Recovery put at risk by water debacle

The Government has made a dog’s dinner out of the water issue, of that there can be little doubt. 

Effectively, our wise leaders have sought to amalgamate the water services of over 30 local authorities into a single company. This is a gargantuan task that one would expect to take up to five years to complete in a proper manner. Instead, it has been rushed through in a little over 18 months, and it shows every sign of being such a rushed and botched job.

Massive uncertainty and fear has been created over what the charges might be; there is no transparency for households regarding how meters can be and might be read (unlike the ESB meter); and the terms and conditions put in place for staff in the new company represent an absolute PR nightmare in an environment where workers who pay tax have been screwed into the ground since 2008.

This is all very unfortunate because it has created what appears to be insurmountable opposition to the notion of charging for water. This is a pity, because water is actually worth paying for and would benefit society as a whole. The reality is that water is quickly becoming a very valuable global commodity, and one need only look at the situation in California or large tracts of China at the moment for evidence of this.

Ireland has a water service and infrastructure that have been very badly damaged since politically motivated decisions made back in 1977 that effectively destroyed a proper funding mechanism for local authorities, from which they have never really recovered.

The quality of water in many parts of the country is very poor, the infrastructure is of such a high quality that is estimated that over 40% of water is wasted through leakage, and the concept of conservation is an esoteric term that most people take to refer to sub-Saharan Africa.

In short, the water supply in Ireland is not worthy of first-world status. The whole water debacle has created a nightmare for the government that could well result in it being kicked out of office in an election that has to be held before the end of February 2016.

The growth in popularity of parties and individuals that are proponents of economic policies that would do little to enhance risk taking; job creation; hard work; and wealth creation in the economy, putting it very mildly is a direct consequence of the manner in which the water issue has been handled.

Unfortunately, we have numerous examples throughout history of policy mistakes that have destroyed economies and societies. I fear that many people who should care about the legacy that will be left for the next generation are actually sleep-walking into a nightmare where entrepreneurial people who take risks, create jobs and generate the revenues that fund the various social services provided by the State, will just make a decision to give up or bestow their skills on other countries. Then who will fund public services? Admittedly, a wealth tax could be introduced to fund public services, but it would not take too long for that wealth to run out and then what?

From the perspective of government this is all rather sad. The water issue has forced many people to forget that the policies that have been pursued in response to the crisis since 2008 have not destroyed the economy as many predicted, but rather have contributed to a situation where all economic indicators are now moving in a positive direction.

Granted, many working people are still stretched and are not yet feeling the recovery in their pockets.

However, a continuation of current trends would see a continuous improvement in labour market conditions over the next couple of years; a gradual reduction in the penal income tax/USC burden; some growth in public expenditure and a pick-up in wages.

Were these events to transpire, then we could get into a virtuous cycle very quickly and there is no better cure for all of the ills we are currently fighting than a few years of stronger economic growth.

It would in my view be a pity to throw all of this away on the back of the water debacle.

More on this topic

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