Water Services Bill 2013 [Seanad]: Second Stage

I move:

"That the Bill be now read a Second Time".

Bille an-tábhachtach é seo agus tá sé práinneach go ndíreoimís ar chúrsaí uisce ach go háirithe. Tá sé soléir anois go mbeidh Irish Water, nó Uisce Éireann, ag tosú mar fhoireann dhleathach agus go mbeidh sé ag díriú ar na ceisteanna práinneacha a bhaineann le soláthar uisce thart timpeall na tíre.

This is a very important Bill which I am pleased to bring before the House this evening because it is now time for the very important debate on the future of our water services. One of the key issues with which we must deal is the need to improve water services throughout the country. At the moment, water services are the responsibility of 34 different local authorities, including county and city councils. What we are doing, with the setting up of Irish Water, is placing, over a period of time, all responsibility and accountability for water services under a single body, namely, Uisce Eireann.

This Bill is the first legislative milestone in the Government's strategy for the reform of water services provision in Ireland. As I said, it provides for the establishment of Irish Water, or Uisce Éireann, as a subsidiary of Bord Gáis under the Companies Acts. The programme for Government provides for progressive and considered structural reforms of the water services sector in Ireland. There are three inter-related components to the Government's proposed reforms and to date, key decisions taken by Government include the establishment of Irish Water as an independent, State-owned company within the Bord Gais group, based on a public utility model; the introduction of a sustainable funding model to support much needed investment in the sector, which will include the introduction of water charges for domestic users; and the establishment of an independent economic regulator for water services, a function being assigned to the Commission for Energy Regulation.

Our water resources are a very significant national asset and there have been significant improvements in the quality and the capacity of our water and waste-water infrastructure over the last decade. This has been achieved on foot of substantial Exchequer investment through successive water services investment programmes. The Environmental Protection Agency, EPA, in its Assessment of Ireland's Environment, published last year noted that our water quality is good relative to other EU countries. A decade earlier, the agency's Environment in Focus 2002 report noted that the quality of our rivers at that time was "unacceptably poor" while our ground water had "unacceptably high levels of contamination". Maintaining the improvements in quality and standards will be a considerable challenge in the coming years against the backdrop of severe restrictions on the public finances which have seriously impacted on Government's ability to maintain the previous levels of capital investment.

Our valuable water resources also serve to support the success of many water-dependent sectors of the economy, most notably the pharmaceutical, information and communication technology, ICT, and food and drink sectors. I cannot stress that point enough. We are very lucky to be water-rich in comparison to other countries. However, some parts of our country do not have as much water as they will need into the future. If one takes the greater Dublin area, for example, it is anticipated that by 2020 supply and demand will equal each other and, therefore, as the economy of the area expands, there will be a water deficit, with the possibility of water shortages. It is very important that we deal with that issue now. The proposal that Dublin City Council and Bord na Mona have been working on up to now will mean the creation of a new reservoir in a place called Garryhinch, which will have sufficient back-up water resources to supply the greater Dublin area for a significant period of time. The reservoir will also serve as a wonderful amenity for the Garryhinch area, which could do with a boost to employment. I was in a water park in the United Kingdom recently which attracts more than 1 million visitors per year. It is a fantastic resource in the Anglian water area which provides massive employment, particularly in tourism and recreation. The new reservoir will address the water needs of the greater Dublin area as well has having a significant impact on tourism in the Laoighis-Offaly constituency.

The key objective of the Government's water reform programme is to put in place structures and funding arrangements that will ensure we have a world-class water and wastewater infrastructure that meets all environmental and public health standards and is well positioned to attract new foreign direct investment and to support job creation in indigenous companies. As I understand it, eight European countries are experiencing water shortages at the moment. When I visited Rutland Park in the United Kingdom in September last year, the water authority in that area was also experiencing a significant water shortage. Ireland has many positives, if we build to our strengths and improve our infrastructure. The establishment of Irish Water will also ensure a co-ordinated approach can be taken to matching regional investment priorities with strategic national objectives.

