Submissionby

The Workers Party

To theDepartment of the Environment

In response to the publication of

Reform of the water sector in IrelandGovernment Position Paper

January 2012

Introduction:

The Workers Party believes that the provision of a safe and adequate water supply to both domesticand commercial customers, as well as the parallel provision of proper and safe waste water / sewageservices, is one of the most vital of infrastructural tasks. As is clearly demonstrated in later sectionsof this submission the provision of water and sewage to domestic customers is vital public health issueand therefore the Workers Party is firmly of the view that the cost should not be individualised butshould continued to be carried from general taxation revenue.

The present, municipally controlled, water supply and sewage systems are very much seen as a productof the Victorian era. As the industrial revolution was consolidated, and urbanisation accelerated, theproblems associated with the lack of a water supply and sewage services were manifest. Contagiousdiseases, including outbreaks of cholera, were commonplace. It is arising from the planned and imag-inative response to this situation that the UK, as then was, embarked on huge public projects in all themajor urban areas.

As far back in written history as the Roman Empire the need for a clean, adequate and continuous sup-ply of fresh water was recognised. Thus we had the famed Roman aqueducts, the remains of somebeing still standing to the present time. However in the mid 19th century the Victorians made a quan-titative leap forward. It was only at that time that the link between hygiene and disease was fully un-derstood due to the groundbreaking work by Dr. John Snow during the Broad Street Cholera Outbreakof 1854 in London. He was the first to prove that bacteria were the cause of the cholera outbreak.This, and the construction of the London sewers by Joseph Bazalgette were key factors as was the San-itation Act of 1866 and Public Health Act of 1875 (still in force although heavily amended over theyears).

One of the key benefits of the provision of clean water in both Britain and Ireland in the Victorian erawas the significant decrease in child mortality rates and, combined with new developments in medicalscience, elimination of diseases such as cholera which had previously been widespread. As the steadyrise in the number of new TB cases in Ireland has shown we can not be complacent and believe thatany disease has been permanently eliminated.

At a time of rapid population expansion globally, and the unpredictable effects of climate change, theimportance of water as a resource is manifest. Water is seen by capitalists as a source of profit and asa source of potential conflict. The continued illegal occupation of the Golan Heights by Israel, for ex-ample, is as much driven by the fact that the Heights are the source of 40% of Israel’s fresh water asit is by so-called security concerns. This, and the further fact that Israel, through its military strength,is stealing drinking water from Palestinians to irrigate fruit farms and wash their cars on illegally heldland adds to the conflict and tragedy in the Middle East. This is but the most high profile of the manysimmering and potential conflicts arising from access to, and control of, water.

This submission will deal with the issues as they have arisen in the Government’s position paper,namely;

* The establishment of Irish Water* The installation of meters and charging for domestic water supplies* The implications for the future of “Water as a Resource”* The future control of the Irish Water Service.

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The Establishment of Irish Water

A continuing and deafening mantra of the Fine Gael party during the election campaign, and somethingwhich finds a strong echo in the FG/labour Programme for Government (PfG) is a declaration of waron quangos. Quangos, like the mythical serpents of pre-christian Ireland, were to be banished from theland.

It is therefore peculiar, to say the very least, that the first major initiative from the Minister for the En-vironment is the creation of a brand new quango. The removal of water services from the democraticcontrol and oversight is part of a continuing pattern of the effective emasculation of local authoritiesas expressions of local democracy. Over the last number of years the creation of the NRA, the RPA,the HSE, as well as the continued extension of the powers of the unelected County Managers to su-persede the decision of the elected members has represented a steady and relentless erosion of democ-racy.

This is part of government / EU / Global move away from governance towards regulation of privatelyowned and controlled utilities. The abject failure of this mode; within the financial sector should be asalutary lesson to the government if it continues with this policy.

We are not at all convinced by the assertions made in the government position paper as a justificationfor the creation of Irish Water as a centralised water authority. To take one simple example the popu-lation projections on the highest possible outcomes from CSO projections made at a time of rapid in-ward migration and low unemployment prior to the collapse of the economy in 2007-08. To projectforward for 35 years a population growth pattern observed in the very peculiar national and EU situ-ation of 2002 – 2006 is statistically unsustainable. This is clearly illustrated by the quiet abandonmentof the National Spatial Plan launched by the Fianna Fáil / PD government in a blaze of publicity in2002.

In our view to use a 2009 study on the possible effects of Climate Change on water supply by IrishAcademy of Engineers without any qualifications or disclaimers is disingenuous. The engineeringprofession, as amply shown in their in-house magazine Engineers Ireland, has a very large vested in-terest in government water policy. In pursuit of their own sectoral interest they have actively lobbiedfor private sector involvement in water supply in this country. Since the previous government signalledthe introduction of water metering numerous private water multinationals and new Irish operatorshave set up here waiting for their chance to make a killing

The Workers Party also takes serious issue with the government assertion that presently there is totallydisjointed activity between the 34 existing WSAs and that the abolition of these 34 bodies and theirreplacement by a centralised body will, ipso facto, create a streamlined and efficient service of nationaluniform quality.

