Go raibh maith agat. I thank the committee for its kind invitation to attend the meeting. I have a speech that I will read, and I will address any of the issues arising from the Chairman's questions afterwards if they have not already been answered. I am joined by Mr. Mark Griffin, assistant secretary in the water and ICT division of the Department, and Mr. Gerry Galvin, principal adviser in the Department's water inspectorate.
I compliment the committee on an excellent report which reflects not only the complexities involved in water provision and the considerable challenges facing the sector but also the wealth of knowledge within the sector. We are embarking on a considerable programme of transformation for the sector and we need to debate the issues that arise in an informed manner. The report is a valuable input into the process ahead.
I concur with the report's opening remarks. We are at a critical stage for water provision in Ireland. We need to take a national perspective and grapple with the challenges facing the sector, conscious that the actions we take have environmental, societal, developmental and financial consequences. There are essentially three inter-related components to the Government's proposed programme of reform for the sector, on which decisions have been taken by Government. First, it will establish the proposed Irish Water as an independent State-owned company within the Bord Gáis group based on a public utility model. On the question of whether Irish Water will have an ainm Gaeilge, beidh. Níl aon dabht faoi sin, and we will discuss that. There is a commitment to using the Irish language in the name of the organisation. Second, it will introduce a sustainable funding model to support much-needed investment in the sector, in line with the commitment in the programme for Government and the memorandum of understanding with the EU-IMF-ECB. This will include the introduction of water charges for domestic users. Third, it will establish an independent economic regulator for water services, a function being assigned to the Commission for Energy Regulation.
These reforms involve major changes in how the delivery and funding of the water sector is organised and are necessary to equip the sector to meet the challenges of the future. These challenges include the need for investment in water and waste water infrastructure to support economic recovery, enterprise development and job creation and to ensure that we comply with statutory environmental and public health requirements. These are real and pressing demands. One simply needs to flick through the current water services investment programme to see both the scale and regional spread of the investment that is required. The committee has particularly examined the proposed project for a long-term source for the greater Dublin area. It was approximately one year ago that the committee visited Laois-Offaly in this regard. I know that all members of the committee will be aware of many projects in their own areas which would have positive impacts in improving water quality, security of supply and the local economy. However, tackling all of these needs requires structural reform and a massive level of investment, which has been estimated at more than double the expected level of Exchequer financing in 2014.
The approach to building a new and sustainable model must be accompanied by organisational change and underpinned by the appropriate policy and legal framework. Work is now focused on the development of an implementation strategy for the establishment of Irish Water, which will provide the platform for dealing with a broad range of implementation issues during the transitional phase. This strategy is being developed in collaboration with other relevant Departments, local authorities, Bord Gáis and NewERA. The strategy will focus on maintaining the delivery of a critical public service during and following a restructuring process, and is therefore premised on a phased rather than a big-bang approach. This will involve the establishment of programme management structures in 2012 to manage the transition process; the establishment of Irish Water on an interim basis later in 2012 and under its own statute in mid-2013, at which stage the company will acquire statutory responsibility for water services; and local authorities acting as agents of the company for water services operations for a considerable period.
We envisage the legislative provisions to establish Irish Water on an interim basis and assign regulatory functions for water services to the Commission for Energy Regulation, CER, will be brought before the Houses of the Oireachtas in the next session, with the comprehensive Bill to establish the company likely to be published in 2013. A range of important aspects regarding the establishment of Irish Water raised in the committee's report will have to be taken into consideration in drafting the Bill, such as the governance and accountability of the new utility, the intention of the Government that the company will be publically owned and the legal name of the organisation. I emphasise that it will be publicly owned and that this will be provided for in the legislation. There will be clarity on that and when the legislation comes before the Houses, we will be happy to consider any wording any parties suggest that may strengthen our proposals. We want there to be no doubt whatsoever that the new authority will remain in public ownership.
The legal establishment of the economic regulator will be an important step in the process of ensuring that water charges for domestic consumers will be introduced in a way that is fair and equitable. A key role of the regulator will be the protection of the consumer interest. The setting of water charges by the regulator will need to take account of a number of factors, those being the capital and operational efficiencies that Irish Water should be expected to achieve, including through investment in leakage reduction; the future investment requirements in water and waste water infrastructure; the level of continued Exchequer funding; and the approach to free allowances and support measures in respect of targeted groups with medical needs or affordability problems. The Chairman referred to water poverty, low income households and people with significant health issues who would require much more water than the average person.
Charging based on usage is the fairest way to charge households for water. The committee has made a number of recommendations in this regard that will be fully examined as the implementation strategy is rolled out. However, I might clarify the Government's position on some of the recommendations. I assure the committee that the decisions on the water metering programme have been subjected to a cost-benefit analysis and consideration has been given to smart metering. At this stage, the smart metering technology is not sufficiently advanced to capture potential synergies between the uses of such technology in the water and energy sectors. However, the issue will be kept under review as the technologies become more advanced. I understand that CER has examined the issue with the energy companies, and their collective wisdom is that we do not currently have the technological capability to put smart metering in place.
I fully agree with the committee that a broad water conservation campaign needs to accompany the metering programme. There is a strong emphasis under the water services investment programme on mains rehabilitation and I would like to see an acceleration of this activity. I am strongly of the view that we need to strengthen our communication with citizens on the value of water, its importance from a societal, economic, environmental and public health perspective and the practical ways in which members of the public can reduce their consumption, thereby influencing the amount they will be charged in due course.
The proposed reforms represent a major change with significant implications for local government and local authority staff, the water industry and its many stakeholders. We are committed to ensuring that this change is managed well. I cannot overemphasise this point; it is key. Earlier this year, a six-week public consultation on the proposed reforms saw engagement with ICTU. We are also engaging with the congress group of unions to explore the nature of the structures required to ensure adequate communication and engagement with unions and staff in local government during the transition phase. It is essential that all parties involved - unions, local authorities, the Department and Bord Gáis - move forward together. Everyone needs to buy into it and be satisfied that what we are doing is the best approach. We are trying to ensure that the structures are in place to deal with the issues that arise.
The committee's production of this report is timely. We are all of the view that unless we address key organisational and funding issues for the water sector, we will constrain our capacity to continue to exploit this natural advantage to attract foreign direct investment and high-end employment and to meet the needs and demands of our existing businesses and communities for high-quality water and security of supply. This is a key point in the 2009 report on the future of our water.
Irish Water as a public utility can build on local expertise and commitment to service, develop a sustainable financial model, leverage additional funding for investment and achieve efficiencies through economies of scale. The implementation strategy for Irish Water, which will be finalised shortly, will outline the next steps, the key milestones to be achieved and the tasks to be progressed as part of the programme of reform. The committee's report provides a valuable input into this ongoing work and is part of our listening and learning process. In our implementation programme, we will try to consider as many of the committee's recommendations as we can. I commend the committee on the comprehensive nature of its report and the interesting points raised and I look forward to further engagement on this matter.