The EU-IMF programme of financial support for Ireland includes commitments to introduce domestic water charges and to establishing a national water utility. While it is committed to introducing water charges, the Government considers that volumetric-based charging is the fairest approach. The annual cost of water service provision in Ireland is €1.2 billion. Ireland is the only country in the OECD which does not charge for domestic water and the OECD, in its review of our environment performance in 2010, argued that the absence of volumetric charging gives domestic users no incentive to save water and perpetuates a low awareness of the real cost of water services.

Where there is metering of domestic water, there will be savings of the order of at least 10% or 12%. There are many advocates of water conservation, and none better than the national group water schemes. One scheme in the Cavan-Monaghan area, involving several farmers so that there was a commercial as well as domestic aspect to water consumption, reduced its overall water demand by more than 80%, which is an unbelievable figure. Significant conservation takes place when we are charged for water. That is in the long-term interest of everyone.

There is considerable public dissatisfaction with the levels of unaccounted for water, including leakage from water distribution mains. Investment in recent years has been prioritised on mains rehabilitation and leakage reduction. The metering programme will assist greatly in improving the management of water supply networks and will assist in targeting investment. Experience internationally and here in Ireland with the non-domestic sector and on private group water schemes indicates that metering will promote water efficiency and conservation by users.

The national figure for water unaccounted for is over 40%, which is unacceptably high. In Fingal, in the Dublin area, the percentage figure is down to the low 20s, which is excellent compared to some counties. There is a league table showing some counties with as much as 60% of water unaccounted for. To say that 60% of water which is treated, stored, pumped and put into a pipe, goes nowhere is unacceptable, given the cost of supply and the issues involved.

The Government wants to ensure that the interests of consumers will be protected when domestic water charges commence and the Commission for Energy Regulation will have the necessary powers to regulate the water sector and to determine the appropriate level of water charges. The Bill provides the commission with the power to advise the Government on the development of this policy. The intention is that the new policy will be given legislative effect later this year when the commission will be given full regulatory powers, including the authority to set water tariffs. The commission's approach to regulation of water services will be transparent and it will undertake extensive consultations in advance of the water tariffs being set. The public can be assured that the water charges will be fair and that the Government will ensure that appropriate measures and supports will be in place to assist vulnerable groups when water charges are introduced.

I would also like to address the impact of the reforms on the local authority sector and in particular on local authority employees. Given the scale and complexity of the change involved in this reform process, engagement with staff and unions is critically important and a specific structure, the Irish Water consultative group, has been put in place to facilitate this. There will be a fair and objective consultative group, independently chaired by Mr. Kevin Foley, to deal with all of those issues, as and when they arise. We want a smooth transition from the present disparate 34 sectors to a one-stop shop.

Good progress is being made on clarifying issues for staff. During the period to the end of 2017, other than situations where existing staff are recruited to new positions in Irish Water, existing staff will remain employees of local authorities working either under service level agreements or on a secondment basis to Irish Water. Where employees are working under a service level agreement they will carry out their existing role and this arrangement will continue until at least 2017 unless otherwise agreed at the Irish Water consultative group.

Some existing water functions are likely to transfer to Irish Water on establishment or on a phased basis in the period 2014 to 2017. These largely relate to management roles and roles associated with the delivery of the capital programme. It is envisaged that the staff currently carrying out these functions would move to Irish Water on secondment in the period to 2017 and would, therefore, remain as employees of the relevant local authority. During this period, some staff could transfer to Irish Water by agreement. The framework for such secondments or transfers would be considered at the Irish Water consultative group.

Before I set out the provisions of the Bill I would like to address some of the matters which are not specifically provided for in this Bill but which will, subject to Government approval, be comprehensively addressed in more detailed legislation which is under active development and will be brought forward in a separate Bill in the second half of this year.

As I said earlier, the Commission for Energy Regulation will be given full regulatory powers later this year. These powers will include the power to examine all costs incurred by Irish Water in the delivery of water services and to determine what levels of tariffs are appropriate for Irish Water to use to charge for the services. The regulator will also be responsible for setting standards of performance for Irish Water and will ensure that appropriate customer protection measures are in place. As I said earlier, the regulator will undertake extensive consultations in advance of the setting of water tariffs and these consultations will commence following the enactment of this legislation. Among the range of issues the regulator will be consulting on are the development of a regulatory framework, the design of water tariffs and the development of customer protection measures.