Greater cohesion and coordination in the provision and delivery of water services is necessary and issupported by the Workers Party. On a practical level this happens already in this country. Dublin, asthe largest urban centre in the state, has for over a century worked in cooperation with Wicklow CountyCouncil and presently also works in close cooperation with Kildare CC. By pulling water servicesaway from the municipal structure then the organic link between water and other services includingroads, planning, and fire services is being broken. The staffing flexibility which municipal control

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allows under the Croke Park agreement will be much more difficult to achieve if new structures arecreated and further problems will be created if the corporate memory of the water service nationallyis destroyed through redundancy or the non-transfer of staff from the existing structures to the new pub-lic utility.

The government position paper refers disparagingly to the failure of some local authorities to cope withthe problems arising from the unusual weather of 2010 and 2011 and asserts, by default, that a nationalservice would have eliminated these problems. In the first instance this ignores the empirical evidencefrom the experience of Northern Ireland. The paper says nothing about the disastrous situation inNorthern Ireland during the same period where a system similar to what the Department is proposingis already in operation. There the water service has been centralised in a GoCo, a structure very similarto the public utility model flagged by the Departmental position paper.

Furthermore we find it hard to understand how two government departments, both with FG ministersat the helm, have adopted such diametrically opposed approaches to the existence of a national struc-ture. In the Department of Health, Minister James Reilly is committed to the abolition of the HSEwhich is a national body taking the place of a regionalised structure. Minister Reilly has committedto the complete abolition of the HSE, and is already engaged in the fragmentation and privatisation ofthe service. We are at a loss to see any structural coherence in the government’s strategy to vital socialand infrastructural services.

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The installation of meters and charging for domestic watersupplies

The government’s position paper states: “Water services cost over €1.2 billion to run in 2010, of whichoperational costs amounted to some €715 million, with capital costs of over €500 million. We are theonly country in the OECD where households do not pay directly for the water they use.” In the nestparagraph it states “From an environmental point of view, the best way to conserve water is to incen-tivise people to use less”. (our emphasis). The next sentence states: “Furthermore, the OECD (2010)has concluded that water metering is unequivocally the fairest way to charge for domestic waterusage”.

It is apparent from these excerpts that the decision to install meters and charge for water was made firstand the public justification worked out later. While the cost of water services is over €1 bn it is a factthat investment in water services for generations has been woefully inadequate and much of the capitalinvestment undertaken over the last number of years was merely playing catch-up. If we had had aproper planning system focussed on the needs of society and the citizen rather than on the speculatorand builder then a proper development levy would have been in place for the last 50 years to ensurethat those who profited from land rezoning and the provision of public utilities paid. Why are the or-dinary citizens, already burdened with the €70 billion bank bailout, also lumbered with paying for theplanning and policy failures of government over two generations?

A glib comparison between the situation in Ireland and other countries in the OECD or EU is not par-ticularly useful in this debate. We are a sparsely populated country with relatively high rainfall (above1,250 mm per year) spread over the entire year. Spain, on the other hand has a yearly average rainfallof 650mm, unevenly spread over the seasons and with some very significant regional variations.Madrid, for example, has an average yearly rainfall of 400mm. Clearly there is a scale cost betweenthe two cities in the provision of the same service so to impose the same charging structure betweenthe two countries is not logical.

The position paper states “From an environmental point of view, the best way to conserve water is toincentivise people to use less”. Where is the evidence for this? There is zero consideration in thepaper on the potential role of public education in this debate; on the potential role of civic society, e.g.residents’ and tenants’ groups, in promoting water conservation. Furthermore there is a jump fromstating the need to incentivise people to use less water to the assertion that charging for water is themost effective way to deliver this incentive. When we charge over the odds for medical or dental treat-ment it may lead to a drop in demand for services, but it does not mean people have suddenly becomehealthier. It merely means that necessary treatment has been postponed with consequent long termdangers. The government has clearly predetermined to install meters and to farm this work exclusivelyto the private sector for private profit.

In the UK one of the most often publicly stated reasons why water metering was introduced and whywater was taken away from municipal control was that “investment in infrastructure was needed dueto the amount of water leaking from the public water system”. But this is still a problem in the UK.20 years after privatisation 900 million litres of water was being lost per day in London’s system byprivate company Thames Water as late as 2006. Despite this the company was able to make profitsof almost £350 million that year, a 31% rise on the previous year. Instead of fining Thames Water,the regulator OFWAT forced them to invest £150 million in repairs. Despite this leakages continue to

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be at a very high level of almost 700 megalitres per day in 2011. The company has also been finedfor pollution the Thames and its tributaries. Similar stories abound in other UK water districts.

