Irish Water charges: an autopsy

How did a progressive initiative become such a disaster? Conor Pope explores the reasons why

Implacable opposition: water-charge protesters outside Leinster House in December 2014. Photograph: Cathal Noonan/ Anadolu Agency/Getty Images)

Implacable opposition: water-charge protesters outside Leinster House in December 2014. Photograph: Cathal Noonan/ Anadolu Agency/Getty Images)

 

When Phil Hogan raised a half-empty glass of water to his lips in a Government Buildings briefing room one day in early May 2014 the photographers at his feet knew they had their money shot. He sipped and smiled as camera flashes exploded around him.

As Hogan had walked through the courtyard to the packed press conference announcing that water charges would be introduced in October that year the sky was blue and the sun was on his back. By the time he left, 40 minutes later, black clouds had formed and rain was falling. It could scarcely have been more prophetic.

The press conference may have been the turning point for water charges. What had begun some years earlier as a high-minded environmental mission became a public-relations fiasco, a financial mess and a political disaster.

But it wasn’t undone simply by bad PR. Some say that water charges as conceived by the Irish government were always destined to fail. “They tried to create one water utility out of 31 local authorities. That was hugely complicated,” says Dr Richard Tol, who was a senior researcher with the Economic and Social Research Institute when Irish Water was born. “They tried to shift away from a public entity to a semi-public one. That was hugely complicated. They tried to introduce water charges using universal metering. That was hugely complicated.

“And they tried to do it all in less than two years. It shouldn’t surprise you that it didn’t work. The very fact that they tried all these things at once was an enormous blunder. They should have listened to the people saying, ‘You are doing too much too soon.’ ”

Tol was one of the people telling successive environment ministers they were getting it wrong. He believes his voice wasn’t heard – or, if it was heard, wasn’t listened to.

The first leaks, 2010

Ireland’s water-charges story starts in the 1970s, when a Fianna Fáil administration scrapped rates. People stopped paying for water, at least in cities, towns and villages, where there was no need to join and pay for group water schemes or to dig wells. Irish people didn’t have to think about the water that came from their taps – unless it briefly made headlines because it was contaminated with cryptosporidium.

But water came into focus in December 2009 when the minister for finance, the late Brian Lenihan jnr, announced in his budget speech that charges were on the way. Water charges were a priority of the environment minister, John Gormley, so much of the emphasis was on conservation.

The following summer the issue reached the cabinet. As the Fianna Fáil-led coalition discussed the issue there were leaks to the press that water was going to cost households as much as €500 a year.

In the Dáil the taoiseach, Brian Cowen, and the Fine Gael leader, Enda Kenny, exchanged barbs. “In the interests of the 1.8 million householders out there,” Kenny said, “can I ask the taoiseach to confirm that there will not be the introduction of flat-rate water charges in the December budget?’’ He described such flat-rate charges as “unfair, inequitable” and “not environmentally sound’’. Fine Gael would oppose such a scheme, he promised.

Later that year, as part of the bailout deal with the troika of the European Commission, the European Central Bank and the International Monetary Fund to rescue the Irish economy after the crash of 2008, the Fianna Fail-led government promised to have water charges in place by 2013 and to shift responsibility from local authorities to a new water utility.

As the 2011 general election loomed Labour and its then leader, Eamon Gilmore, made clear the party’s opposition to water charges and promised to stop Fine Gael introducing them.

But by the summer of 2011, once Labour and Fine Gael were in government, the water music changed. The new minister for the environment, Phil Hogan, said meters would be installed in every home before charges were introduced and that everything would fall into place quickly.

‘They should have gone at much slower pace’

Richard Tol doubted Hogan’s promise. Speaking to this writer in 2011, the economist expressed scepticism that Hogan could deliver 1.5 million water meters by 2014.

Today he stops short of saying “I told you so”, but he allows himself a humourless chuckle at how things have turned out. He recalls Hogan saying, soon after he took on the environment portfolio, that the issue would be solved within 18 months. “It was ridiculous. They should have gone at a much slower pace.

“I realised it was going to go badly when Bord Gáis was given the tender to run the new utility. Initially I thought it might be a good idea, because at least it had experience in the retail space, but then it sold its retail division and that experience just disappeared.”

Tol says that although the blame for the Irish Water debacle is frequently laid at Fine Gael’s door, “it was really John Gormley and James Nix” – an environmentalist and sometime adviser to the Green Party leader – “who made the first mistakes”.

