Yesterday the Taoiseach was asked questions in the House about the new water tax and standing charge and he gave very little information to the Members of the House. He referred to a draft memo from Irish Water but played down its implications. He failed to mention anything about a draft memo going to Government this morning for a special meeting on water charges and the water tax issue, the details of which are covered extensively today in The Irish Times and Irish Independent.
Leaders' Questions
Wikileaks.
We learned, for example, that the average cost will be between €250 and €300 and that the free allowance will consist of a seven minute power shower, a three minute tap run to brush one's teeth and two flushes of the toilet and that is basically it. That is the level of detail that was available this morning. There will be an annual standing charge, we were told, applying to all households irrespective of how much water they use. Basically, householders will pay for every drop of water used beyond the most basic morning routine. We have also learned that social welfare protection for low income families and particularly for pensioners has been ruled out.
I remember the Tánaiste saying, very eloquently, in 2010 that he was against water charging because water is a necessity, and that he always believed essential services like water should be delivered as a public service. Despite this, for some reason the Government has set up a very expensive and complicated regime in Irish Water, costing €180 million, despite that water will still be produced and delivered by the very same people who have been delivering it for decades.
I have a number of questions for the Taoiseach. Were the Labour Party Ministers informed about this level of detail in advance of it being circulated to the media by the Government? Was a memo brought to Government today on the new water tax and was a decision taken? Can the Taoiseach confirm that the free allowance is as revealed in The Irish Times and Irish Independent? We meet many people throughout the country in the course of our duties who say they have no more to give with all the other charges they have had to cope with, particularly pensioners who have been very hard hit by the previous two budgets.
(Interruptions).
Will there be an ability to pay provision in the regime? Will there be any link to a person's income or capacity to pay?
Only for the newspapers we would be hearing nothing.
I did not call on my assistant, thank you.
I thank Deputy Martin for his range of questions. There is a lot on the Government agenda that has to be considered. This morning, at a meeting I called to deal with a number of matters, we approved the publication of the legislation dealing with free general practitioner care for children under six, the publication of the Bill dealing with climate change and carbon emissions, and the changes recommended by the Minister for Education and Science to the Bill previously known as the Teaching Council Bill. We also had our first discussion on a proposal from the Minister for the Environment, Community and Local Government on the introduction of water charges. This is all about equity, equality, affordability and fair pricing. The situation, as Deputy Martin is only too well aware, is that we have a completely inferior infrastructure for water in many parts of the country. This State has failed to invest properly in that infrastructure over the years and that is why the Irish Water utility was created in order that it can borrow money off the Government's balance sheet to provide the infrastructure for water for consumers and businesses and to maintain our attractiveness as a location for setting up businesses.
Deputy Martin asked a number of questions. The Ministers' memo sets out a range of issues that are important. The Government, comprising the two parties, Fine Gael and the Labour Party, is united in supporting the Government's priority that water charges would be fair, affordable and as equitable as possible. We started that discussion this morning. The Government noted the importance, in the context of our recovery plan, of ensuring Irish Water, like Bord Gáis and the ESB, would be classified as a commercial semi-State body, the finances of which are separate from the Government's. In that way, Irish Water can fund much higher levels of investment to fix the inferior infrastructure we have. We also noted the official advice from the Minister for the Environment, Community and Local Government that the level of taxpayer subvention for Irish Water, consistent with it being classified as a commercial State company, could not exceed €537 million in 2015 and 2016. That equates to an annual average metered charge of €240. The Government has not signed off on these figures. There has been intensive engagement between the Department of the Environment, Community and Local Government and the Central Statistics Office in recent weeks in order to understand the statistical rules that apply here in the context of how EUROSTAT conducts its business. Deputy Martin will be aware that the requirement to pass a market corporation test means that income from customers, ex-VAT where applicable, must be greater than 50% of production costs, including both consumption of fixed capital and interest. These are important elements. The CSO, in explaining the rules, has explained the maximum level of subvention that will be available.
