Smell My Fear

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seanwhelan

Sean Whelan, RTÉ Economics Correspondent

Further to yesterday’s claim by Irish Water that it would cost ‘up to €7 billion’ to abolish Irish Water…

RTÉ Radio One’s economics correspondent Sean Whelan went over the figures with Cathal Mac Coille on Morning Ireland.

Cathal MacCoille: “Our economics correspondent Sean Whelan has been looking at the figures involved. Morning, Sean. First of all, let’s take a look at something very short-term. Say, they scrapped, or put a freeze on payment of water charges for a year. How much would that cost?”

Sean Whelan: “Well Irish Water were hoping to get around €270million from domestic bills. They say they’re going to raise about €111million by the end of this third billing quarter and when they added the fourth everyone, because not everybody is not paying, they’re going to fall short of that but you’re talking well in excess of €100million, maybe €150million that they might collect. But, in terms of their own accounts, if you stop water charges for a year, you’re down €270million, so they’d have to come back, looking to the exchequer for that sum, for one year.”

MacCoille:
“Now, what about five years, which is the Fianna Fáil proposal, in other words nobody pays any bills for five years and then you start paying?”

Whelan:
“Well then you multiply that by five and add a small bit for inflation I guess and you’re looking at up around €1.5/6billion in lost revenue to the company which would then have to be made up by Exchequer funds, in other words, taxpayers’ money. There’s also, I should stress, a cost involved in doing, stopping the billing thing because they’ve built up a billing system which they’ve spent a lot of money doing. There’s a couple of hundred people in Micheal Martin’s constituency employed in the billing process – what happens to them? They’re on a contract basis, outsourced from the company but there’s uncertainty about that. There’s a cost in shutting down a billing operation like that and there’s also a cost – and quite a considerable cost in starting up a billing operation again because it’s a large machine. It takes time to crank up. It takes time to crank down. And cranking it up again would be even more costly.”

MacCoille: “So the rough cost of a freeze for five years would come to what?”

Whelan: “€1.6billion in lost revenue terms…”

MacCoille:
“And..”

Whelan: “Plus the costs of shutting down and restarting the billing network, you’re talking in the tens of millions there.”

MacCoille:
“All right. Now the big option which is abolishing Irish Water completely and replacing it with some kind of State service or handing it back to local authorities. Something the Taoiseach ruled out but anyway, it’s up in the air. If you’re to abolish the whole thing, what charges the semi-State company, everything, how much would that cost?”

Whelan:
“Well this is where it starts to get very costly and I suppose contentious in how you allocate the costing there. The Irish Water, one of the justifications for it, it would drive down the cost of doing business through efficiency gains, rather than having 31 local authorities trying to process the investment, you have a single authority. They claim that they can drive down the costs by about €270million a year, that’s another €1.6billion which they say comes in efficiency gains over the next five years.”

MacCoille: “I suppose you could say that if you had a section of the Department of the Environment or some State service, they could do it aswell?”

Whelan: “Well what’s the difference? You already have a company there, a structure. Are you going to set up a new quango from scratch? How much is that going to cost? What kind of disruption is there going to be in transferring across? Remember there’s going to be a lot of legality involved here. They’ve transferred the assets and liabilities of local authorities into a new corporate structure. That took time, money, hassle, expense. Trying to disaggregate those various bits of the company would not be easy. And you’ve got two components here in settting up Irish Water. You’ve got all the capacity and capabilities of the local authorities that were doing the water management but you’ve also got an entirely new set of capacities that only exist within a single entity, Irish Water. So either you get rid of that and that’s where you’re going to lose these, these efficiency gains…”

MacCoille:
“We’re running out of time. €7billion was the Irish Water estimate. Is that right?”