“Gormley lost his department early on in his time in government. He was in charge but always battling with civil servants, so he brought in Nix. I met him to discuss it, and it was obvious he was not of a mind to listen to my advice.

“When Hogan took over he had other things on his mind. He should have intervened, but he didn’t. He just carried on with what was an absolutely crazy plan, and that has to be held against him.”

Nix remembers things differently. He says that a lack of understanding among some civil servants about what was needed and a failure to convince the public of the benefits of water charges were largely to blame for the problems that beset Irish Water from the start.

Another problem, Nix says, was the failure to introduce a payment structure that was widely perceived as equitable. “I think for it to have succeeded it would have needed a completely different approach and a completely different communication strategy. They needed much better communication, and from a very early stage they should have been talking about clean water, clean beaches and a world-class system. That was the narrative that was needed, but instead what we got was: ‘You are going to be charged, folks. Charges are on the way.’

“I worked with the Irish Environmental Network at the time and lobbied the department to bring forward proposals for social tariffs – reduced charges for lower-income households. Gormley tried to pursue this, but the issue went interdepartmental.

The privatisation idea

“It was around this time the government changed. Under the new government the idea that the [utility company] could decide on [income-based charges] won the day. This was a massive mistake,” Nix says, arguing that reduced charges for lower-income groups was a political issue “and needed a bright green light from the cabinet, not a kick into the regulatory arena”.

There was, Nix says, an even more significant shift when Fine Gael and Labour took office. Privatisation appeared on the horizon. “After the change of government a privatisation agenda came in, heaping one mistake on top of another,” he says.

His claim is backed up by senior people who worked on water at the time. One very senior source tells The Irish Times that the Department of Finance “always wanted an entity that could ultimately be privatised. If nothing else it wanted the option to privatise.”

Gormley has backed up these assertions. “Most of the political comment from the opposition is focused on the apparent unfairness of water charges and in particular the costs of installing the water meters themselves,” he wrote in Village magazine in 2012. The real issue was waste, he said, but some people had a different agenda. “Let me state it bluntly: the creation of Irish Water is the first step in the privatisation of water. No doubt about it. And we haven’t heard a squeak from the Labour mice.”

Some facts support these claims. In 2009 and 2010 the government plan was to use money from the National Pension Reserve Fund, or NPRF, to cover set-up costs, including meter installation. By early 2011 a new idea had emerged, suggesting that a significant level of separation was needed between the State and Irish Water to allow it to borrow money.

“The clandestine privatisation agenda at the Department of Finance, successful from early 2011, led to the NPRF being cut off as a borrowing option,” the source says.

Alan Kelly, the Labour Party minister for the environment in the last administration, disputes that privatisation was a political goal. “Anyone who is pushing the privatisation agenda is completely wrong. It was never mentioned to me, and it is complete and utter garbage. Apart from anything else, who in their right mind would buy it?”

We asked Hogan, who is now the EU commissioner for agriculture and rural development, for an interview. “We unfortunately have to decline,” his spokesman said, “as the commissioner is not in the habit of getting involved in domestic politics, [albeit] from the member state he knows best.”

Fianna Fáil’s theatrical walkout

The water debate grew more fraught over the course of 2013, and as the year ended, and the government pushed through the Water Services Bill, which gave January 1st, 2015, as the starting date for charges, it reached what appeared to be a boiling point.

In a bad-tempered Dáil debate Luke “Ming” Flanagan handed Fergus O’Dowd, a minister of state, a glass of water from his constituency and asked him to drink what he said was “glorified piss” contaminated with cryptosporidium. “Kids in my area can’t even brush their teeth with it, and you’re going to charge them for it,” he said.

The stunt caused consternation in the chamber. There was more when Micheál Martin, the Fianna Fáil leader, led his party on a theatrical walkout because of the guillotine on the legislation: just three hours was allowed to discuss the Bill. Sinn Féin boycotted the debate too, as did Independents.

But the government didn’t care. With its enormous Dáil majority it probably thought it didn’t have to. Big Phil Hogan almost certainly thought he had won the day. Irish Water’s problems were only starting, however – and were about to get a lot worse.

‘What are you spending on consultants?’

When Irish Water’s first chief executive, John Tierney, was asked to go on Today with Sean O’Rourke, on RTÉ Radio 1, on January 9th, 2014, he and his head of communications, Elizabeth Arnett, were probably quite relaxed. The interview was sandwiched between discussions of judicial appointments and of concussion in sport. It lasted just 22 minutes and nine seconds.