This next Bill will also confer powers on Irish Water for the provision of water services which are currently the responsibility of the county and city councils. This would include the power to provide water and wastewater services directly, responsibility for strategic planning and delivering investment programmes and powers of examination and survey. It will also provide for the transfer of local authority water assets and associated liabilities to Irish Water. The establishment of an asset base will be an important step in ensuring that Irish Water will, in the future, be able to access financial markets to secure funds for capital investment.

The accountability of the company to the Oireachtas will also be addressed in more detail as well as its interaction with the local government and the functions that local government discharges in relation to planning, economic development and emergency management. This issue, the political accountability of the new company at national and local level, arose during the debates on the Bill in the Seanad. I can assure the House, as I did the Seanad, that the Government will ensure that the company will be accountable and transparent.

I will now outline the purpose and operation of each section of the Bill. Sections 1 and 2 set out the Title and commencement provisions and definitions of terms used in the Bill. Section 3 is a standard provision enabling the expenses incurred by the Minister for the Environment, Community and Local Government for the administration of this legislation to be paid out of moneys provided by the Oireachtas. Section 4 provides that Bord Gáis shall establish a subsidiary company, Irish Water or Uisce Éireann, under the Companies Acts, following consultation with the relevant Ministers.

Section 5 outlines that the subsidiary will be known as Uisce Éireann in Irish and Irish Water in English. The shares in the company are to be distributed between Bord Gáis, the Minister for the Environment, Community and Local Government and the Minister for Finance. Bord Gáis will be allocated the only voting share which it will not be allowed to alter without the consent of the two Ministers. The two Ministers will share the remaining shares between them. This share structure will ensure that Irish Water remains in full public State ownership. I will reiterate that. The above structure will ensure that Irish Water remains in full public State ownership. An important point for many people I have spoken to in the political and local government areas and on the streets of our towns and cities is that Irish Water will remain in public ownership and will not be privatised. That is a critical issue.

Section 6 sets out conditions in relation to the memorandum and articles of association of the company and provides that they must be approved by the Minister for the Environment, Community and Local Government, with the consent of the relevant Ministers. Any amendment to the memorandum or articles of association can only be made with ministerial approval.

Section 7 is a standard provision and sets out the circumstances in which a director of Irish Water will no longer be qualified and must cease to be a director. Section 8 outlines the standard prohibitions on directors or members of staff of Irish Water holding political office, either at national or European level.

Sections 9 and 10 are also standard provisions setting out the requirements for the disclosure of interests by directors or staff of Irish Water of any material interest, in the case of directors in any arrangement or agreement for consideration of Irish Water, and in the case of staff in their capacity as employees.

Section 11 prohibits the unauthorised disclosure of confidential information by a director, member of staff, consultant or adviser to Irish Water, unless authorised to do so. This prohibition will not apply to the disclosure of confidential information to Bord Gáis however. Confidential information for the purposes of this section includes information expressed by Irish Water to be confidential either as regards particular information or a particular class of information or description and proposals of a commercial nature or any tenders submitted to Irish Water

Section 12 provides that Bord Gáis and Irish Water may borrow money, subject to the consent of the Minister for the Environment, Community and Local Government, the Minister for Communications, Energy and Natural Resources, the Minister for Finance and the Minister for Public Expenditure and Reform. The aggregate borrowings of Bord Gáis and Irish Water for the purpose of this legislation must not exceed €500 million. The section specifies that the borrowing limit is additional to the limits for Bord Gáis set out in section 23 of the Gas Act 1976. Money borrowed in currencies other than the euro will be deemed equivalent subject to the rate of exchange at the time of the borrowing. Money borrowed by Bord Gáis under this section may be subsequently lent to Irish Water.

Section 13 provides that the Minister for the Environment, Community and Local Government may, for the purposes of this legislation, make grants out of money provided by the Oireachtas to Irish Water, Bord Gáis or the Commission for Energy Regulation.

Section 14 provides that subsections (1) and (2) of section 21 of the Gas Act shall apply to Bord Gáis, such that the approval of the Minister for the Environment, Community and Local Government and the Minister for Public Expenditure and Reform will be required for capital expenditure by Irish Water above a level to be specified.

