YOU KNOW THE Government is getting things wrong when they start blaming others for the mistakes they themselves made. Pat Rabbitte was at that game yesterday when he blamed the Troika for rushing through the establishment of Irish Water. He seemed to think that this was the cause of the extensive bonuses and large consultancy payments that the company is now paying. However, the problems besetting Irish water are all very much of the Government’s own doing.
Early in 2011 the Troika did sign off on a study which was designed to look at various options for the delivery of water services in Ireland. However, the new Government came into office and changed the terms of reference for the report, ruling out other options and simply asking what form of single water authority was now preferable. It seems that Fine Gael and Labour were set upon giving responsibility for the water network to Bord Gais from the start, and they ignored the recommendations of the PWC consultants report not to go ahead with combining energy and water services within the one utility.
In both England and Wales a similar approach had already been a failure, where they eventually ended up having to separate the water and energy services at a large cost to the public.
The Government decided to ignore the existing evidence and proceeded to set up the agency with little or no proper debate in the Dail. They also ignored the evidence that had been presented by the ESRI at the Oireachtas Environment Committee in January 2012, which raised concerns that few real savings could be made if the new company simply took on the full staff complement of the local authorities. The existing level of staff and budget levels are way above international norms, so the ESRI was confident that some €2 billion in efficiency savings could be made.
However, when it came to the final drafting of the necessary regulations, Phil Hogan caved to pressure from the local authorities. The same staff levels were to be kept in place for the first 12 years and the local councils were given the power to decide who should stay and who should go. Those councils have no incentive to deliver the €150 million-a-year savings that the ESRI estimate is possible. One wonders how the Department of Finance could have signed off on such a deal, but presumably they were influenced by the fact that, by putting the new agency in with Bord Gais, it would be possible to take the companies’ debt off the state books and make their own figures slightly better.
The fact that the Irish public would end up paying over the odds for the service, to the tune of some €90 per-household per-year, seemed to have bothered no one. This is a regulated asset where the consumer has no choice but to pay.
What we have ended up with is a repeat of the establishment of the HSE. No real savings can now be made for 12 years, while we in effect create a duplicate of the existing arrangements and also set up an expensive new central agency to boot.
Given that the legislation is already passed and over one hundred million euro has already been spent, what can we now do to turn things around? Even at this late stage it would be better for the Government to admit its mistakes and amend the relevant legislation, taking back from the local authorities the power to deploy staff into the new agency. Those same people could instead take on some of the urgent work that needs to be done in every county in the preparation of proper flood prevention works.
Making that change will not be easy, as it will require Phil Hogan to admit to making a mistake. That might be too radical a reform for the Irish political system and in the short run it is easier to blame the Troika, or the last Government, or whoever else makes an easy and convenient target. Perhaps admiting mistakes might be one of the political reforms that the Irish public desperately want to see, and in the long run it might do more than anything else to restore some confidence in our Irish water supplies.
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