It was not the most dramatic interview O’Rourke had ever conducted. There was some probing about the nature of the new utility. There was talk of agreements between Irish Water and local authorities. There were questions about how the service would function and what the charge would be.

Tierney handled them adroitly; he said it was too early to tell how much people would have to pay for water. And, anyway, it would be the Commission for Energy Regulation that would make that call.

Just over half way through the interview came a question that arguably reshaped Irish politics. “What kind of money are you spending on consultants or what have you spent so far?” O’Rourke asked.

Tierney batted the query away, but with a hint of discomfort. O’Rourke, possessor of a finely tuned bluster detector, was having none of it. “How much?”

“To date we have spent approximately €100 million on establishment, and over 50 per cent of that would be on consultancy,” Tierney said.

“Maybe you’re a bit generous with consultants,” O’Rourke said gently.

Tierney disagreed, and the conversation moved on to other topics, such as how the company would compel people to pay. The idea that their water supplies could be cut to a trickle was floated.

“I hope you’ll be back,” O’Rourke told Tierney as the interview ended.

Tierney never came back.

Fat cats on a gravy train

A PR executive describes the interview as shocking. “As soon as I heard the word ‘consultants’ I knew things would go badly wrong. Instantly it conjures up images of fat cats on a gravy train. If he had called them anything else – if he had said, for example, ‘contractors’ – then it might have been a different story.”

Sean O’Rourke says that even he did not see how far-reaching the consequences of the interview would be. “I knew it was significant,” he says. “But I didn’t think it would run and run the way it did. I think perhaps if Tierney had explained in more detail what he meant by ‘consultants’ in the interview they might not have got into as much trouble as they did.

“When people hear the word ‘consultant’ they think of highly paid people being brought in to tell people how to do the jobs they are already doing. If he had maybe made it clear that the money was being spent on IT and a complex billing infrastructure it would have made a difference. As it was it overshadowed everything for a long time after the interview.”

Within hours the fees issue had blown up in Tierney’s face. Within days he was before the Oireachtas Committee of Public Accounts explaining how much was actually being spent on consultants. The amount emerged to be €85 million.

At the committee hearing Tierney looked like a man under intolerable pressure. Hogan, looking less perturbed, insisted that he was unaware of the level of money that Irish Water had spent on consultants but that the fledgling semi-State kept his department fully informed of all the costs it had incurred. On Prime Time, on RTÉ One, Hogan said it wasn’t his job to “micromanage a State company or a semi-State company”.

That week a controversy also arose about bonuses. They weren’t really bonuses, Irish Water said, but “performance-related pay schemes”. It didn’t wash with the public. Senior managers were in line for substantial salary top-ups if they did their jobs well. And to most people that’s a bonus.

It was a different part of the bonus story that really caught the public imagination. Under Irish Water’s wage structure lower-paid employees who were said to “need improvement” could get awards of 1.5 per cent. Midranking staff who needed to improve could look forward to 4 per cent. Senior managers in need of improvement were promised a 9 per cent salary top-up.

“A mistake was made with the language used,” one Irish Water source says. “The newspapers had a field day with it. I think that was, maybe, a little unfair. To say someone ‘needs improvement’ is not the same as saying they are terrible at their job. We are all in need of improvement, surely.”

Senior Irish Water staff stopped making public appearances. The Oireachtas hearing was one of the very few times that John Tierney was seen or heard from in public until he retired, last April.

Irish Water’s parent company, Ervia, shielded him from publicity. Senior executives have said off the record that it would have been grossly unfair to send him out to bat for the utility, so widely had he been vilified.

Even Arnett’s public appearances were scaled back as the company did its best to keep itself out of the news and out of the political arena. In 2014 any day that Irish Water was not high on the news agenda was a good day for the company. It didn’t have many good days.

Neither Tierney nor Arnett was available to speak to The Irish Times for this article.

Opposition grows

As the year went on the focus switched from the cost of Irish Water to the cost of water to Irish people. In April 2014 the Taoiseach, Enda Kenny, said he expected that an average family would pay €248 a year. He said they could economise by turning off the taps when they were brushing their teeth. Labour disputed the figure, but within weeks the Commission for Energy Regulation confirmed the average bill as €240.