Section 15 relates to the accounts of Irish Water. It contains standard provisions on the maintenance by and audit of the accounts of Irish Water and the submission of audited accounts and any other accounts to the Minister for the Environment, Community and Local Government. The accounts must be then laid before each House of the Oireachtas. The section also sets out the arrangements for the appointment by Irish Water of an auditor to audit the accounts and for the Ministerial approval of the fees of the auditor.

Section 16 provides that by 30 June each year, Irish Water will prepare and submit to the Minister for the Environment, Community and Local Government and the Minister for Communications, Energy and Natural Resources a report on the performance of its activities in the area of water services in the preceding year. The report must be then laid before each House of the Oireachtas.

Sections 17 to 21 of the Bill deal with the water metering programme and confers powers on Bord Gáis and the new company as metering authorities. I referred earlier to the Government's position regarding the fairness of volumetric-based charging. In addition to this, the domestic water metering programme will have significant economic and employment benefits. The programme, which is the largest and most ambitious programme of its kind of which we are aware, will commence later this year. It will be preceded by the surveying of domestic water connections at the external boundary of households connected to public water supplies; this work will be undertaken by the local authorities. This surveying work will commence across all local authorities shortly. On the meter installation works, the Department of the Environment, Community and Local Government and Bord Gáis have already commenced the procurement procedures for the sub-contractors, regional management contractors and equipment for the metering programme which will be rolled out over a three year period.

Section 17 provides that a reference to a metering authority in sections 17 to 21 means Bord Gáis or Irish Water.

Section 18 provides that the functions of a water services authority in relation to the installation of water meters for dwellings may be carried out by a metering authority in addition to a water services authority. It also provides that other functions of a water services authority may be also carried out by Bord Gáis and Irish Water to the extent that their performance is necessary for the installation of water meters for dwellings. These would include, for example, the power to lay pipes and the power to interrupt water supplies at sections 41 and 51 of the 2007 Act respectively,

Section 19 provides that the provisions in section 41 of the Water Services Act 2007 relating to the installation of pipes shall apply to a metering authority, subject to the removal of a requirement to obtain the consent of a road authority, which applies when the water services authority is not the road authority. The 34 water services authorities are the 34 city and county councils, which are also the road authorities. The installation of pipes by Bord Gáis and Irish Water will be exempt from planning permission. This is necessary to avoid causing delays to the metering programme and, having regard to the level of excavation work required to install a meter, is unnecessary. The Department and Bord Gáis will agree a protocol with the Department of Transport, Tourism and Sport and with the local authorities which will specify the standards for the installation works nationwide. This protocol will ensure that the highest standards will be applied and will address issues such as traffic management, the quality required for footpath and road reinstatement and health and safety requirements. Many people have said to me that it is essential that footpaths and roads are reinstated as they were before. There is far too long a history of some companies going in and digging up footpaths and leaving behind an appalling mess but no one can find out who is responsible and no one is held accountable.

Section 20 specifies that the water meters will remain in the ownership of Irish Water and Irish Water may not dispose of any property vested in it without ministerial consent.

Section 21 provides that the provisions of section 29 of the Water Services Act of 2007 shall apply to Bord Gáis and Irish Water in the same way as it applies to a water services authority. This provides for the immunity of these bodies and their employees from prosecutions arising from carrying out their functions.

Section 22 is a standard provision and provides that Bord Gáis and Irish Water will have all of the powers that are necessary or expedient for the performance of its functions.

To create an accurate database of the names and addresses of domestic customers, Irish Water will be given the power to request information from other public and commercial bodies which hold similar information. Section 23, therefore, provides that Irish Water and Bord Gáis may request a relevant person to provide them with such information that they may require to perform their functions or that they could be expected to require if additional functions, similar to those currently vested in a water services authority, were conferred on them. A relevant person may be a local authority, the Private Residential Tenancies Board, the Property Services Regulatory Authority, the holder for the time being of a licence granted under section 14 of the Electricity Regulation Act 1999, the Local Government Management Agency, the Revenue Commissioners, the Minister for Social Protection and any other person prescribed by order made by the Minister for the Environment, Community and Local Government after consulting with the Data Protection Commissioner. A relevant person must comply with a request under this section. This section amends sections 6 and 7 of the Water Services Act 2007 such that Bord Gáis and Irish Water have the same powers to obtain information as a water services authority, as well as the same entitlement to obtain information on ownership as a water services authority. This provision will not exempt Irish Water from the requirements of data protection legislation. Irish Water will agree a protocol with the Office of the Data Protection Commissioner to address the exchange and treatment of any personal information. There have been discussions with that office during the drafting of the legislation and the section includes a provision that before any proposal to extend the list of relevant persons, the Data Protection Commissioner must be consulted.

