Confidential Cabinet papers have been released to RTÉ's The Week in Politics
The Fianna Fáil-led coalition expected domestic water charges to cost each household €500 per year, according to confidential Cabinet papers that have been released to RTÉ's The Week in Politics.
The papers dating from 2010 - the last year of Brian Cowen's government - give an insight into the Fianna Fáil/Greens coalition's plans to introduce domestic water metering.
Brien Cowen
The coalition agreed at Cabinet on 15 September 2010 to establish a new water agency and draft new legislation allowing for domestic water meters - some two months before Ireland entered the Troika bailout.
Charges
The last government estimated that it would cost €500m to install water meters (an average cost of €500 per household) over five years. But it anticipated the metering programme had the potential to create between 1,200 and 1,800 jobs between 2011 and 2013.
It was estimated by the Department of the Environment (in a water meters memo dated 15 September, 2010) that each household would receive an estimated household bill of €330 per annum - this excludes the additional cost of the meters and their installation.
Later email correspondence (dated 28 September 2010) from Robert Watt, the Assistant Secretary of the Department of Finance (who is currently Secretary General of the Department of Public Expenditure and Reform), to a finance department colleague states "it is likely that a charge of €500 a year would be imposed. This would meet operational costs and capital costs over time".
National water agency
The 2007-2011 government also proposed the establishment of a new water agency to manage and deliver the metering programme, and manage the procurement process for the installation, billing and collection services.
"Local Authorities would continue to be responsible for the direct provision of water and waste water treatment services," stated a Department of the Environment memo.
It was anticipated that the new "national water agency" would keep directly employed staff to a minimum and outsource more labour intensive functions. It would directly employ around 25 personnel with estimated annual costs of €4m per annum.
Background – 'Ministerial Mercs' and budget cuts
There was a furore in July 2010 that the government had lost touch with the public over images of "ministerial Mercs" driving ministers to a special cabinet meeting in Farmleigh House to discuss budget cuts.
Cabinet papers, released under the Freedom of Information Act 2014, show that "water metering for domestic connections" was scheduled for debate at Farmleigh on 26 July 2010 but it was deferred until September.
The issue was discussed by government at the Cabinet meetings on 8 September and 15 September 2010.
A series of previously confidential government memos show that Fianna Fáil ministers Brian Lenihan (Finance), Mary Hanafin (Tourism, Culture & Sport), Brendan Smith (Agriculture, Fisheries and Food), Noel Dempsey (Transport) and Batt O'Keefe (Enterprise, Trade & Innovation) along with Green Party ministers Eamon Ryan (Communications, Energy & Natural Resources) and John Gormley (Environment) were in favour of introducing a domestic water metering programme.
The Cowen government's Renewed Programme for Government in 2009 included a commitment to introduce domestic water charges, where households were allocated a free basic allowance and charged for water used in excess of that allowance.
The documents, released to RTÉ this week, detail the discussion papers around proposals from the Minister for the Environment for a programme of domestic water metering.
They refer to the period two months before government formally requested financial aid from the EU/IMF on 10 November 2010.
Cabinet papers from the Farmleigh meeting offer an insight into government at a time when the cost of borrowing was skyrocketing out of control.
A memo labelled "Secret" and titled "Government Expenditure Savings Options 2011-2014" states: "The public finances remain extremely vulnerable and are coming under increasingly close international scrutiny, particularly from the IMF, EU Commission and international credit agencies."
A water referendum
The documents relating to the domestic water metering proposals show that then minister for the environment, John Gormley, initially sought a referendum so that the Constitution could be changed to further protect against the privitisation of water in the future.
But this proposal was "deleted" from a later Cabinet memorandum after observations were received, "particularly those of the Department of Communications, Energy and Natural Resources".
Minister Eamon Ryan's department highlighted "the complexities involved" and suggested that any amendment to the Constitution "could prove contentious and time-consuming".
It was decided that this issue be separately pursued with the Attorney General.
The government's decision
According to the official 'Cruinniu Rialtais' document, released to RTÉ's The Week in Politics this week and dated 15 September 2010, the government approved the minister's proposals for a free allowance of 40 litres of water per person per day with the cost of the allowance to be met by the Exchequer.
The free allowance would commence at the same time as domestic water charges.
The Fianna Fáil/Green coalition also agreed to draft legislation to establish the new water agency and remove the legal prohibition on charging for domestic water services.
An "assessment of the implementation issues" would be carried out in parallel by the seven relevant government departments.
Ministers' views on water charges
The newly-released Cabinet papers indicate the observations of government departments and their line ministers on domestic water charges.
Minister for the Environment John Gormley
Minister Gormley's department was spearheading the drive towards domestic water metering as a means towards conservation and the documents have been released by his old department.
Mr Gormley was opposed to a flat rate charge as "it offers no incentive for consumers to conserve water".
His proposal for a free water allowance of 40 litres per day per person was modelled on the water charging structure used by the regional government in Flanders, Belgium.
He did not consider it appropriate to seek full capital cost recovery from the domestic sector.
But he did "consider it necessary for households to make a contribution towards capital upgrading and replacement (including the costs of installing, maintaining and replacing the water meters). The minister is proposing that the water charge for each household should include a contribution towards capital costs and to provide for the repayment of the borrowings by the Agency."
