Lack of expertise will bloat Irish Water’s costs

Unfortunately, these controversies are deflecting attention away from some relatively positive economic news and are serving to increase the sense of disillusionment with the overall system of governance.

The fiasco with the City of Culture project in Limerick is not what that city needs, but hopefully it will be put back on track as quickly as possible because the region badly needs investment and good news. The Irish Water issue is more difficult to figure out.

It is clear that Ireland’s current water supply system is not working properly, as evidenced by the massive leakage problem and the supply issues that have arisen in recent years, not least when the IT maestros of the world were in Dublin for the Web Summit. Imagine a country trying to set itself up as a high-quality IT location, and the water supply is cut off in its capital city. It is bizarre beyond belief.

If one accepts that a guaranteed supply of clean water is an essential ingredient for business, and for society in general, then it is clear that a system that is not working needs to be radically rectified. The idea of setting up a single water company to manage water, just as a single company was set up in the past to manage electricity supply, appears to make sense.

However, it was always going to be a logistical nightmare and an expensive process to amalgamate 34 separate water companies into a single company.

The expense of amalgamating 34 entities into one entity is seriously increased by the fact that households will have to pay for water in the future. The introduction of water charges does make sense as it should put a much greater focus on conservation, although I am deeply worried and disturbed by the strange notion that if water consumption is lower than budgeted for, then households will have to pay more.

This seems to fly totally in the face of the conservation objective, but hopefully some semblance of sense will eventually prevail.

Water charges will also facilitate investment in the water infrastructure, replacing pipes and such like. This is obviously very necessary. Some argue that we are already paying taxes and that we should not now have to pay for water.

As currently configured, we are actually not paying enough taxation to provide vital services such as health and education to an acceptable standard. If the necessary investment in water infrastructure were taken out of the general tax pot, there would be even less money available to invest in health and education. We cannot have it every way.

The introduction of a household charge for water necessitates a billing system, customer call centres and such like. These will have to be set up from scratch and will involve quite a financial outlay. This outlay has become an issue of considerable political controversy over the past couple of weeks and it is being turned into a political football by the usual suspects.

Minister Phil Hogan suggested this week it is not possible to make omelettes without breaking eggs, which is true. It was never going to be possible to set up a water company from scratch and run by a company with absolutely no experience in this area, without incurring considerable sunk costs. This, of course, raises the question, if it was appropriate day one to create another semi-state monopoly.

Perhaps it would have made more sense to bring in a private sector water company with experience in running a water system overseas, rather than giving the contract to a company that would not, on the surface at least, appear to have any expertise in this area?

However, that is now water under the bridge and there is not a lot we can do about it, other than grin and bear as the bill rises.