Section 24 provides that the Commission for Energy Regulation may do all things necessary or expedient for the purpose of preparing for the performance of water regulatory functions under any future enactment. The functions include functions relating to setting charges for water services, the specification of minimum standards of service for the provision of water services and the protection of the interests of a person in receipt of water services. This section also states that the commission may advise the Government on the development of policy regarding the regulation of the provision of water services. Under this section the commission may consult with Bord Gáis, Irish Water, the water services authorities or any person prescribed by order by the Minister for the Environment, Community and Local Government. Following the enactment of this Bill, the commission will commence its work and will undertake public consultations as soon as possible this year on a range of issues, including the development of tariff structures, and will prepare guidelines on consumer protection measures.

Sections 25 and 26 remove the existing prohibition on charging households for water services as set out in section 105 of the Water Services Act 2007 and in section 4 of the Local Government (Financial Provisions) (No. 2) Act 1983, as amended by section 12 of the Local Government (Financial Provisions) Act 1997. I want to stress that section 105 of the 2007 Act has not been commenced and it will not be commenced prior to the introduction of charges, which will not be before 1 January 2014. This amendment is being made only to enable Bord Gáis and Irish Water to undertake functions relating to domestic water charges, such as the development of a customer database, the establishment of a billing system and the commencement of consultations with the public and other stakeholders.

Section 25 transfers the functions of a water services authority relating to charging dwellings for water services from the water services authorities to Bord Gáis and Irish Water while section 26 provides for the removal of the statutory prohibition by amending the Local Government (Financial Provisions) Acts.

Section 27 provides for the amendment of section 15 of the Gas Act 1976 so that Bord Gáis shall keep accounts of moneys received or expended by it in the performance of its functions in relation to this legislation.

Section 28 provides that Bord Gáis must submit a report on its activities in the area of water services to the Minister for the Environment, Community and Local Government and the Minister for Communications, Energy and Natural Resources. The report shall be submitted no later than 30 June each year and arrangements will be made as soon as possible after the receipt of the report for copies of the report to be laid before both Houses of the Oireachtas.

Section 29 relates to directions issued by the Minister for the Environment, Community and Local Government. Directions may be issued, subject to the approval of the Minister for Communications, Energy and Natural Resources, to Bord Gáis or Uisce Éireann on the performance of their functions and they must comply with a direction issued to them. It would not be the intention that ministerial directions would be issued to the companies, or, indeed, that such directions would be necessary. However, as this Bill is effectively interim legislation pending the more comprehensive Bill later this year, this section is considered prudent to ensure that Government policy is being implemented appropriately by the companies.

As I stated at the beginning, this Bill is the first legislative milestone in the Government's strategy for the reform of water services provision in Ireland. It is the first step in what is undoubtedly one of the most fundamental reforms of public services provision in Ireland. I look forward to engaging with you on the provisions of the Bill.

I commend the Bill to the House.

I will be sharing my time with Deputy Barry Cowen. I understand we are adjourning at 7.30 p.m.

We are moving on to Private Members' business at 7.30 p.m.

I thank the Minister of State for his opening contribution on this legislation.

Fianna Fáil cannot support this Bill until the Government comes clean on the full cost and implications of its plan for water services. The Government has failed to learn from the household charge fiasco and is determined to ignore genuine concerns about its plan for water charges. These include the lack of detail in how much metering will cost the consumer, uncertainty for current employees, a rushed decision-making process by-passing the Oireachtas, confusion in the Cabinet over the costs involved, and no guarantee on conservation or water infrastructure. Metering will not be finished until 2016, contrary to the Minister for the Environment, Community and Local Government, Deputy Hogan's original time line of 2014. The Government is rushing ahead with the creation of Irish Water and rolling out water meters without clearly considering the costs involved to consumers. Apparently, apartments, in particular, will be excluded from metering but no details about how these will be charged has been yet forthcoming.