The Government will continue to discuss the question of how to make this as affordable and fair as possible for different categories of families. There are vulnerable groups here. One includes those who live on their own and who may be very vulnerable, including pensioners. Another is families with children, where there is an obvious requirement for extra water. The question of the scale of metering, the level of assessment and the general issues that apply in respect of all these things must be agreed. Deputy Martin mentioned standing charges, which is a matter in respect of which the Minister will give detailed policy directions to the regulator, who starts the public consultation process tomorrow in respect of the structuring of the tariff. The regulator will move on later to a more detailed analysis dealing with the actual charges.
In answer to Deputy Martin, the issues he has raised, including vulnerability, ability to pay and standing charges, are all matters the Government will consider in the next two weeks, taking into account the overall headline figures under the rules as explained by the CSO in order for us to keep in line with the EUROSTAT requirements. If the market corporation test is failed, there would be an additional-----
Which test?
If we were to fail the market corporation test, the consequence would be a €700 million capital cost being incurred by Irish Water which would impact on the Government deficit and would have serious implications in that regard.
In explaining the rules, therefore, the CSO has set out what the maximum subvention can be for 2015 and 2016. I want to make it clear that the Government has not signed off on any of these figures. We think it is important to discuss the elements surrounding that, including categories, vulnerability, ability to pay and levels of metering. We hope to conclude that within the next two weeks.
The Taoiseach is anything but clear this morning. No one could decipher anything from what he is saying. If the Taoiseach had turned on "Morning Ireland" this morning and heard the political correspondent, Ms Martina Fitzgerald, he would have heard that the Government was bringing this memo to Cabinet today and that this was going to be announced today. By the end of "Morning Ireland" the Labour Party was rushing in some news that they had been told nothing about this.
The first question I asked the Taoiseach was if the Labour Party Ministers were told in advance about the details of the Minister, Deputy Hogan's, memo before it was circulated to the media. The memo was circulated to the media and it should be published now in deference to this House and the public. The public are being treated with absolute contempt regarding this matter. They are not that concerned about passing some corporate market test that the Taoiseach is going on about.
That is what happened to you.
A question please.
With the greatest of respect, the people I meet, including pensioners, are basically concerned about what bill they will receive in the last quarter of this year. That is what people want to know. They were aghast when they saw the €180 million extravagance surrounding the establishment of Irish Water. That annoyed and angered many people. There was secrecy surrounding that.
A question please.
The Taoiseach endeavoured to keep it under the radar for quite some time. He then said he would publish everything well in advance of the local elections but he has not done so. He keeps trying either to leak or soften the blow, but the public want to know how much they will be paying for water by the end of this year. It is a basic and simple request. The only reason they do not know is because the Taoiseach and the Minister have deliberately delayed it until now. It is about time we found out the actual details. The Taoiseach also said that the Government has not signed off, but what does that mean in real terms?
We are over time.
Is it because Labour angrily raised the leaks to the newspapers this morning and the Taoiseach has deferred it from today? What are the implications of that? The Taoiseach did not answer the question of whether there will be an ability to pay provision in the regime that is being announced. The memo that was circulated to the media says that any welfare protection has been categorically ruled out by the Government.
We are way over time.
That is categorically in the memo, according to RTE's reporting today and the newspapers.
Let us be clear that I do not speak for any reporter on RTE. If the memo the Deputy speaks of was circulated then I would have assumed that a very competent reporter, like the one speaking on "Morning Ireland" this morning, would have had the details of what was contained in the memo. She was obviously very clear in the fact that she did not have the details to which the Deputy referred.
It is in all the newspapers that the level is €537 million. That is the exact figure.
You have had your say.
Please hold on a second, Deputy.
The Deputy makes a charge that memos were circulated to the media.
And they were.
It is like the water-pipe, leaking all over the place.
We are talking about fairness, affordability and a workable scheme to provide infrastructure for the next 50 years for business and domestic consumers alike. The average charge as set out by the CSO's rules means that the bill for an average meter charge next January is €60. What it means-----
(Interruptions).
I will have to ask the Taoiseach to finish because they are not listening to him and we are over time.
When I said to Deputy Martin that the Government had not signed off on a memo, on a proposal from a Minister, it means that the Government has the right to discuss all of the issues surrounding that, including vulnerable groups, affordability, assessments, metering, standing charges and all these things.
I take very little notice of those who are opportunistic hypocrites, of which Deputy Martin is the leader.
Deputies
Hear, hear.
