Irish Water: FG ideal has lurched from crisis to crisis since being set up

Despite the Coalition's muted protests about the troika forcing its hand on the water charges issue, Irish Water is very much a creature of Fine Gael.

The idea and name first cropped up in April 2009 as part of a wider plan by Fine Gael to sell off some State assets and companies. In their stead the party wanted to create a new holding company, called NewERA, which would oversee infrastructural investment in energy, telecoms and water.

The- driving forces behind it were Simon Coveney, Phil Hogan and Andrew McDowell, a special adviser to Enda Kenny. An economist and policy wonk, McDowell is described by some colleagues as the "Taoiseach's brains". The NewERA plan was reheated in 2010 and formed one of the central planks of Fine Gael's election manifesto.

The party also undertook to introduce water charges – at up to €238 a year. In contrast, Labour opposed water charges during the election campaign and included them in its infamous Tesco-style advert.

In any event, water charges had already been agreed with the troika of international lenders by the outgoing Fianna Fáil-led government in November 2010, although the exact form had not been worked out.

Negotiations

Fine Gael’s more expansive NewERA plan did not survive the Coalition negotiations with the Labour Party in March 2011. The plan for Irish Water remained unchanged.

The gist was that it would take over the water supply from 34 local authorities, create 1,800 jobs during the €500 million water-metering programme and make the big investment to ensure an adequate supply of drinking water. The utility would be able to borrow, leaving it at a remove from the Government balance sheet.

The new Government accepted water charges and then minister for the environment Phil Hogan began setting up Irish Water. Within a year it was announced that Bord Gáis Éireann would have responsibility for its establishment. In 2012, the set-up cost of €180 million was agreed.

In January, 2013 former Dublin city manager John Tierney was appointed managing director, an outsourced call centre with up to 400 jobs was set up and the water-metering programme began.

What seemed such a calm and seamless ideal in opposition soon encountered the rough waters of reality in government. There were a few problems. For one, like the Health Service Executive, the 2,000 water-specific employees in the 34 local authorities could not be sacked.

Second, there was going to be political opposition from the left to the charges, as had happened with bin charges two decades previously.

Third, it wasn’t a tax but a charge. When the onus is put on householders to pay, compliance rates won’t be high unless there are sanctions. The television licence and the short-lived household charge should have alerted Hogan to this.

Consultant fees

However, the fateful moment when the rot started to set in came on January 9th, 2014, when Tierney was interviewed by Seán O'Rourke on RTÉ. He disclosed that €50 million had been spent on consultants. It created a furore and hurled the project down a long, slithery snake and no number of ladders could regain lost ground.

It went from bad to worse. Within weeks there were daily stories about bonuses and performance-related pay to employees, a disclosure that 29 of its staff were earning more than €100,000, and a report by John FitzGerald of the ESRI that suggested the extra 2,000 staff could cost Irish Water as much as €2 billion by 2025.

The utility contested this, saying it would have 10 per cent fewer staff by the end of 2015 and would save 14 per cent in operating costs by the end of 2016.

But the die had been cast: it was perceived as another overinflated quango, the kind the Coalition had promised to cull.

In April 2014, the Taoiseach made a political miscalculation when he announced the average family would pay €248 a year. He reckoned the Fine Gael base would find that tolerable.Labour quickly disputed the figure but by May the average bill was confirmed at €240.

There was a tangible metric of its impact that same month: the local elections. Both parties took a hammering, especially Labour. The first bills due in 2014 were deferred until 2015. Hogan went to Brussels denying he had created a mess and saying it was not his job to micromanage Irish Water.

Meanwhile, the strength of the anti-water campaign was seen in the Dublin South West byelection, when Paul Murphy won at the expense of Sinn Féin. It led to the latter party hastily hardening its anti-water charges stance.

The new Minister, Alan Kelly, said Hogan could have done a better job of it. But the solution he brought forward in November was a little like the bank guarantee.

It looked great at that moment but was proved to be a bit of a dud over time.

Charges

His ruse was two sets of charges, one for €160 (for a household with one adult) and the other for €260. The lure was a €100 conservation charge for those who registered an interest. For a while, it looked like the Coalition had drawn a line under it.

Its cause was helped by the anti-water campaign shooting itself in the foot. First a megaphone-wielding Murphy was among a crowd that trapped Tánaiste Joan Burton in her car.

Then another activist, Derek Byrne, was caught on video calling President Michael D Higgins a "midget parasite". The in-your- face nature of some of the protests alienated some waverers.

Against that, a mass protest against Irish Water in Dublin in December, at which Sinn Féin reasserted its credentials, attracted well in excess of 30,000. An earlier one in October had seen huge crowds demonstrate around the country.

By 2015 it had become a battle of numbers. A few deadlines for registration had passed. After the latest in February this year, Irish Water claimed 1.23 million had registered (that included about 250,000 who already pay privately for water through group schemes).

There were two big blows in July. The first was the figures that showed only 43 per cent of customers had paid the first quarterly bill, a failure by any standard.

In the spring statement in April, the Government included Irish Water on the balance sheet as a precaution, but it expressed confidence it would pass Eurostat’s market test.

But, as we found out yesterday, that too was a failure.