The answer to both questions is "No". The question of the supply of water to the city, its citizens and its growing population deserves the most serious consideration. For far too long, substantial amounts of water have leaked away through the system that taxpayers pay for and there is clearly a need for a major project in which the pipes service in Dublin city can be renovated, repaired and brought up to standard. There is also a need to deal with the future requirements of the city and its population for the next 50 years, from other locations or by whatever means.
It costs €1.2 billion per year to run the current system, with most of the funding coming from State sources. The creation of Irish Water has many benefits in terms of increased investment resulting in better-quality water services, which are fundamental for industry, human consumption and the health of our people. Not only do enhanced water services benefit individual households, they also attract industries with high water usage. Deputy McDonald is aware of the exceptional amount of high-quality water required by modern industry in a country such as Ireland. With global demand due to rise by 40% in the next 20 years, it is a critical issue.
Dublin City Council will be left with pension liabilities of €330 million. Local authorities operate a public sector defined benefit pay-as-you-go pension scheme. Therefore, as pension liabilities fall due when people retire, payments are made from current expenditure. Liability arises if everyone working for the services retires in the morning. The Minister for Social Protection has pointed out that there is a major pension problem in respect of the entire public service, which makes this figure seem relatively modest. Pension liability already exists in respect of staff working in water services, so the transition to Irish Water does not create a new liability. The service level agreement provides that Irish Water will pay local authorities for existing water service pensioners. The Water Services (No. 2) Bill also provides a mechanism for payment of pension benefits to local authority staff who transfer to Irish Water now or following the service level agreement. When the service level agreement comes to an end, the pension liability for water services staff who do not transfer to Irish Water will rest with the local authority. This is unlikely to arise until 2025 at the earliest.
The comment about asset-stripping to the tune of €2 billion without any compensation is an unbalanced presentation. The Bill provides for the transfer of water services assets to Irish Water and all of the liabilities associated with the assets, including loans. A total of €730 million in gross water costs will transition to Irish Water from 2014. Some €244 million will be paid back to local authorities for the provision of water services under the terms of the service level agreement. Irish Water expects to pay commercial rates of approximately €42 million to local authorities on the water infrastructure assets that transfer to it from 1 January 2014. The remaining €444 million of water-related costs, which local authorities would otherwise have to meet from their own resources, will be funded centrally by Irish Water.
The Bill provides that non-domestic charges existing in local authorities in 2013 will continue to apply from 1 January 2014 and will continue to be collected by local authorities on behalf of Irish Water for the first half of 2014. Irish Water will be responsible for collection of commercial water charges from 1 July 2014. In respect of the Dublin City Council deficit in 2014, the city manager issued a note to councillors on Friday stating that the general purpose grant, GPG, allocation he received in the net transfer of water costs to Irish Water represented a satisfactory outcome and exceeded his expectations in regard to the council's funding position in 2014. He said he was satisfied that he would be able to prepare a draft budget for 2014 that would largely maintain service levels.