Understanding the crisis in our water system

Posted: August 2, 2017 in Uncategorized

The loss of water supply to more than 50,000 people in Louth and Meath this week was yet another reminder of the deep rooted crisis in our water and sanitation system.

At least 10% of the water distribution system is at risk of similar leaks. 1,300 kilometres of pipe urgently need replaced. Under current plans this will take at least four years. To describe this as an appalling vista would be an understatement.

None of this should surprise anyone. With have known for years that almost 50% of our treated water leaks into the ground before it crosses the boundary wall of a single residential property. State sponsored water wastage is a long standing and integral part of the system.

Worse still is the state of our waste water treatment plants. The Irish Government is currently in front of the European Court of Justice over substantial breaches of the Urban Waste Water Treatment Directive.

Almost forty treatment plants are pumping raw sewage into our lakes, rivers and coasts.

Formal enforcement proceedings by the European Commission have been underway since 2013. Unimpressed by the states progress in tackling this serious environmental hazard the Commission lodged formal court proceedings earlier this year.

Again there is nothing new here. The Environmental Protection Agency have been raising serious concerns about our treatment plans for years. There most recent annual monitoring report has identified 100 plants requiring urgent attention.

Contrary to much of the political and media commentary this week, the responsibility for this mess does not lie with the Right2Water movement and those of us who campaigned successfully for the abolition of water charges. Nor does it lie with Irish Water or our Local Councils.

Decades of underinvestment by successive Fianna Fáil and Fine Gael governments created a water and sanitation system that is antiquated, fragmented and at risk of imminent collapse.

During Fianna Fáil’s last term of office, capital investment in waste water treatment averaged out at an inadequate €244m per year.

On taking office in 2011 Fine Gael slashed this to €140m in 2012 and again to €124m in 2013. This was undoubtedly the principle reason why the European Commission initiated enforcement proceedings for breaches of the Urban Waste Water Treatment Directive in September 2013.

The overall water infrastructure picture is similar. When Fianna Fáil were last in power capital investment averaged €423m annually. When Fine Gael took over it dropped to €382m per year.

Through boom and bust Fianna Fáil and Fine Gael neglected one of the most important parts of our public infrastructure. As a consequence our water and sanitation system needs at least €13bn of capital investment to provide the standard of service that citizens deserve and European Union law requires.

The creation of Irish Water and the introduction of domestic metered water charges in 2013/14 was sold as the answer to this historic neglect of our water system. It was time for grown up responsible politics we were told. The era of “pay-for-nothing and expect-everything-for-free populism” was over. Domestic water conservation had to be incentivised.

A lot of smart, thoughtful people, including some progressives, bought the sales pitch. Decades of ‘free water’ was the cause of our problem. A reckless coalition of Fianna Fáil and ‘hard-left’ populism had led people astray. Yet another of the Great Recessions ‘hard choices’ had to be made. It was time we all paid our way.

There is another way of looking at Fine Gael and Labour’s proposals of 2013/14.

Like every administration before them they simply didn’t want to provide a high quality universal public service though a combination of progressive tax revenue and state borrowing funded capital investment.

At the same time they wanted too shift responsibility for reducing waste from the state to the citizens – despite the overwhelming majority of waste being the responsibility of government agencies.

But EU law and public demands meant something had to be done. The solution was to create a system based on expensive off-balance private investment. Irish Water would have to have sufficient non-government revenue to keep it off the books. Domestic charges were born.

Water charges were never about increasing peoples contribution into the funding of the water system. Nor were they about punishing waste. Their purpose was to reduce government investment in water and sanitation services even further while at the same time allowing Irish Water to borrow private finance off-balance sheet to upgrade the system.

Unfortunately the clumsy design of Irish Water combined with popular opposition to regressive water charges threw a spanner into the off-balance sheet proposal. In 2015 Eurostat classified Irish Water as a part of the Government sector on five separate grounds, only one of which related to revenue.

The result was that Irish Water and its borrowings remain on the Governments balance sheet. In their June 2016 Funding Options Paper to Government New Era recommended that Irish Water shift its borrowing from private to Government sources as this would save money.

None of this has had any impact on Irish Water’s capital investment plans.

On page 23 of their business plan the utility sets out its investment programme from 2014 to 2021 totalling €5bn for capital investment and €574m for metering. This was the plan when revenue was expected from domestic water charges.

The suspension and now abolition of domestic metered water charges has resulted in the utility receiving approximately €240.5m per year from general taxation rather than charges (€130.5m net when the water conservation grant is abolished). The overall levels of capital investment as per the utilities plan have not been affected.

The New Era recommendation confirmed what the Right2Water movement had been saying all along – that a mixture of general taxation and government borrowing was more cost effective than the original Irish Water plan. Crucially it was also more socially just as it would maintain our zero water poverty rate, unique across the EU.

There are those who bemoan the use of tax revenue to fund the service claiming this is money that should be spent on health or housing. Of course this is not the only choice, as progressive tax reform could generate sufficient revenue for all three public services.

Indeed Sinn Féin in our 2017 Alternative Budget, costed by the Department of Finance, argued that a greater portion of direct state investment in water infrastructure is possible. This would either allow for a more rapid upgrading of our water and sanitation system or a reduction in reliance on and cost of state borrowing.

The withdrawal of water from thousands of families and businesses in Louth and Meath over the last 10 days was the result state neglect. Enda Kenny’s expensive off-balance sheet private finance model was as much an abdication of responsibility as Bertie Ahern’s underfunded fragmented county council model.

Those of us in the Right2Water movement have always had better and fairer proposals for creating a first class water and sanitation system. It’s a pity so many smart, thoughtful people -including some progressives- have to be dragged kicking and screaming to this realisation.

This article was originally published in the Sunday Business Post on 30.7.17


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