Here is the Fianna Fáil four-year programme, which stated that it would transfer water services provision to a water utility and prepare proposals for implementation as appropriate with a view to start charging in 2012 and 2013, with an average charge of €400.
I call Deputy Adams.
(Interruptions).
Would Deputies please settle down? If they keep shouting nobody can hear a word they are saying, so please allow speakers to speak. I call Deputy Adams, please.
(Interruptions).
Would you stay quiet for God's sake? Give us a break.
When I raised the issue of water charges with the Taoiseach yesterday, he said the Government had not taken a decision, various matters have to be taken into consideration, and there is a need to assess a whole range of issues before any decision can be taken. He then pulled together an unscheduled Cabinet meeting and sent his spin doctors off to the media to give details of a decision that he told the Dáil yesterday he had not taken. This is the latest in a whole series of decisions in which the Government has by-passed the Dáil in favour of governing by press release and media spin. On each occasion, the Taoiseach shows contempt for the Oireachtas, the Opposition and for his own backbenchers, especially Labour Party backbenchers, but most of all for citizens who will be affected by his decisions. The fact that the Taoiseach called a special Cabinet meeting to deal with these issues is down to the way he is playing catch-up. One debacle follows another and it is clear that the Taoiseach is trying to kick for touch on this issue. He is governing by making it up as he goes along.
A Deputy
And Sinn Féin does not.
It is very clear that there will indeed be a standing charge as part of the water charges. The Taoiseach promised that citizens would know the cost of domestic water before the elections, but they will not know this until they get their bills after the elections. Does the Taoiseach agree that this water charge is a flat, aggressive tax which will impact most negatively on working families?
We got it abolished in the 1990s and we will do it again.
Would Deputy Higgins mind keeping quiet for a moment, as we want to hear the Taoiseach?
I agree with Deputy Adams that the imposition of any new charge is always difficult for people. We recognise that, but I also recognise that 18,000 people have to boil drinking water every day. I recognise that this city is struggling to meet its daily capacity requirements.
That is your fault.
I recognise that there are 20 treatment plants around the country that are completely inadequate. I recognise that the infrastructure in so many places is grossly inferior to what it should be, so people have to deal with inferior, infrequent and poor supplies. The only way that can be dealt with is by having an entity that is entitled to borrow money to provide that infrastructure, construction jobs and facilities for business and domestic consumers alike. Some 40% of our water leaks away into the ground. This city has never dealt with this problem. The imposition of any new charge is always difficult for people.
When I told Deputy Adams that the Government has not decided on all these measures, that is because the Government is required to discuss and decide the details of how we can make this affordable, equitable and as fair as possible. That is why it is only right that one takes into account whether houses include children, vulnerable individuals or people with particular medical circumstances that require more water usage than most. We must look at the scale of how assessments are to be carried out, taking into account the explanation of the rules by the CSO in the context of whether EUROSTAT means one can only give a maximum subvention level of €537 million for 2015 and 2016. That means that the Government cannot put any more finance into Irish Water without putting it back on the Government books.
That would mean having to deal with a €700 million requirement later in the year.
The Government is deciding on this and the details will be known before the local elections. The average metered charge as currently indicated by the information from the CSO is for €60 per quarter. That is the bill that will come to people in the first days of January 2015. Both parties in Government have every right to discuss the details of all of these issues and will do so in the next two weeks. A final decision on the proposition will be brought forward by the Minister for the Environment, Community and Local Government. It is very important for the future of the country.
When Deputy Martin was shouting from his bench, he did not share with Deputy Adams, who puts up with water charges in the North of Ireland without any problem, the information that he himself intended to introduce a €400 charge last year.
That is not true.
I appeal to the Taoiseach to, for once, bring proposals to the Oireachtas for discussion and consultation with Members of the Dáil and Seanad. The Government's water charge, borrowed from Fianna Fáil and opposed previously by the Labour Party, is another tax on top of all the other taxes and stealth charges faced by struggling families who have already been hit. The Taoiseach must know that taking this money out of people's pockets means less money going into local economies, which drives down economic activity. As well as being unfair and unjust, the charges make no economic sense.