Why, for example, has the government not decided initially at least to incentivise people to use lessmunicipal water by promoting rain water harvesting. Would it not be sensible to grant-aid the instal-lation of rain-water recovery tanks in domestic dwellings, and make it mandatory in new builds?Where are the proposals to amend planning laws and/or building regulations to make rainwater har-vesting compulsory on all new builds and even on any substantial refurbishment? Does it make senseto fluoridate, and otherwise treat water, pump it through miles of piping, and then have a large per-centage of that water used to flush toilets, water plants or wash cars? If rainwater harvesting, as justone example, was widespread it would constitute a major supply saving for the WSA. Furthermore itwould have the benefit of greatly reducing flash flooding, which very often occurs when there is sub-stantial rainfall after a prolonged dry spell. Because of the amount of water captures by dwellings andbusiness the sudden and immediate pressure on shores and drains would be relieved and spread overtime, thereby ameliorating the possibility of flash floods in estates and public roads.

Several times the government position paper raises the issue of “unaccounted for water”. There arethree component parts to this water loss: leakage on the municipally-owned mains supply; leakageswithin private properties, probably between the mains connection and the actual dwelling/business; andillegal connections. The government paper states, and we agree, that a leakage rate of 41% is not ac-ceptable. Indeed the 20% reported leakage rate in the UK should not be acceptable. Surely we wouldnot accept a 20% leakage rate from the national gas or electricity grid. However there is a very largegap between the laudable aspiration to reduce wastage and the dual policy decisions to create a nationalwater utility company and to charge domestic customers for water. There may be opportunities foreconomies of scale within a larger organisation but the “Long term underinvestment in assets” inden-tified by the position paper will not end merely because of changes in corporate structure. How willcharging domestic customers help to alleviate the chronic obsolescence of much of the mains network?

The essential question, which the government avoids, is whether they regard water and sewage pro-vision as an essential social service or as a tradable service. However the language of their argumentsand the logic of their decisions show clearly that they follow the Friedman view that water is a tradableservice. There is a general acceptance in society here and throughout Europe that, for example Primaryand Second Level education is a necessary social infrastructure that is paid for communally throughgeneral taxation and provided free at the point of use. The UK’s NHS follows the same model. In sofar as the provision of adequate and safe water supplies, as well as proper sewage systems, is inextri-cably linked to public health we favour this model with regard to water supplies.

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The implications for the future of “Water as a Resource”

The commoditisation of water, as set out in the Government’s Position Paper, has some positive butmany implications. On the positive side it recognises that fresh, clean water is a finite and fragile re-source and must be managed sensibly. Until very recently both industry and agriculture regarded ourrivers and lakes as convenient sumps for all manner of noxious waste. Indeed many local authoritiesbehaved in a similar fashion in their disposal of sewage waste. The constant lobbying of industryagainst greater environmental controls and the long-drawn out manoeuvres by the national farming or-ganisations to wriggle out from their responsibilities under the Nitrates Directive demonstrates thedifficulties that exist in this sphere.

As outlined in the last section of the submission the negative implication for the citizens of this stateof that position is that water becomes a commodity to be bought and sold to the highest bidder.

For the citizens one of the logical consequences of water as a commodity, a resource that can be boughtand sold, is that those who cannot afford to by do not get access to the resource. In other words peoplewho do not pay will be disconnected from the supply as happens already with other utilities like gasand electricity. Irish people can clearly remember the mid-1980s when the authorities used force, in-timidation and scab-labour in attempts to cut off supply to people who did not pay water rates. In theUK for example OFWAT has recorded instances where households with young children were cut offfor arrears as low as £60.

We are particularly concerned by the language adopted in the sections of the position paper where thestrategic use of water as part of the economic development tools of the state is discussed. We are par-ticularly concerned at the mendicant attitude displayed in this section. It appears that the governmentsees its role as ensuring adequate water and waste-water treatment facilities as an inducement to certainwater-intensive industries being established or being expanded. Certainly Ireland must use every ad-vantage possible to rebuild our economy after the present international capitalist crisis which, as weknow, was exacerbated here by the speculator / bank driven building bubble.

The UK experience in certain sectors, however, must be taken into account here. There has been a spec-tacular expansion in the UK, and the south of England in particular, in poly-tunnel horticulture. Whilethis has produced a major expansion of the UK crop yield in certain fruits e.g. tomatoes, leading tosignificant import substitution; it has led to minimal job creation and minimal tax yield to the excheq-uer. The return has been more optical than real. If the government is going to pursue the policy as setout in the position paper then it is vital that each project supported must be subject to a full cost-benefitanalysis. Water and waste disposal services provided by the taxpayer cannot become another hiddensubsidy to business.

