Another water controversy erupts as first bills land

Another water controversy erupts as the first bills land Government's water project is lurching from one crisis to the next

GUILLOTINING THE LEGISLATION: In December 2013, the Water Services (No 2) Bill was rushed through the Dail in just four hours, prompting outrage from the opposition. The debate was taken by junior minister at the Department of the Environment, Fergus O’Dowd, who later became a trenchant critic of Irish Water following his demotion

GUILLOTINING THE LEGISLATION: In December 2013, the Water Services (No 2) Bill was rushed through the Dail in just four hours, prompting outrage from the opposition. The debate was taken by junior minister at the Department of the Environment, Fergus O’Dowd, who later became a trenchant critic of Irish Water following his demotion

No sooner have the bills gone out than another water controversy rears its head. There's a sense of deja vu about this one - it's back to the thorny issue of Personal Public Service (PPS) numbers.

Just a matter of months ago there was a public backlash about the need for householders to provide this sensitive detail to Irish Water when registering. Such was the outcry about a faceless utility holding such data that the Government swiftly removed the requirement.

Only now it's surfaced again, but this time it's the Department of Social Protection seeking the information before paying out the €100 water conservation grant due next September.

To add fuel to the fire, it also emerged that a private firm will collect the numbers and bank details from householders registering for the grant over the phone or who choose to receive the payment by cheque.

The insistence on providing the PPS number suggests that the department, and by extension the Government, simply doesn't trust its citizens.

"Ensuring the right amount of money is paid to the right person at the right time is central to every scheme the department administers," the Department of Social Protection said.

"In that respect, it takes a robust approach to both fraud prevention and data protection. The requirement of a PPS number is to ensure that multiple water conservation grants are not paid to the same person."

As if the citizen trying to come on board with the great water project hasn't been put through enough.

Instead of being thankful that more than one million people have registered their willingness to pay the charge, the State has decided to complicate claiming the grant which, lest we forget, is solely aimed at removing the sting of being charged for a utility which until January 1 last we all received for free.

It's grist to the mill for the 'We Won't Pay' campaign which this week also announced a further series of protests including a 'Bin the Bill' protest outside the Dail this day week.

But protest won't be enough, anti-austerity TD Paul Murphy warned, saying that a "key tactic" would be non-payment, and that the demonstrations were about "convincing people to have confidence not to pay".

React

"People will again react to private companies collecting PPS numbers, it's bizarre how the simplest of lessons seem to bypass the Government," he noted.

The coalition may take the view that the 1.25 million people who have already registered as of last Tuesday - of which around one million will be Irish Water customers - shows that its campaign is working. But the registrations aren't arriving at the level hoped for.

On March 4 last, some 1.23 million had registered, of which 984,000 were Irish Water customers, indicating that just 20,000 have signed up in the last month.

Which all suggests there's a big job of work to be done by both Irish Water and Government to increase those figures, particularly as the company after will be going to the market to borrow money to fund upgrades.

If it cannot prove that it has a customer base, and that it is paying, it will find it hard to source this money.

But ongoing public disquiet about charges and registrations are only one of many challenges facing the utility.

There's no shortage of projects underway or in planning to bolster and upgrade the network, but the sources of funding is not yet clear.

While Government will provide around €400m this year and next for capital projects, Irish Water will also borrow, a process already underway. It will rely heavily on domestic charging, but also on monies paid by the commercial sector.

That presents a major problem, as collection rates across the commercial sector average at 55pc and some €142m is currently outstanding. Assuming that Irish Water will adopt a get-tough approach on residential customers who refuse to pay, a crackdown on the business sector is also likely which will add to public relations woes.

But Irish Water does have access to another source of finance - development levies paid to local authorities. These are typically charged to fund essentials such as roads and street lighting, but also for water services. In 2007, more than a third of the cash collected was used for water projects.

Irish Water is legally entitled to take control of these levies since April 8, last Wednesday. But it's not clear how much these levies amount to, and the money is the source of ongoing discussions between the utility and local authorities as a host of problems have emerged.

They include the fact that while some of these levies were charged, they may not necessarily have been paid. That gives rise to the question as to who chases the money?

The situation is complicated by the fact that Irish Water will also have to take responsibility for some debts incurred by councils when building plants.

City and county councils have invested heavily in water and wastewater treatment facilities in recent years, many of which were funded through bank borrowings.

As Irish Water takes control of the assets, it is expected to also assume liability for repayments. Environment Minister Alan Kelly told the Dail in recent weeks that 115 design, build and operate contracts for treatment plants would cost €1.4bn to service over the next 15 years. But it is not yet clear what the total sum of liabilities will amount to.

It's all a big mess, and one that doesn't look like getting sorted out any time soon. Notwithstanding the positive work being done by the utility to date, and there has been much, it shows how rushed the company's creation was.

Irish Water's establishment was announced three years ago this month. It was formally incorporated in July 2013. Setting up such a major utility was never going to be easy, but Government should have sorted out the finances from the beginning and taken a less confrontation approach to its customers.

The next big hurdle is passing the Market Corporation Test, where Irish Water must prove that more than 50pc of its income is from sources other than Government. If it passes the test, its borrowings will not appear on the State's balance sheet. Failure to meet the standard will have major ramifications as it means that Government will be forced to borrow the money needed to fund network improvements.

This could have a profound impact on commitments to reduce the deficit and deliver mooted income tax cuts to angry voters in the next Budget.

There'll be a few nervous figures around Leinster House until the Market Corporation Test is decided. In the meantime, Irish Water must finalise the thorny issue of development levies and figure out how much debt it will take on from local authorities.

If nothing else, it will at least show a sceptical public that Irish Water isn't just after its money, but everyone else's too.

Irish Independent

#IrishWater