Opposition grew. On July 11th Phil Hogan was moved to Brussels as EU commissioner, and in the subsequent cabinet reshuffle Alan Kelly took his job. In the autumn of 2014 Kelly announced an overhaul of the charging system. A one-adult household would pay a maximum of €160; a house with two or more adults would pay no more than €260. Children would get an allowance and, crucially, a €100 water-conservation grant would be offered to anyone who registered with the Department of Social Protection. Effectively, it meant that water would cost each household, at most, €3 a week.

The public wasn’t happy.

Many people claim credit for the protest movement that has, ultimately, led the Government to a point where it will, next week, suspend water charges. But John Lonergan of the Ballyphehane and Togher anti water and property tax group, in Co Cork, has, perhaps, the strongest of the claims.

He and six others were the first to mount a sustained protest against the charges and, particularly, against metering. In the early months of 2014 they knocked on doors in Cork, canvassing for a co-ordinated resistance to water meters. “We went up to Ashbrook, in Carrigaline, and gave them the information. Around 10 or 12 houses said that they did not want meters, says Lonergan. “That is where it started.”

He says his group was “sick and tired of being whipped with austerity measures. It is really unbelievable we have come so far. It took a lot out of us physically and emotionally, but ultimately it led to the Right to Water movement.”

They stopped Irish Water contractors installing meters at 65 houses in Ashbrook, despite Garda warnings that they would face arrest if they continued with their blockade. Within days the protests had spread to Dublin and elsewhere.

“We always kept politics out of it,” Lonergan says. “We got the Socialist Party, or whatever it is they are calling themselves now, pushed out of our branch, because they were trying to manipulate people in their own way.”

Some of the group were convicted of criminal damage as part of the protest, but Lonergan says things were mostly peaceful.

He remains opposed to metering. “Water meters are not about conservation, and all international evidence suggests that meters don’t really help to save water. They are just in place to help private companies to make a profit.”

Not everyone would agree. Hundreds of thousands of people paid their bills, some because it was their legal duty, others because they believed in the polluter-pays principle.

“I agree with water charges,” says Áine Carey, a bill-paying citizen from Kildare, “though not the way it was handled. I despair of all the nonpayment arguments. Where do people think the money comes from to provide potable water? I also would be very uncomfortable breaking the law – so much so that I even paid my last bill that came after the new Government and the announcement of ‘suspension’.”

Carey says she paid with a heavy heart. “I feel taken for an eejit, and I am very annoyed with the way it has been handled. Financially it is not easy for me, but I thought it was the right thing to do. I will not see a penny refunded.”

Sam Redfern, from Galway, also paid the charge from the beginning. “I was motivated primarily because of water conservation. Processed water is an expensive resource, and people just piss it away. There is only one way to stop that, and that is metering.”

Redfern also questions the motivation of some protesters. “I am not an expert in politics, but it seems to me the ringleaders – Paul Murphy and Ruth Coppinger and others – are benefiting hugely from this.”

Murphy and Coppinger may not have had personal gain in mind when they became involved in protests, but Murphy certainly benefited politically from the movement.

‘Something switched in the public psyche’

There are several pivotal moments in the Irish Water saga. Tierney’s disastrous RTÉ radio interview was one. Simon Coveney saying on Prime Time that water charges were back on the table as negotiations on the formation of the current administration got under way was another. But neither was as central as the Dublin South-West byelection campaign, in October 2014, to replace the Fine Gael TD Brian Hayes, who had been elected to the European Parliament.

The campaign did not electrify voters. They’d been to the polls in May in both the European and local elections, and they knew the byelection result would make no difference to Dáil arithmetic. Turnout was just above 35 per cent.

At first Paul Murphy did not appear a huge threat to the favourite, Cathal King of Sinn Féin. But Murphy did two things right: he turned the byelection into a referendum on water charges and he ran not as a Socialist Party candidate but under the umbrella of the Anti-Austerity Alliance.

In the European elections the previous May he had adopted much the same strategy on water but failed to win a seat. He says that opposition then was not nearly powerful enough to make a difference. But in the five months between the European and Dublin South-West elections “something switched in the public psyche”, he says.

“It became the issue that people felt able to mobilise on, to fight back on. It isn’t morally more important than workers’ rights or homelessness or repealing the eighth amendment. But for seven years people were hammered with all sorts of austerity, and there wasn’t much people felt they could do about it.” All of sudden, he says, they had a weapon.