Whelan:
“It’s well, you add those two figures together and you’re up to €3billion, €3.2billion, then there’s the cost of a straightforward shutdown which is €100million on top of that and then there is the potential loss of an investment programme which is around €5billion which is planned. Now one of the things that the company says you need to be careful about is the track record of State investment in capital. We’ve seen, in the last six or seven years, the capital budget was cut to shreds in order to free up money to spend on current spending. So, paying social welfare, paying wages for teachers and guards and all that sort of thing, takes priority in spending. If we want to invest and we do need to invest, having it at the mercy of politicians, deciding on a whim, also if they, if there’s pressure to spend things, they can always spend on the things you see, like hospitals…”

MacCoille: “We’re right out of time. €7billion, right or wrong?”

Whelan:
“It’s close to that, it’s close to that. I’m not sure it’d be fully €7billion, the company make a fairly convincing case that it would be quite substantial and it would have to be found somewhere else.”

Listen here

Alternatively..

The Uncomfortable Truth About Irish Water (Stephen Donnelly TD)

Meanwhile…

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86 thoughts on “Smell My Fear

  1. William Taylor

    Whelan is talking out of his rear end, as usual. Bin Irish Water, use emergency law cancelling all contracts as its a waste of money in an age of austerity. Invest from general tax via county councils.

    1. Jake38

      “Invest from general tax via county councils.”

      It hasn’t happened for the last 40 years, why should it happen now? The system is in a state of collapse as a result and the stuff coming out the pipes (when it comes out) has to be boiled.

      1. Vote Rep #1

        It was all fine when the country councils were running it. If you ignore the crumbling infrastructure and the boil notices, everything was fine and it should go back to that immediately.

        1. martco

          but the councils ARE running it
          IW is just an inserted quangotecture layer and glorified water meter installer..the actual infrastructural pipeworks are being carried out by same fellas who’ve always been doing it

          1. classter

            There was no central technical & managerial body.

            The system has been an underfunded joke for decades.

            None of the councils have the technical expertise or scale to do the job properly.

            Hate FG as much as you want but a central water utility makes great sense.

            Compare the NRA and the local county councils in the provision & maintenance of roads. There are noticeable (and sometimes shocking) chnages in quality of council-procured & managed roads as you pass between local govt boundaries,

          2. martco

            @claaster
            Hate? no I don’t hate anyone (even Tories)

            Disagree? definitely.

            I disagree with guillotined bills which never got a chance to be discussed/debated.

            I disagree with the creation of a fake company using our money to create a vehicle that will line the pockets of mates in the right places.

            I disagree with a world run by Goldman Sachs.

            Tell you what, here’s a way to kill the argument stone dead, lets see over the next few days if FG proposes a referendum on the ownership of water ;) They won’t and you know why they wont or they’d have already done it by now.

            Do I think the county councils are competent? Of course not, I’ve seen it for myself so many times. But IW is the wrong way, wrong wrong wrong.

          3. Harry Molloy

            you don’t understand what a constitution is for if you think there should be a referendum for water. Especially what our constitution is as it is based on the concept of unenumerated rights.

            A constitution is only the bare foundation for building legislation upon.

            Tell me, if you are so convinced that Irish Water will be sold, why hasn’t the ESB been sold? Especially considering all the valuable consulting services they provide worldwide?

    2. Condescending Nana

      ” use emergency law cancelling all contracts” hhahahaha go back to the loony bin you utterly contemptible fool.

    3. kellma

      No, he is not…. There is a very valid point about disengaging and winding down. that all costs a lot of money. If they have outsourcing contracts in place they tend to have a minimum of a 5-year roll and cancellation penalties for early withdrawal can be enormous. Remember they have staffed up to do the work here and those people have to go somewhere… The set up of Irish water was a fiasco but just disbanding and this bananas idea of a 5 year “break” does not make financial sense. Two wrongs don’t make a right etc…

    4. Sheik Yahbouti

      Utter bollocks from Whelan, not for the first time. Is this an iron foundry or nuclear power station he’s talking about that has to be “cranked up – and down”? it’s an effing billing company, nothing more. They really do think we’re idiots. Disgraceful from RTE, an alleged public service broadcaster.

  2. JustSayin

    I was paying my water tax like a good child. I won’t be paying any more, this is now a joke.

