There are many things about water charges that Fine Gael/Labour would prefer you didn’t know. At the top of the list is this: Not one penny of the money they’re demanding you pay will be used to run, or to upgrade, the water system.
In fact, even if everyone paid their water bill, every penny of the money would be spent on the admin involved in issuing us with bills.
As it stands, with the number of people currently paying their bills, the introduction of domestic water charges will result in there being about a €25m less available to run the water system than if the charges had not been introduced at all.
Why? Because it costs a lot to collect the money. And it costs a lot to pay for the so-called ‘water conservation grants’ that arrived in people’s accounts this week – a crass pre-election stunt worthy of Fianna Fáil at its worst. And it turns out that the money raised from the water charge is less than these two costs.
Think about that – the people are being asked to pay €271m this year in water charges. That’s €160 or €260 per household, depending on whether one or to adults live in the house, and that’s if every single person actually pays.
At a time when children are going hungry, when people can’t make the rent, when pensioners can’t afford to turn the heat on, when parents are scraping together to send their kids back to school, that €260 matters a great deal.
Fine Gael/Labour claim that the money’s needed to keep the water flowing but that isn’t true. The way they have set this thing up, the money isn’t being used to fund the water system – it is being used to fund the administration of billing for water.
Fine Gael is clearly worried about people cottoning on to all of this. At its think-in recently, backbenchers were instructed to attack the Social Democrats’ position on water charges as being dishonest – which gives them full marks for irony at least. In fact the Social Democrats’ positon isn’t dishonest – the numbers have been verified independently by several very able economists and they tell a very clear story.
The numbers are pretty simple; if everyone paid the water charge (and that is a pretty big if), then €271m would be raised. But all those €100m grants we’ve been receiving cost the State a whopping €166m. On top of that, simply administering the grant costs another €6m.
Water meters are costing at least €44m a year for thr next 15 years. The Government says we need to have meters to improve conservation and detect leaks. It’s true that if you put meters in every house you will find the leaks. But if you talk to engineers, you’ll find that this isn’t actually how they do it. They put in area meters and follow the leaks. It’s called targeted detection and it can be done at a fraction of the cost of putting meters into every house. The actual purpose of the meters is to bill you.
Finally there’s the cost of maintaining the meters and reading them, chasing you up, sending debt collectors your way and so on. In the industry, this is called the ‘cost to serve’, there are no data available for what Irish Water’s cost is. but if you assume, generously, that it’s at the average level for water companies in the UK, it’s about €54m. Add it all up and you get a total cost associated with the water charge of €270m. So even if the full €271m was collected, there’d just be €1m left to spend on the water system.
But only half of households have paid the charge. Let’s be generous again and assume that only half the water conservation grants have been paid out. If that is the case,  there is actually €25m less available this year to upgrade the water system than if there weren’t any water charges at all. You can understand why Fine Gael/Labour would prefer if you didn’t know this.
Now let’s be clear: We absolutely do need to upgrade the water system and it seems to be happening. Spare capacity in the Dublin region has jumped, boil-water notices are being cancelled and waste-water treatment plants are being fast-tracked. Irish Water may be the equivalent of a public relations cluster bomb but it does appear to be making significant and much-needed progress on the engineering front and should be recognised for that. The blame for the Irish Water fiasco doesn’t fall to Irish Water – it falls to Fine Gael/ Labour. Whatever way you cut it, additional money is needed to upgrade the system: €200m for the first few years is proposed, due to rise to €350m from 2017. So if water charges aren’t raising the money, where do we get it, without raising taxation?
The answer is in improving the service. I’m not against some of the concept of Irish Water. The central entity is a smart idea. Fianna Fáil has been talking about going back to the local authority model but that is madness. Pooling the inefficient workings of 40 utility operations into one is vital – it creates the opportunity to carry out rigourous reform, which has been absent from the public sector for so long. It creates opportunities to create improvements and savings in technology, procurements, centralising functions and perhaps in voluntary redundancies.
But we need to stop charging people to cover the cost of charging them. It’s dumb and insulting. Instead we maintain current Exchequer support for water. We reduce the operating cost base of Irish Water and we reinvest the savings. The €200m a year needed for the next few years requires a cost reduction of just 16%. Scottish Water reduced its cost base by 40% in the first five years of its existence. Moving the €350m a year investment would an additional 13% reduction in costs. Even if the entire amount couldn’t be found, it would be far more efficient to make up the difference through central taxation rather than water charges. The cost of the meters and billing for the first 10 years will be at least €1bn – that would cover the entire additional investment requirements for the water system for five years.
Fine Gael/Labour should hold their hands up and accept this fiasco for what it is. But they won’t. Instead, they’ll put their own reputations ahead of the public good and continue to insist that people pay out hard-earned and badly-needed money for no reason. Then, in a perfect storm of authoritarianism and incompetence, they’ll futher invade people’s privacy by using new legislation to take people’s money at source.
Here’s what the Social Democrats are proposing. Water charges should be abolished, as should the conservation grant. The meter rollout should be stopped. A full and open financial review of Irish Water should be conducted to understand what cost savings can be achieved each year and how they can be reinvested in the water system. Irish Water should be reconstituted as a public body, rather than as a commercial semi-state, to ensure it can never be privatised. And the people running and improving our water system should be allowed to get on with the job – which is the only bit of good news in this entire Government-induced, nonsense.