Government has simply poured money down the drain

Ministers must know the game is up and that the ruling by Eurostat has completely removed the rationale for Irish Water and water charges, writes Michael Taft.

Government has simply poured money down the drain

We should not underestimate the impact of the Eurostat ruling. It completely removes the rationale for Irish Water and water charges. After Eurostat, there is no policy, no direction, no strategy. Ministers will downplay the ruling with a ‘move-on-nothing-to-see-here’ rhetoric, punctuated by a ‘there-is-no-alternative’ but all this does is expose the inability to grasp how fundamentally the landscape has changed.

Whatever they say in public, ministers must know it is game over. The only way to pass the Eurostat test is to introduce ‘economically significant prices’. This would mean reverting to prices based on usage with no cap determined by an independent regulator. Is that likely?

No, not with the potential to bring another 100,000 to 200,000 on the streets. The people didn’t win many victories during the austerity days; they won the battle over uncertain charges, PPS numbers and cut-offs. No political party is going to challenge that.

How do progressives react to this? The safe ground would be to call for the scrapping of the charges and the reform of Irish Water. Fianna Fáil is already calling for that. Progressives can and must go further. We can’t effectively challenge the current ‘steady-as-it-goes’ Government approach with a ‘steady-as-it-went’ that dominated past policy.

We need creative and innovative thinking that can not only address the issues but present an exciting, inclusive alternative to water supply and all public provision. We need to increase investment to €600m annually to modernise our infrastructure.

Water investment has been a bit of a roller-coaster ride. We are now slightly ahead of 1995 levels after peaking in 2008. We need to do better.

The New Fiscal Framework published by the Right2Water trade unions shows how. Based on Government projections and modest increases in capital and wealth taxation (along with increases in the social wage), public investment can be doubled to €6-€7bn a year by 2020 with leeway to go further.

Prior to the crash, water and sewage investment made up 11% of total investment. Based on the New Fiscal Framework projections, investment would easily rise to the needed €600m. There are two points here:

Some commentators rightly state that governments can change priorities and, so, reduce investment. That was one rationale for a commercial Irish Water. However, this argument could be applied to any other public spending category— broadband investment, health and education expenditure, pensions and social protection payments.

These are political choices and to ensure the needed resources for water and sewage we need to elect a government which will pursue investment-driven economic policies.

Secondly, €600m annual investment is a gross figure. As the Nevin Economic Research Institute has shown, the net cost is far less when you take into account the impact on employment, domestic demand, growth and the resulting tax revenue. The actual net cost would be half that amount. Increasing investment is not a fiscal or economic issue — it is a political issue.

Irish Water should now be transformed into a new national public agency sans all the charges, billing, collection, and off-the-books machinations, save for current business charges. A working title could be the National Water Authority (NWS). A single water agency it can engage in national strategic policy while capturing the benefits of economies of scale.

It is also less capable of being privatised since it doesn’t operate on a market basis charging for water. But we can go further.

We could charge the agency with developing energy renewable resources from the use of waste treatment. The new NWA could be charged with rolling out R&D and renewable technologies appropriate to Ireland.

The new agency could become a national and international leader in water conservation. Our public enterprises already do this. Bord na Mona (which probably would have been a better fit for water policy than Bord Gáis) was developing water conservation, management and consultancy programmes before

Irish Water while ESB International shows that even a small public company can regularly beat much larger, private energy companies in winning contracts in other countries to install, design and manage energy plants.

These two measures would generate revenue over the long term and, so reduce water and waste supply costs. But we can go further still.

NERI (the Nevin Economic Research Institute) has proposed a programme of energy retrofitting; in particular for second-hand houses when they are being bought and sold which would be part of a New Green Deal. We could complement this with water conservation retrofitting with current technologies (eg dual-flushed toilets, repairing pipes on private premise) and new technologies (eg grey water usage, rain capture, etc.).

This could be funded on a long-term basis through the European Investment Bank or the new European Strategic Investment Fund.

Progressives should take up the opportunity that Eurostat has given us — to radically rethink in new and innovative ways of how we do public business. In this way we can recapture the excitement of nation and economy-building that took place when people came out to offer cups of tea and cheer the ESB workers as they brought electricity to towns and villages throughout the country— pole by pole.

At the end of the day, Eurostat has done us a favour.

Michael Taft is research officer with the union, Unite

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