      1. Condescending Nana

        privatisation would be a dream, this is what happens when you stuff a private entity with unionised deadwood.

  3. Jake38

    Let’s get back to 31 incompetent and underfunded local authorities providing water more suited to the third world than a modern European country as soon as possible, and lets pay billions of the taxpayers money to do it. You couldn’t make it up.

      1. Jake38

        Basic principle of management (I know, I know, fascist scum)………don’t throw good money after bad.

    1. MayJay

      Sure, because if someone suggests Irish Water should be scrapped, they must automatically be proposing that it be returned to exactly the same state it was in before? Are you saying there are only two options? Maybe people are suggesting that it should be run by a national public body, paid for through progressive general taxation. As has been suggested on BS and elsewhere many times before. You seem to be saying that we should retain a gloriously corrupt and inefficient entity like Irish Water that costs as much as it collects and doesn’t do what it was proposed to do. P.S. I would argue that the underfunding of the local authorities was done purposely to create an appetite for their ‘solution’, by eventually privatising it. Much in the same way as is being done with public transport and health.

      1. classter

        ‘I would argue that the underfunding of the local authorities was done purposely to create an appetite for their ‘solution’, by eventually privatising it. ‘

        You could argue this but putting that aside, local authorities have shown very little competence or probity in the areas over which they do have control & sufficient resources.

        Look at planning which is a horrow show in large swathes of the country. Huge numebrs of small towns have destroyed their aesthetic beauty & economic rationale with disastrous plannign decisions. Expecting these same organsiations to manage alone the 21st century’s most precious resource seems optimistic at best.

        1. MayJay

          Hi Classter. I completely agree that local authorities are a crumbling mess. But I am not proposing that the they be given back sole responsibility for the water service. I am suggesting a single national public body, as above. My point regarding the underfunding of public authorities was simply an aside. (A distracting one, granted!)

        1. Clampers Outside!

          Yes, ‘absolute nonsense’ is in the commas. Breaking News are not saying its nonsense, just quoting some Right2Water guy whose job is a communications officer for Mandate.

          Great source Jimmy.

  4. Panty Christ

    Everyone with a car on the road is paying their water charge through subvention. Double tax in all but name.

    1. Cup of tea anyone?

      I never understood this double tax thing. the cost of getting the water to the taps doesn’t change. All that will change is how you pay it. the money you pay in motor tax wont continue to go towards water. It will be put to something else.

      And to avoid confusion I am aware it will probably be a bit of both for the first while until water charges can pay for it. But isnt the point that those that use the most also pay the most?

      1. Harry Molloy

        Of all the arguments against Irish water, many which are valid, the we pay already argument is the most stupid.

        Really, really stupid.

        1. classter

          Reall, really, really stupid.

          Especially since we have not actually paid the true cost of water (or of roads for that matter) for decades.

        2. Lorcan Nagle

          Technically it’s correct though. The last time water charges were introduced and scrapped, the idea was that money for refurbishing the water network would come from motor tax. And clearly that didn’t happen, but that’s not the fault of the people who paid their motor tax.

          I’d be of the opinion that if you’re going to use money from taxation to pay for something, but can’t afford it at current rates, then you raise that tax. The failure of successive Irish governments to do so is a separate but still major issue.

          1. Harry Molloy

            Our taxation goes into a pot. That’s what pays for our stuff. Right now, we haven’t got enough money for our stuff, i.e. we are running a deficit.

            also, there were plenty of taxes that dropped since them. Remember the auction politics of the 00’s?

          2. Lorcan Nagle

            I agree with the general point here, and the tendency of Irish governments to buy votes by dropping taxes is ultimately self-destructive. We absolutely need a strong, preferably progressive tax regime that provides enough money to fund acceptable public services. We also need a major overhaul of said public services because they’re inefficient bureaucratic nightmares.

            Like a lot of people here, I’ve been on most of the water protests, and am not 100% averse to paying a water tax/charge. But I’ve had it up to here with the way business is done in this country, especially quangos like Irish Water.

