Cliff Taylor: Politicians must fix the leak in Irish Water’s funding

The controversy over the interruption to the water supply in the northeast might all too easily be dismissed as just the latest in a series of dramas surrounding Irish Water. But what happened is as clear a warning sign as you could want that years of underinvestment and poor planning in our water infrastructure have left us dangerously exposed.

There are scores of other potential flashpoints in the old copper and asbestos pipes around the country, in treatment plants which date from the 19th-century and in our creaking waste water infrastructure. What is emerging is a giant failure of public policy over many years.

We have been investing too little in our water for years and are now starting to pay the price. It never really became an issue, because people start to care about pipes only when they burst.

And for politicians there was more mileage presiding over the opening of a new school or hospital wing than ensuring the upgrading of a waste water plant or replacing a few miles of an old 1970s asbestos pipe.

Capital spending must not be hijacked by ‘new politics’

---

Cliff Taylor: Trump’s tax package is bad news for Ireland

---

Donald Trump’s trade policy is tightening global tensions

---

We know Brexit is coming so Ireland can be prepared this time

---

The anti-water charges argument – that we are 'already paying for it' via general tax – has won

Irish Water has a plan to start fixing this and has already undertaken some important investments. But years of neglect will take years to fix.

And it will take funding, too, with investment spending by Irish Water due to rise from €522 million this year to €595 million next year and steadily higher to top €800 million by 2021, with further spending on this scale required for years thereafter.

Consequences

With the Irish Water funding model now in tatters, the Oireachtas will return to the issue of how this will be paid for in the autumn. Right now, funding is agreed only up to the end of next year.

The anti-water charges argument – that we are “already paying for it” via general tax – has won. But no one is yet facing up to the consequences of this. Money spent on water means less spent elsewhere, or more taxes raised. Guaranteeing money for water might mean less on housing, or hospitals, or for a pre-election tax cut.

When our politicians return in the autumn, will this week’s events have focused minds on the need to really address this? Or will they all get carried away in point-scoring over the water charges and claiming credit for the repayment cheques?

One of the central ideas behind the establishment of Irish Water was that it would raise funds for itself and be, in part at least, independent of the central exchequer and in time off the State balance sheet.

An independent stream of income from domestic water charges and the ability to borrow independently would have given some guarantee of funding.

Now the risk is that needs of water will have to fight each year against all the other State priorities for investment – social housing, rural broadband, roads and railways and so on – and the wider demands on the budgetary pot.

There isn’t a lot of point in refighting the water charges debate. And nor is it relevant to what happened in the northeast.

This resulted from decades off underinvestment and mismanagement when 31 local authorities and three urban councils managed the water and waste infrastructure and services.

They operated on the basis of uncertain and often inadequate funding, leading to delays, underinvestment and to a string of locally-based, inefficient facilities.

Leaking mains

The network inherited by Irish Water in 2014 was creaking at the seams, and some of our largest plants date back to the Victorian era.

We have rusting, leaking cast-iron mains in our major cities, some more than 100-years-old, and the estimate is that 49 per cent our water is lost through leakage.

There have been an average of 168 local sewage incidents each year. Just this week, Kilkee beach in Co Clare was closed at the peak of the tourist season due to a pump failure in a local waste treatment plant.

The original Irish Water funding model has collapsed – and no one is quite sure where to go next

Solving all this will require significant investment over a period of many years. Trying to square all the circles, the Oireachtas committee on water funding suggested in its April report that a specific chunk of general tax revenue be earmarked to provide the necessary funding.

In this way, Irish Water would have its guaranteed resources and, the committee argued, users would be seen to pay, as required by EU directives.

Whether this will fly is open to question. Governments will always want freedom to move tax revenues around, rather than setting aside money for one purpose – a point specifically made by the Department of Finance at the committee hearings.

Also, the EU may not let us off the hook so easily in terms of the user-pays principle. Is earmarking some USC, for example, for water investment really users paying? There is some political support for so-called wasteful houses to be charged, though collecting this might cost nearly as much to collect as the revenue raised.

We have driven ourselves into a cul de sac here. The original Irish Water funding model has collapsed – and no one is quite sure where to go next.

We need to face up to the need for pay for this and ensure that Irish Water has the certainty about funding that it needs. If we aren’t paying via water charges, then we will indeed be paying via general taxes. And the tax pot will stretch only so far.

Taoiseach Leo Varadkar says that the squeezed middle want tax cuts. But they are surely likely to put even higher priority on water coming out of their taps.