Confusion reigns over the future of Irish Water. Last week a series of media reports suggested that the conservation grant of €100 for registered customers will be linked to the payment of water charges.
This was quickly denied, but it’s obvious that somebody in the coalition was briefing journalists.
If the aim of this particular leak was to make the concept of the charges more palatable to the public, then it hasn’t worked. Irish Water is the gift that keeps on giving to the opposition and the single biggest threat to the re-election prospects of this government. Under half of all customers, just 43% , have paid their bills so far.
The danger is, with an election looming and government TDs at risk of losing their seats, the immediate fate of the utility will be shaped by political considerations rather than economic rationale. When it set up Irish Water in 2012, the government said it needed to operate independently, so it would be free to raise the €1.2 billion needed without any impact on the state’s balance sheet. A ruling by Eurostat in late July stipulated that it could not be treated as an independent entity because of its capped charges and the conservation grant.
Meanwhile the actual water system is a complete shambles. The pipe network is crumbling and leaks mean that roughly half of the entire treated supply is lost every year.
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The reason for this is that responsibility for pipe maintenance and overall management of system lay with each local authority in the country. Investment in the water system was thrown into the budgetary mix every year. Is it any wonder that the system has suffered from years of neglect? When each local authority was responsible for water services in its own area, there was no joined-up thinking and absolutely no emphasis on conservation. That is why it makes sense to have a water utility.
It is unfortunate that the establishment of Irish Water has been so badly handled. The utility is falling well short of its original mandate, which was to create an efficient and cost-effective system.
Ireland, however, is a democracy. It is up to the government to decide the law of the land, not protest groups and social media. The vocal opposition groups to water charges have been effective in disseminating a number of mistruths. Perhaps the most seductive and emotive is that water is free. It isn’t. It will cost an estimated €1.2 billion to make the system fit for purpose.
Brendan Ogle, of the Right2Water campaign, claims taxpayers already pay for water services. This is clearly not a viable argument as the €1.2 billion investment gap illustrates. Mr Ogle also argues that water should be paid for through a progressive tax system; this really gets to the heart of the problem. Ireland already has one of the most progressive tax systems in the world. Health, education, the gardai, emergency services and a lengthy list of other sectors are all in need of investment. Irish water is supposed to raise €350 million each year. If water charges are scrapped then that revenue will have to come through income taxes and cuts to investment in other areas.
Why is Ireland the only OECD country that does not have water charges? It is becoming an increasingly scarce and precious commodity, so it makes sense to have a utility dedicated to ensuring conservation and efficient management.
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The election should be used as a platform to establish Irish Water on a solid footing. Sinn Fein accepts the principle of a water utility, but has ruled out forcing users to pay for it. There are similarly populist stances from other opposition parties, while Fianna Fail has said it would abolish the entity. On this basis, it is incumbent on all parties to spell out how they will manage a crumbling water system if they intend to scrap the utility set up to do just that.
Protest movements were an inevitable consequence of the economic crisis. It is a healthy sign of any democracy, but the danger is when legitimate protests become infused with ultimately self-defeating populist rhetoric. If it becomes an axiom that a tax should not be paid because it is perceived to be unjust, then it sets a dangerous and destabilising precedent.