          3. Harry Molloy

            ok, well we can be agreed on this. I just find myself getting frustrated when I hear the same silly arguments time after time. As opposed to yours which are perfectly sensible.

  5. ahjayzis

    ” then there is the potential loss of an investment programme which is around €5billion which is planned.”

    Why can’t a water-directorate controlling the water departments of the councils (pretty much what IW do) not invest? or the government? Or the councils themselves? IW didn’t gift the state that money and it’s not taking it with it when it goes?

  6. Steve

    Scrap domestic water charges.

    Change it to a national agency, like the National roads authority.

    Let it take all it’s revenues from the exchequer and business’s.

    Use the water meters to give tax credits to those who use less water than national average. Keep rolling out the meters so everyone can get potentially get credits.

    Reduce local property tax for those who have their own well and septic tank, so they aren’t subsidising a public service they will never use.

    Change it’s name.

    Let the new authority run the network on a national basis.

    Sound good?

    1. ahjayzis

      The cost of maintaining metres in order to PAY users makes no sense whatsoever, it’d be an absolute fortune.

      We don;t actually have an overconsumption problem – if 50% of our water is leaking out of the pipes, that means we’re USING less than 50% of what we produce.

      1. Steve

        Meters help spot where the leaks are. Therefore , They can help reduce costs on the system. As long as the cost reduction from water saved is equal or greater than the cost of maintaining meters + cost of tax credits then I reckon meters would still serve a purpose .

        1. ahjayzis

          District metres do that fine – having one for every household in the country is completely daft. These will be obsolete in a few years – we cannot replace them when district metering can detect leaks for a fraction of the cost. Then there’s the cost of sending actual humans to read them because they’re already obsolete in that respect.

          I don’t know the figures but installing MILLIONS of machines to be read regularly and detect leaks cannot be a good financial move when the metres don’t accrue charges.

          1. Cup of tea anyone?

            I believe the meters are made so that a passing car can read the meters without looking into the hole in the ground. also the district meters do not tell you how much of the water is used in houses or wasted under ground. also those that used the most should be penalised. It is only fair.

          2. Vote Rep #1

            The meter outside my rented house discovered that there was an absolutely massive leak under the house. I am sure lots of other people have discovered large leaks as well. Is this not a good thing?

          3. classter

            So, ahjayyzis, how do you check beyond the level of districts then?

            Water is a precious resource & carries with it a cost.

            We need to stop pretending otherwise.

          4. sqoid

            If the district meters where finding leaks just fine then 50% of the water wouldn’t be still unaccounted for

      2. Cup of tea anyone?

        The meters are the key so. There are meters that say how much water goes into each estate/area. Now we can say that in this estate, for every million liters pumped in, only half a million goes towards houses. Where does teh rest of it go?
        You can identify leaks and fix them reducing the overall cost of producing the water in the first place.

    2. han solo's carbonite dream

      sounds ok bar the tax credits bit
      throw in a referendum to ensure that natural resources like water and others cannot be privatized.

      then,…I’ll be with you…

      whelan seemed reluctant to put his name on the 7billion (knowing that it was manure) but he also knows he can’t upset his paymasters.
      he’ll be hung either way.
      I don’t blame him , I’d rather be lashed out of it for money than be lauded and broke.

    3. classter

      ‘Reduce local property tax for those who have their own well and septic tank, so they aren’t subsidising a public service they will never use.’

      Those who have their own well & spetic tank are already paying MUCH lower local property tax than their urban cousins by virtue of lower land costs, even though it costs much more to provide services of all types to rural-suburban one-off housing dwellers.

  7. nellyb

    IW does not fix leaks, they report it to relevant councils, which are already funded by our tax money. Councils do the inspection and fix the leaks.
    And winding down this retarded setup will cost NEARLY HALF of our ANNUAL HEALTH budget.
    I suspect 6.5 bln would be legal fees you and me on the hook – for something we never wanted.
    We are really a spit bucket, folks.