The Department of the Environment noted that the installation of meters will increase the detection of customer leaks and "typically the most expensive leaks to repair are in the supply pipe which runs from the connection at the boundary of the property, under the property to the kitchen sink. It is estimated that the cost of replacing this pipe is in the region of €1,500-€2,000."
Minister Gormley advocated the introduction of some assistance for householders faced with such leaks, for example, a grant scheme towards the cost of the works.
Given the perilous state of the public finances in 2010, the government realised that the water metering programme could not be funded through sources such as Exchequer funding or EU structural funds.
The only two viable funding options were local government borrowing or setting up the new water agency.
Mr Gormley was "concerned that establishment of a new national agency is not interpreted as opening up the possibility of privatising water services in Ireland".
He said he would consult the Attorney General on the format of a constitutional referendum if it was deemed necessary.
Later documents show that Minister Eamon Ryan's Department of Communications, Energy and Natural Resources was among those opposed to a referendum on water charges.
According to a draft cabinet memo, dated 15 September 2010, "the application of the proposed free allowance of 40 litres per person per day would result in an estimated average household bill of €330 per annum - this excludes the costs of the meters and their installation".
Minister for Finance Brian Lenihan
"The Minister for Finance favours the introduction of water charging for domestic water services on a metered basis to encourage conservation and as a means of generating revenue for local authorities."
"The Minister favours the introduction of a flat rate charge to remunerate the cost of the metering programme, pending the coming on stream of volumetric charging."
"...the Minister is not opposed to the approach suggested in the memorandum that would see the delivery and financing of a metering programme through a new commercial semi-state body, funded through borrowing and/or other financial instruments.
"He considers it imperative that the programme is commercialised and that households pay for the cost of the meter installation through a charge in their water metering bill."
"The Minister does not see the need for a constitutional referendum on the public ownership of water resources."
"The Minister believes the metering programme should commence as soon as possible to maximise the benefits to the Exchequer and reduce borrowing costs."
Minister for Social Protection Éamon Ó Cuív
"Believes income support for low income households is not appropriate and that the Agency should be required to make provision for such households."
"There should be a grant scheme for householders facing costs to address leakage including 100% support for low income households."
Minister for Communications, Energy and Natural Resources Eamon Ryan
Minister Eamon Ryan was "generally supportive" of his party leader John Gormley's proposals.
He noted the potential synergies between water metering and smart metering in electricity and gas.
Minister for Community, Equality and Gaeltacht Affairs Pat Carey
Minister Pat Carey said that a key issue is the impact that water charges may have on households at risk of poverty or exclusion.
He said that officials from his department would be available to provide advice on "poverty proofing" and a "poverty impact assessment".
Minister for Enterprise, Trade and Innovation Batt O'Keefe
Minister Batt O'Keefe "welcomes the general thrust of the proposal to introduce water metering for domestic consumers and notes the potential for 1,200-1,800 jobs per annum to be created over the period 2011-2013".
He did caution that "it may be premature to proceed with the creation of the new Agency in the absences of a clear pricing structure and information on the structure of water policy in the future".
"He strongly recommends the introduction of a flat rate charge in advance of metered charges to support the public finances and the funding of the water meters."
Minister for Agriculture, Food and the Marine Brendan Smith
"Supports the proposals and asks that the proposed review of water pricing policy recognise that farms are relatively large users of water."
Minister for Transport Noel Dempsey
"Supports the proposals but believes to maximise public acceptance their introduction should be accompanied by a commensurate reduction in income tax."
Minister for Tourism, Culture and Sport Mary Hanafin
"The Minister welcomes the fact that the implementation of these proposals would contribute to greater water conservation in line with the broad sustainability agenda."
She suggested examining "the possibility of introducing an increased free water allowance for listed Bed and Breakfast premises as they service the needs of the tourist industry".
Other ministers....
Tánaiste and Minister for Education & Skills Mary Coughlan, Minister for Defence Tony Killeen, Minister for Foreign Affairs Micheál Martin, Minister for Health Mary Harney, and Minister for Justice Dermot Ahern did not make any observations on the water memo. A number of these indicated that they would make their observations known at the cabinet table.
How has this information come to light now?
Under the current Fine Gael/Labour government's revised Freedom of Information legislation that passed through the Dáil last year, cabinet papers dating back five years may be released.
And another thing...
The documents obtained this week reveal how far advanced the government's plans for introducing domestic water charges were even before the Troika arrived in November 2010.
Yet it was only relatively recently that the first domestic water bills arrived and meters are still being installed.
It does raise the question of why the current Fine Gael/Labour coalition did not forge ahead with the plans sooner?
As one current Fianna Fáil TD put it: "All the current crowd had to do was bring the water charges in at the start of their term in office. They had a honeymoon period in 2011-2012 where they could have brought them in and blamed the IMF and Fianna Fáil!"
We are about to have the second election since the cabinet meeting at Farmleigh.
The political landscape has changed since then. But the water issue certainly hasn't gone away.
Original Article http://www.rte.ie/news/2015/1018/735225-cowen-governments-water-files/