up to the fact and remedy the error. Whatever one's views on water charges, it is now clear that Irish Water has been an utter disaster.

Badly designed and poorly executed, the best thing that could happen is that this corporate mutt is quickly put out of its misery.

Now that the Government can borrow again the main reason for the creation of Irish Water has disappeared. It should be immediately scrapped and replaced by a state water agency, which would upgrade the water distribution network and collect water charges.

A stand-alone water company should only be established when all of the glitches have first been ironed out.

Given all that has happened, the Irish Water name and brand is now toxic. No amount of expensive spinning or marketing can save it.

The sooner it is scrapped and replaced by an organisation fit for purpose, the better.

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