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The future control of the Irish Water Service.

The Position Paper says nothing in an overt fashion about the long term future and control of IrishWater, other than that it will be a “public utility”. The key question is whether this will be a public util-ity under public control or whether it will be under private, corporate control?

However, the language used and tone adopted throughout the document give very clear indicators asto indications and aspirations of the government. For example the Position Paper, under:

* The “Independent Assessment on transfer of functions to Irish Water” states as one of its criticismof the present system states:• “Funding regime exposed to variation in development levies, limitedability to access alternative sources of funding (e.g. capital markets) and low recovery rates of non-domestic water charges”.

* Under “Functions of Irish Water” it states as an objective: • “Sourcing private finance for investmentin capital projects”.

* And, discussing the role of the Economic Regulator vis a vis Irish Water the paper states: “Indepen-dent regulation of the water sector has been identified as a prerequisite if Irish Water is to sourceprivate finance for investment in capital projects.”

The logic of all these statements is that the government envisions a major role for “private capital” inthe water services. Decoded, this means that privatization is the medium term agenda. Clearly theWorkers Party are not the only organisation who believe that this is the ultimate outcome of the presentprocess. Since the previous government signalled the introduction of water metering numerous privatewater multinationals, Irish front-companies and new Irish operators have set up here waiting for theirchance to make a killing.

The planned centralization of water supply as a national public utility and its subsequent privatizationwould fit seamlessly with the government’s present programme and actions. The government’s overallposition on Public Utilities as outlined no later than Wednesday 22nd February, is that everything is onthe auction room floor. Parts of vital national infrastructure, ESB, Bord Gáis, Coillte, and what’s leftof Aer Lingus are to be sold off. These sales will raise minimal funds at this time, make very little im-pact on the scale of our national debt, make no impact on the €3.1 billion annual repayment on prom-issory notes. Experience has shown that it will lead to neither efficiency nor job creation as the stillbitter example of Eircom clearly shows. It will however provide a bonanza for certain wealthy venturecapitalists and will satisfy the ideological cravings of certain politicians and commentators.

The history of the privatization of the water service in the UK must be taken on board here. UnderThatcher’s privatisation the number of people employed in water and sanitation was cut from 80,000to 50,000 in UK. This process started immediately once she came to power. The public utilities wereasset-stripped and slimmed down in the name of modernisation. As the Irish experience of both Eircomand the Irish Sugar Company demonstrate this phenomenon is not a once-off UK aberration.

A new regulatory body (quango) called OFWAT was formed – this is what the new Irish Water boardwill eventually become. Some of the privatised UK companies are now being taken over by US andother multinationals and facing further “slimming down”. In the meantime the service to customersdeteriorated while the costs continued to increase.

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The Workers Party believes that it is also worthwhile looking at the experience in France. Some of themajor cities in France, including Paris, were amongst the first to privatise their water supply. Howeverthe failure of the privatised service to deliver a proper service, to invest in infrastructure, to deal fairlywith customers has led to a reversal of policy in France. In 2009 Paris(1), which had privatised its serv-ices in a joint arrangement with Veolia & Suez re-municipalised its water services at expiry of contractby decision of Paris city council. Grenoble also terminated its privatisation deal.(1), Trends in water privatisation, PSIRU, 2011.

Across the world there is widespread opposition to water privatisation. This opposition extends fromBrussels, to South Africa to Argentina. In Greece, for example, the state water company is being soldoff as part of the “bailout” deal. This is being strongly challenged by the Greek people. For instancein Thessaloniki the local community are bidding against the private multinational SUEZ to buy the sys-tem which supplies over 500,000 people. We believe that the Irish people will also reject any proposalto privatise our water supply even if, like Greece, we receive a diktat from the troika.

Conclusion:

• The Workers Party believes believe that goovernment policy is driven by ideology and the policiesoutlined will not be to the benefit of the Irish people. In fact the policy outlined will take an invaluableresource and hand it to international capitalism on a plate.

• We believe that water and waste water services must remain in public ownership and under demo-cratic public control and scrutiny.

•We believe that as a matter of public policy, and as a public health issue, water should be free to do-mestic consumers.

• We believe that the current project to install water meters on all domestic customers’ supply is com-pletely unnecsary and a criminal waste of scarce resources.

• We believe that the money presently earmarked for meter installation should instead be spent on re-pairing and upgrading mains supply; public education programmes; and rain-water recovery schemes.Furthermore we believe that all of this work should be carried out directly by the local authoritiesusing directly employed staff.

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