Charges never reduce. It is inevitable that this charge will increase and that this is the first step in an escalating water charge. I pointed out to the Taoiseach yesterday that it makes no sense at all in terms of water conservation. It is clear that the real intent is to privatise water services in the State.
For the Taoiseach's information, there are no domestic water charges in the North. The Taoiseach should know that.
This is questions. The Deputy is over time.
If the Taoiseach listens, he might learn something. He should know there are no charges because the Department for Regional Development in the North had meetings as far back as January 2012 with the Department of the Environment, Community and Local Government.
We are not discussing Northern Ireland.
DRD officials apprised Deputy Hogan's Department of the system in the North. The Taoiseach has a choice. In the North, Sinn Féin stopped water charges and the privatisation of water services. The Taoiseach could do the same in the State. Why does he not?
The average household charge in Northern Ireland, including water, is €980.
(Interruptions).
Would Members calm down?
It is the fault of the Brits.
Sinn Féin did not put a stop to that. They welcomed it with open arms. The taxpayer here pays €1.2 billion for water systems through 34 different local authorities. The system is not consistent or up to standard and it will never be up to standard until sufficient money is available to invest in infrastructure. The Government is unable through the Minister for Finance and the taxation system to meet the requirement here. We have been spending an average of €300 million per year when it should be €600 million or more to meet the requirements nationally for water and waste water treatment plants and the relevant infrastructure. I can point to areas in the far west where local schemes upgraded their systems, installed meters and constructed proper water treatments plants and saved 500 million litres of water in the first year. If the Deputy talks to those people they will show him the advantage of this approach.
While it is difficult where people have a new imposition placed on them, this is necessary to provide for the future. Both parties in Government are united in the view that we need a fair, affordable system. That is why the Government is considering the categories of vulnerable people, including those who live on their own, those with children and those who have medical requirements for exceptional water use on a daily basis. The rate of installation of meters is running at an average of 27,000 per month. To date, 185,000 meters have been installed and 400,000 are to be installed by the end of the year. We must discuss the way in which assessments will be carried out where houses are not metered as against where they are. There are answers to all of these questions. Over the next two weeks, the Government will continue to discuss the issues presented by the Minister for the Environment, Community and Local Government, taking into account the figures presented in the explanation of the rules by the CSO.
The Government will make its decision in good time. We have not signed off on the Minister's proposition for the very good reason that we want to get this as right as possible.
It looks like Irish households will pay €250 a year to begin with. Factoring in the kinds of exemption the Taoiseach has referred to, approximately €300 million will be raised. Ireland's water infrastructure costs approximately €1.2 billion to run. We know there are a great many inefficiencies in the way it is run currently. There are 33 separate entities involved and layers of management and administration that those working in the service say are not needed. There are plenty of outdated monitoring and control systems. How much money could be saved by doing this properly?
It was estimated that in Northern Ireland, approximately 40% of the cost base could have been saved by updating the water service. Scottish Water achieved almost exactly 40% savings in the first five years after upgrading its system. Let us be conservative and say that Ireland can only achieve 25%. It would mean a saving of approximately €300 million, which is almost exactly the same amount that will be raised from water charges. Instead, we learned in January that Ireland is applying a different approach and that service level agreements are being put in place for the next 12 years. The entire cost base is being locked in. Unlike Scottish Water's saving of 40%, there will be no cost savings in Ireland over the next five to six years. We were told by the Cabinet that saving money early on could only ever be achieved in a mythical country. To the best of my knowledge, Scotland exists.
The Government's approach means the new water charge will not pay for water or to upgrade infrastructure. The only thing it will pay for is political expediency. The €250 bill will not be for water, it will be a bill for unnecessary cost. It is a bill that effectively says, "We refuse to improve the operational effectiveness of the system so we are going to charge you instead". It effectively says, "We have decided not to implement the kind of reform that we promised the people before the election". The Government will not be charging Irish households for their water, it will charge them to maintain hundreds of millions of euro in unnecessary costs.
Does the Taoiseach accept that savings in such an inefficient system can be found in the first five years? Will he instruct Irish Water to find these savings on behalf of the people and agree to reduce the water charges to households by whatever amount of savings can be found?