As the byelection campaign started the government inadvertently helped Murphy, he says. It stepped up its rhetoric about recovery,as it did in the run-up to this year’s general election, and on both occasions the result was the opposite of what the government had intended.

“People were hit over the head with this notion that recovery was happening, and then, combined with that, water charges come into focus more clearly. And figures are mentioned of €500 or whatever. And consultants are mentioned. And it becomes the issue. People started saying, ‘You’re saying there is a recovery, but you are continuing with the austerity policies, and I can fight this.’ ”

The Anti-Austerity Alliance highlighted a remark that Pearse Doherty, Sinn Féin’s finance spokesman, made at his party’s think-in in Co Louth in the summer of 2014, when he suggested that water charges were not a red-line issue. Weeks later, and under pressure from Murphy’s campaign, Sinn Féin’s deputy leader, Mary Lou McDonald, changed tack and said that the reversal of water charges would, in fact, be a precondition if the party were to enter government after the general election. Murphy said he had forced Sinn Féin into an embarrassing climbdown.

All byelections are about something, says Murphy. This one “was about water, and the Shinners made a big mistake in not recognising that fact. Even people who might have traditionally voted Fianna Fáil or Fine Gael could vote on water charges and have a purposeful vote.”

Murphy’s election coincided with the first mass anti-water-charge protests across the State. Tens of thousands took to the streets in Dublin. “We helped to popularise the movement, but then in turn we were built by the movement, and this was all dramatically expressed on October 11th with the byelection and the protest.

“We have taken an opportunity clearly, but we have been absolutely principled in identifying water as an issue. It is a genuine popular movement, but we are happy to seize the opportunity to strike back against austerity.”

After this year’s general election, which all but destroyed the Labour Party, Eamon Gilmore, who had stepped down as leader in July 2014, and his colleague Brendan Howlin, who had been minister for public expenditure and reform since 2011, cited water as a key reason for the party’s electoral collapse. In an internal review Gilmore and Howlin said that charges should not have been introduced in 2014. Instead they should have been postponed until metering was at an advanced stage.

Howlin is reported to have said that the Labour Party should have postponed water charges “even if it meant taking down the government at that stage, held our ground on that.”

Too late for that now.

Ten more years?

Simon Coveney, the new Minister for Housing, Planning and Local Government, will ask an expert commission to recommend a funding model for water services, as well as to suggest how to improve water quality and encourage water conservation. A referendum to ensure that Irish Water, or whatever it becomes, remains a public utility is on the cards. So too are European Commission fines that could cost the State tens of thousands of euro a week because of the Government’s decision to suspend charges while the expert commission look at the options. The European Commission is “extremely frustrated” at the State’s failure to lodge a comprehensive plan to govern Ireland’s water resources.

Irish Water will not talk to The Irish Times about what has gone wrong since it was set up. But it is outwardly upbeat about the future. “Irish Water has already begun the complete transformation of the water services industry,” a spokeswoman said.

One of the utility’s few remaining cheerleaders appears to be Alan Kelly. “So what has Irish Water actually done to date?” he asked in the Dáil in April. “Irish Water’s investment has delivered 34 new treatment plants. A further 47 water-conservation projects have been completed, with 452km of pipe remediated. Irish Water is also targeting investment to improve water quality. Look at the improvements it has made to the lives of 17,300 people in Roscommon.

“Two of the required plants are complete and in operation, with another six in construction. It is addressing the unacceptably high level of leakage. Through the repairs conducted by Irish Water under the scheme, and those by customers of internal leaks, identified through meters, 34 million litres of water were being saved per day. That is enough water saved every day to supply all of Co Wicklow.”

Dr Richard Tol, now a professor of economics at the University of Sussex, still believes some version of Irish Water is needed. But he is not convinced that

“There is a very good reason why you want to create a single entity like Irish Water,” he says. “The system that existed previously was hugely inefficient, very costly and not at all good. So simply going backwards will not work. People will always need to pay for their water. There is an illusion that it comes free when in fact it is incredibly costly.

“There are three ways it can be paid for. It can be paid for through general taxation, as it has been in the past. It can be paid for by a standard charge. Or it can be paid for with metering.”

What would Tol have the Government do? “They need to start over. They need to do away with the name, throw out the senior management – and even shift it to a different Government department – and start anew.

“What is needed almost more than anything else is for the utility to regain the trust of the Irish people. I am not a marketing expert, but even I can tell that people hate Irish Water and everything it stands for. I think the problem will be with you for the next 10 years. At least.”

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