Irish Water debacle far from unique in political context

The case of Irish Water and its consultancy costs isn’t unique in the political context but this type of process controversy is the first to have affected this Coalition since it came to power in 2011.

And there are strong echoes in the details of arrangements that were brokered during the three terms of Fianna Fáil led governments.

The first element was the extravagant monies (invariably many millions) of euro that were paid out to consultants or service contractors for services, some of which were intangibles like training or the catch-all ‘change management’. The second was the political response from the Minister who was caught in the eye of the storm - a seemingly impossible mixture of standing over everything while still distancing themselves from the costs involved.

Phil Hogan's comments that his job was not to micromanage how Irish Water spent his money was unfortunate politically and will take some explaining in the Dáil tonight, and possible some backpedaling. Sure he got the Commission for Energy Regulation to run the rule over the expenditure but €180 million (and €85m in consultancy costs) isn't loose change. The rule of ministerial responsibility is cruel but absolute: the buck stops with you and that means everything should be known. As Albert Reynolds once remarked, it is the little things (and he meant details in that case) that trip you up.

There is precedent. There was the Bertie Bowl, a project for a National Stadium and campus that bloated out of control very quickly with a projected budget topping €1 billion. Much of the political focus was on the role of consultants to the project particularly a clause that made their fee a percentage of the overall budget. Thus, the more the stadium cost, the greater the fee would be.

Then in the second term of that Government there was PPARS. This is the closest comparison to Irish Water because it stemmed from the amalgamation of a multiple of agencies into one. In that case it was the eleven health boards being merged into the HSE. PPARS was the payroll and human resources project that would integrate all the different and disparate systems being used by the health boards.

But what started off as a €9 million project ballooned quickly and within a very short space of time the budget was heading northwards of €140m. There were difficulties. For one, it was impossible to estimate the overall staff numbers in the HSE. Then there were different employment grades, different networks and systems, different conditions of work, different kinds of leave days and special leave, different bonuses and overtime rates in each of the old health boards.

But that did not take away from the fact of the enormous amounts of money paid to consultants. Again some of what was being done was captured by that nebulous phrase ‘change management’, an always costly exercise.

The other big process controversy was the dismal e-voting project. Then environment minister Martin Cullen took the idea piloted by his predecessor Noel Dempsey and sprinted away with it. Before any opportunity had been given for rigorous scrutiny, the machines had been bought, as had the software, and a big glossy launch had been organised. It was only when the prospect of a 'hanging chad' problem reared its head - and the absence of a verifiable paper trail - was a halt called to the gallop. Eventually the whole scheme was abandoned and the electorate reverted to the peann luaidhe and ballot paper.

But not before some €50m in costs had been incurred, some of it for costly storage of the voting machines throughout the country. Generous consultancy fees again featured.

Politically, two major questions surrounding the set-up of Irish Water will dominate the debate and proceedings in the Dáil and in the Public Accounts Committee later today.

The first is the extent of knowledge of the Minister and his justification for not micro-managing a spend of €180m. Allied to that will be further scrutiny of why the expertise that Bord Gáis claimed to have in its application for the contract was not utilised and why the new company had to spend such enormous sums on consultancy services and service contracts.

In its detailed memorandum yesterday it pointed out that the contracts were fixed price, that the consultants were immediately available, had the relevant experience and Irish Water had no obligation to them once the contracts came to an end.

And such are the biblical going rates for consultants. But such an enormous spend still needs to be justified as it is taxpayers’ money. And that is where Hogan may be in the frame for taking his eye off a dropping ball.

The second issue is that of bonuses. John Tierney’s disclosure that there is provision for bonuses is embarrassing for the Government. There seems to be a bit of pass-the-parcel going on between Hogan and Brendan Howlin’s Department of Public Expenditure over responsibility. With widespread cutbacks in public sector pay bills and in public service budgets, it still remains an embarrassment for the Government.