If there was no subvention as proposed by the Government, the average domestic charge would be €580. Service level agreements, etc., are matters for further discussion. I do not accept that there should be 12 year service level agreements and I have said as much in the House before. The Deputy should also take into account the prospective 25% reduction in staff over the next five years. It is possible to achieve significant savings. Clearly, the system which has evolved over the years is no longer fit for purpose and is costing the taxpayer €1.2 billion across 34 local authorities.
I point out to the Deputy that the EPA reports that remedial action is now required on 16% of supplies. Many of the at-risk schemes are very large and include schemes in Dublin and Cork which are the subject of official EPA reports. Deputy Donnelly is well aware of the significant supply constraint in a city as large and as rapidly growing as Dublin.
It is absolutely unacceptable that 40% of water is unaccounted for, or is leaking away into the ground. Some 36% of water treatment plants did not meet EPA effluent standards in 2011. The European Commission has launched a pilot infringement case against Ireland in respect of 80 treatment plants. The State would not be in a position to deal with these infrastructural requirements without the advent of Irish Water, which is able to borrow to fund these things. The Government has decided to implement the "user pays" principle. We want to adopt that principle to make the system as flexible, affordable and equitable as possible. When the Minister for the Environment, Community and Local Government brings his proposition to the Cabinet, the Government will be perfectly entitled to consider it. It has a duty to talk about all of these issues. It has a responsibility to adhere to the principle of fairness and affordability in what is done here.
As I have said, the metering programme is continuing with an average of between 27,000 and 30,000 meters being installed every month. All of these issues will be discussed and decided on by the Government in the next short time. The CSO has explained the rules in the EUROSTAT context. The maximum subvention in 2015-16 is €535 million, giving an average metered charge of €240 per household to be divided through the quarters as a utility measure. The Government's focus will be on the details of how this can be made as affordable and as fair as possible, in the knowledge that this is the last of the major decisions it has to impose on people. I recognise that this is always difficult. We have to deal with it in the context of how far behind this country is in terms of water quality and the water supply infrastructure. We will try to deal with it now in as fair and as affordable a way as we can.
I agree with everything the Taoiseach has just said. It makes perfect sense. The problem is that it does not reflect what is happening. The Taoiseach has said he does not agree with the service level agreements, but they are in place for 12 years. To date, we cannot get a business plan from Irish Water. When we rang them this morning to ask if we could see a business plan, they told us that there is no business plan. There is an environmental assessment, a capital expenditure programme and some other report, but there is no business plan that we can see. We have to rely on what we hear from the Cabinet. In January, we heard clearly from the Cabinet that there would be no cost savings whatsoever for the first five or six years. I welcome the Taoiseach's position, but I respectfully suggest that it does not reflect what is happening on the ground.
When I asked the Minister, Deputy Noonan, last week why the Government is abandoning thousands of Irish families that have mortgages with Irish Nationwide, he said, not unreasonably, that "nobody stands up for the taxpayer anymore". I will put aside the fact that the Irish Nationwide proposal would have benefited the taxpayer. I will ignore the fact that the taxpayer funded the payment of tens of billions of euro to bondholders. Instead, I will apply the Minister for Finance's very reasonable principle to Irish Water. In the case of Irish Water, every euro that this Government refuses to get from operational efficiencies is a euro that an Irish family will have to pay. I am very happy to take the Taoiseach at his word. My understanding of what he has said is that he believes there are savings that can be found in the first few years. Will he publish for Dáil Éireann the business plan? Will he show us what the cost base is and what the projected savings are? Will he commit that these savings can be passed on to Irish households in a reduction in the annual water charge?
We should be shown the plan.
I commit to having the Government discuss the range of issues we will have to discuss to make this as fair and affordable as possible. I also commit to have a full-scale debate in the Dáil, or in an appropriate committee, once the matter is finally decided. I also commit to ensuring the business plan is published and debated after it has been put in place.
Surely a business plan is in place.
There is a process starting tomorrow with the regulator, who has to discuss and have a public consultation about the structure of the tariff to be involved here and later about the details of how that is going to apply.
We will have a debate after it is decided.
The Government has to give policy directions to the regulator and it will do so. As I have said, the Government's discussions in the next period will focus on how to make the important figures which have not been signed off on, as explained by the CSO in respect of the maximum subvention which determines the average meter charge, as affordable and fair as possible.