  8. rotide

    Well you can listen to economics journalists point out that it will indeed cost money to wind down a state body or you can listen to commenters called ‘Jimmy 2 Tones’ who know better.

    1. Harry Molloy

      +1

      And those who blindly agree because they want it to be true. Even when the evidence states otherwise.

      Welcome to Ireland in 2016 where thinking and analysis is seen as bourgeois

    2. nellyb

      Sure, but who will perform cost control in public interest? Specifically – of legal costs. Our government are absolute sh&te at it. Not because they can’t – because they can’t be bothered.

      1. Cup of tea anyone?

        If we leave the British in charge then when there is corruption at least someone will look into it.

    3. Cup of tea anyone?

      It will cost money to wind it down but the question is, do you want Iw the way it is or do you want something else, something better. What ever this government decides will be set up forever. IW is a sham of company and will cost this country a hell of a lot more the 7 billion in the next 50 years. all going to make the rich even richer.

      So yes it will cost more now. But maybe it will cost less in the future.

      1. rotide

        I’m not questioning whether IW is fit for purpose, thats for sucessive govts to decide.

        I’m pointing out that the outcry about the figures quoted for winding it down is the usual morons having no contact with how things actually work.

        1. Jimmy 2 tones

          There is only one self serving moron around here.

          The people look out for the people while the greedy look after number 1.

          1. classter

            What people look out for what people?

            The Irish electorate have consistently shown themselves keen to vote for short-sighted self interest time & time again.

        2. Fergus the magic postman

          As opposed to people who are not morons at all, and voted for Labour, despite the absolute blatant incompetence they’ve displayed over the last 5 years.

          Eh to tide? Amirite?

  9. Frilly Keane

    Do I have ta’ read all’a that for
    “RTE singing their usual tune in the key of D O B & F G ”
    Not to be true

  10. some old queen

    Irish Water threatened to cut people off for non payment, trickle is the same thing. That was bad enough but they did not and still do not have any means of reducing the supply. Irish Water would have needed to send a contactor out to dig a hole beside the meter and install a value. The cost would have been way above the bill. And now we have the disbandment figures provided by these same people. RTE news last night presented this nonsense as fact, with a quick sly one sentence disclaimer?

    When in supermarkets up and down the country you have people checking the ingredients of their food, the most important utility in the country should not be a political trade off. It will not be privatised and it will not go back to as before. Nobody, including the Environmental Protection Agency knows who is responsible for roughly one fifth of the water supply.

    Let’s start there?

  11. Mac

    Stephen Donnelly and the Soc Dems have really let themselves down by jumping of the abolish water charges bandwagon. At least he’s called BS on FF’s NRA model.

  12. Truth in the News

    Rather funny the media avoided anything about water tax before the election
    and now its their main obsession…march in Dublin ,the weekend before not a
    dicky, RTE tried to avoid it, they sent George Lee down to Athlone to cover the
    Shannon demo, and the man from RTE alias John Kilrane, Dublin correspondent
    to cover Dublin, he seems to have missed most of people…maybe big crowds
    of people are invisable to certain people from Donnybrook….aboblish not alone the Water Tax but the TV Tax too….RTE is another replica of Irish Water, its
    time they were flushed away like the Shannon floods

  13. Kieran NYC

    REALISTICALLY – when FF go into government with FG, Irish Water will be renamed something else, there will be a junior ‘Minister of Water’ appointed, and things will carry on pretty much as before.

  14. 15 cents

    more “scare the poo out of them” tactics. Enda Kenny will die for IW, he’s so insanely proud and stubborn that there’s no way he’ll allow it be disbandoned and have his authority thusly diminished. Unfortunately FF will also go along with it, they’re just saying at the moment that it has to go, just to appeal to the people, to be seen as on our side, but it’ll come down to them saying there’s nothing they can do, they’re the smaller party in the coalition, and then say if they were the bigger party theyd do away with it, and thats how they’ll try win everyone over in the next election.

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