Ireland is the only country in the OECD in which households do not pay directly for the water they use.

Posted by | April 23, 2012 | Blog, News | No Comments

The Irish Times – Saturday, April 21, 2012.  Harry McGee,

Ireland is the only country in the OECD in which households do not pay directly for the water they use.

This can be traced to a series of populist political fudges by successive governments. The first was when Fianna Fáil abolished domestic rates in 1978 without coming up with an alternative model. Seven years later, in 1985, the then tánaiste, Dick Spring, introduced a local-service levy, which included a water charge. Water charges were abolished again in December 1996 by environment minister Brendan Howlin, widely seen as a political move to block anti-tax candidates in a forthcoming election.

Since then, the only domestic users who have paid for water are those in group water schemes. For the rest of us, the water is paid for from general taxes.

In a paper for the World Bank in 2002, Sue Scott of the ESRI wrote about the effect of this: “Under an ‘absent hand’, a generation of people is growing up without realising that water is expensive to deliver.”

THE PAST WEEK has shown that water is still a highly political issue.

Because water is not free as most people believe.   In 2010 water services cost the State €1.2 billion to run, with operational costs of €715 million and capital expenditure of more than €500 million

The Government’s plan to set up Irish Water and to install meters in a million households is fraught with political risk.  The public has a strong aversion to any new taxes, particularly in a period of cutbacks when many households are struggling financially, and so soon after a household charge, or property tax, was introduced.

But there are many other problems. It is a double taxation, say the critics, who contend that water is already paid for by income tax and other taxes.

The United Left Alliance has already portrayed Irish Water as a Trojan horse for privatisation. Fianna Fáil has predicted it could lead to the loss of 1,600 jobs in local authorities.

And, in communication terms, Minister for the Environment Phil Hogan and Taoiseach Enda Kenny have refused to publicly discuss the price or free allowances of water. All that’s really known is that there will be a fixed annual charge of about €40.

Earlier in the week the Government struggled with the pricing issue: Enda Kenny said households would have to pay for meters but that their installation would be free. Tánaiste Eamon Gilmore said no decision had been made on how water meters would be paid for, while the Department of the Environment said the buying and installing of meters would have to be paid for. There was little clarification as the week went on.

Within the Coalition the issue could become a political embarrassment. It’s hardly a year since Labour Ministers, including Brendan Howlin and Eamon Gilmore, were opposing water charges hammer and tongs. The smaller Coalition party will be reminded of this constantly, and it will be painted as a political “flip-flop”.

In practical terms, to have more than a million meters installed by 2014 is as likely as Ireland winning a dozen gold medals at the London Olympics. Charges have to be introduced by 2014, which means if there are delays, a significant number of households will be charged on an “assessed” basis – that is, the charge will estimated based on the number of people in a home, and the size of the house.

And now it appears that a third of houses eligible for water rates will always have to pay a flat charge, because their properties are not suitable for the installation of meters, according to the executive manager at Dublin City Council, Tom Leahy. This is because the houses share supply pipes with neighbours or their water supply from the mains enters the house under their back gardens.

As the household charge has demonstrated, people have deep antipathy to flat taxes, which make no distinction between thrifty people and spendthrifts.

The presence of meters in group water schemes is one of the reasons water charges have been accepted with hardly a murmur of complaint by a generation of rural households that makes up 8 per cent of the population. In these cases, the voluntary nature of the groups leads to strong “buy-in” and is another persuasive factor.

So what can the Government learn from rural water schemes? Well, in most of these cases, metering works, and works well. Those who run the rural schemes believe that standing, or fixed, charges will fail, because they don’t encourage conservation. They also argue that meters should be paid for by customers upfront.

But they also point out that their schemes are predominantly rural and and run by local communities and by voluntary committees. That gives them a moral persuasion that central government can never have.

In his role as national policy adviser for the National Federation of Group Water Schemes, representing about 370 groups, Sean Clerkin has drawn on his own experience – and his initial shock at having to pay for water – to convince others of the merits of charges. There is almost no scheme that is not metered nowadays.

As his colleague in the federation Brian McDonald says: “We realised from the beginning that [meters] were the fairest and most equitable way of paying for water. If there is a widow on her own paying a flat-rate charge, where’s the fairness or equity in that? She is subsidising the bigger user.”

Clerkin zealously gives The Irish Times a tour of another large scheme in Co Monaghan: the Glaslough and Tyholland scheme, catering for 700-plus households. The source for the scheme is Emy Lough, and there is a treatment works on its shore, which was designed, built and is operated by the French company Veolia. In the plant, there’s a demonstration sink with four taps, each producing water at different stages: raw; filtered; after ozone treatment; and final. The colour changes from brownish to clear.

Committee members David Wright, Padge McKenna and Nuala Murphy describe how about half of the households stay within their free water limit, while most others pay between €50 and €100 a year. However, there is an annual Government subsidy of up to €400 per household.

In Tydavnet, says Clerkin, there is a basic free allocation; the average two-adult, two-child family will pay about €100. The bill is sent out in March each year, and if it is paid by the end of the month there is a 20 per cent reduction. About 96 per cent pay within that first month.

And what of those who refuse to pay? “On two occasions in the past 28 years we have had to bring the digger to the roadside. Our board and management have the power to waive, but we use common sense. If somebody is in difficulty, we will give them time to pay it, but we will insist they pay it in time. We don’t want to give anybody the impression that it is free,” says Clerkin. Both Clerkin and McDonald believe metering works, both in terms of equity and in conserving water. They also argue that the cost per cubic litre must not be too low, and they do not favour the Government’s proposals for a standing charge, not linked to usage, which they say is a disincentive.

“If you give it away too cheaply, people won’t have any regard for it,” says Clerkin.

“If there’s a flat-rate charge and no metering where’s the incentive to turn off a tap? Our emphasis is to put all the water being used on the meter and not have a standing charge. Our view is that the Government should consider giving people the option of paying for the meter upfront. In Arva, Co Cavan, a new scheme was introduced five years ago with meters. There was also a decent charging regime, and the consumption dropped by 55 per cent.”

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