The Government has decided on this issue amidst internal Cabinet confusion over the costs, the lack of details on how much consumers will pay, no public tendering for the new body, the by-passing of the Oireachtas committee and holding a severely limited public consultation. For the Labour Party, it is yet another direct U-turn on its pre-election promises to the people. The Cabinet generated immense uncertainty over how much people would have to pay for the cost of water metering with contradictory statements coming out from various Cabinet Ministers.

The Minister, Deputy Hogan, has announced that householders will receive their first bills for water by the end of 2014. The estimated annual costs could reach €400 per household. He originally stated that the Government would implement water charging by 2014. However, reports in September 2012 indicate that metering would not be completed as late as 2016. Then Irish Water Board chief executive, Mr. John Mullins, stated that it will take two and a half to three years to fully install water meters in all qualifying properties. The Minister, Deputy Hogan's initial statements were clearly lacking any factual basis, casting his whole policy in doubt.

The Cabinet announced the creation of Irish Water which will be an independent State-owned subsidiary of Bord Gáis. It will bill all households for their use of public water supplies. The services were not put out to tender and the decision-making process to award the contract remains shrouded in mystery. Irish Water and the regulator, the Commission for Energy Regulation, will determine the cost of the service, the free allowance and the framework for levying the charges. However, there is no detail on the level of free allowance and the total costs involved to the consumer.

Irish Water will operate in conjunction with the current 34 local authorities, which operate the water infrastructure, up until 2017. However, the nature of the relationship between the bodies has not been clarified to date. Ultimately, local authorities will be stripped of this function. Despite the fact that the White Paper on local government reform has not been produced, the Government is whittling away their powers in an ad hoc incoherent fashion.

The Government has lauded the creation of Irish Water and rolling out of metering as a job stimulus package, yet it is pressing ahead with investments in the area without clarify the cost. It is also putting the cart before the horse as it has not passed the Construction Contracts Bill 2010 which would secure sub-contractors rights to ensure they will fully benefit from the stimulus.

I will address a number of metering issues. Water meters will be established in some 1.05 million households across the State. These meters will be built outside the curtilage of the property. Reports indicate that establishing water meters across the country will cost €300 million, although the cost may reach €500 million.

The 2011 census figures show the potential problems with the Government's plans. Some 503,140 units or 36% of those households eligible to pay water charges are potentially unsuitable for metering by the Government's own standards as they either are too old or are apartments, creating a two-tier system of charges. Apartments, some 300,000 units, will not be metered initially due to technical challenges. These will be charged through an alternative method, although the Government has been unclear as to how.

The employment status of those workers currently employed in the water section of local authorities is unclear. The PwC report on the creation of Irish Water has suggested job losses in the area. The PwC consultants report states that the number employed will be significantly lower than the 4,278 deployed today, although the Taoiseach has denied this. Additionally, it is unclear whether the 60,000 holiday homes across the country are eligible to pay water charges or whether vacant houses will be metered on an ongoing basis as they are occupied or in one fell swoop on estates.

How much time remains?

Can I just make one final concluding remark?

Of a couple of seconds, yes.

It was announced by the media in Limerick that the Irish Water billing and call centre is to be located in the former Dell facility in Raheen in Limerick and may create up to 400 jobs, which is most welcome news.

No. The Deputy will have to finish.

I checked it out with Irish Water and was told that was very premature and that in fact there is a tendering process for the supply of an outsource service of the billing and call centre.

I have given the Deputy latitude and we must move on to the Private Members' motion.

There is considerable confusion about the possibility of that entity coming to Limerick. I implore the Minister of State-----

I ask the Deputy to move the adjournment of the debate.

-----to ensure that service comes to Limerick-----

I must ask the Deputy to obey the rule of the Chair.

-----so that those jobs come to Limerick-----

-----as the Government has announced unofficially.