Irish Water overstaffing will cost up to €2bn, says expert

The way the new utility company Irish Water is being staffed involves waste of up to €2 billion and will add to the level of water charges for Irish households and businesses in years to come, according to one of Ireland's leading economists.

Prof John FitzGerald of the Economic and Social Research Institute said the new utility probably needs about 1,700 staff but instead is going to have to pay for more than 4,000, who will provide services to it by way of 34 local authorities.

He said the scale of the waste involved in this structure makes all other problems associated with the establishment of the new utility “pale into insignificance”.

The economist said nevertheless the creation of Irish Water will free up an extra €500 million in Budget 2015, which could be used for tax cuts or extra expenditure. This is because the State will no longer have to spend these funds on water.

The creation of the utility will also knock up to 2 per cent of gross domestic product off the national debt, he said, as its borrowings will not go on the Government’s books.

Infrastructure
Instead of setting up a system whereby Irish Water would be able to buy the services its needs from the workers it selects, as happened when Bord Gáis took over the role of Dublin Gas, it is instead taking on the services of the local authority employees who currently operate the infrastructure.

A requirement to do so was set out in the legislation establishing the utility.

While the new utility believes it will need about 1,700 staff, it has signed service level agreements with the 34 local authorities who run the Republic’s water and waste water infrastructure. As matters stand, these legal agreements, which run up to 2026, involve about 4,300 local authority staff, whose cost is to be paid by Irish Water.

While the primary purpose of establishing Irish Water is the creation of massive savings from increased efficiency, a large proportion of the potential savings have been jettisoned because of how the employee issue is being handled, Prof FitzGerald said.

Overstaffed
"It is massively overstaffed. They are being made to spend €1 billion to €2 billion more than they need to over the coming decade," he said. He added that the issue was one politicians did not want to address.

A spokeswoman for Irish Water said the service level agreements were signed last year and continue to 2026, but the issue of the resources involved will come up for review every year.

“The numbers of people involved will be reviewed in that context,” she said.

Minister for Natural Resources, Pat Rabbitte, said on RTÉ radio yesterday the establishment of Irish Water had been "railroaded" by the troika, which had pushed for the establishment of the massive new utility so that it was being put in place at a much faster pace than would have otherwise have been the case.

He said the water infrastructure had been massively underfunded for the past 20 years and the “corporate knowledge” as to how the “rickety” system operated was in the heads of the engineers who ran it for the various local authorities.

Prof FitzGerald, who prepared a paper with ESRI colleague Edgar Morgenroth on Irish Water for the Department of the Environment in February 2012, and who has been a member of a review group in Northern Ireland looking at the water utility there, said the economic argument for metering was questionable, given the €500 million plus cost of installing meters.