Tuesday, 21 February 2017

Joint Committee on Future Funding of Domestic Water Services Debate

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The Joint Committee met at 11:30

MEMBERS PRESENT:

Information on Declan Breathnach Zoom on Declan Breathnach Deputy Declan Breathnach+ Information on Lorraine Clifford-Lee Zoom on Lorraine Clifford-Lee Senator Lorraine Clifford-Lee,
Information on Colm Brophy Zoom on Colm Brophy Deputy Colm Brophy, Information on Paudie Coffey Zoom on Paudie Coffey Senator Paudie Coffey,
Information on Mary Butler Zoom on Mary Butler Deputy Mary Butler, Information on Grace O'Sullivan Zoom on Grace O'Sullivan Senator Grace O'Sullivan.
Information on Barry Cowen Zoom on Barry Cowen Deputy Barry Cowen,  
Information on Seamus Healy Zoom on Seamus Healy Deputy Seamus Healy,  
Information on Martin Heydon Zoom on Martin Heydon Deputy Martin Heydon,  
Information on John Lahart Zoom on John Lahart Deputy John Lahart,  
Information on Paul Murphy Zoom on Paul Murphy Deputy Paul Murphy,  
Information on Eoin Ó Broin Zoom on Eoin Ó Broin Deputy Eoin Ó Broin,  
Information on Kate O'Connell Zoom on Kate O'Connell Deputy Kate O'Connell,  
Information on Willie O'Dea Zoom on Willie O'Dea Deputy Willie O'Dea,  
Information on Jan O'Sullivan Zoom on Jan O'Sullivan Deputy Jan O'Sullivan,  


+ In the absence of Deputy John Lahart for part of the meeting.

Information on Pádraig Ó Céidigh Zoom on Pádraig Ó Céidigh SENATOR PÁDRAIG Ó CÉIDIGH IN THE CHAIR.

Right2Water

Chairman: Information on Pádraig Ó Céidigh Zoom on Pádraig Ó Céidigh We are now resuming in public session. I wish to draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence.  They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. The opening statements submitted to the committee will be published on the committee's website after this meeting.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

At the request of the broadcasting and recording services witnesses and those in the Visitors Gallery are requested to ensure that for the duration of the meeting their mobile phones are turned off completely or switched to airplane, safe or flight mode, depending on their device, and not just to silent mode.

Today we will consider the funding of domestic water and waste services. I welcome Mr. David Gibney and Mr. Steve Fitzpatrick from Right2Water. We will note their submissions as read and will proceed immediately to a discussion with members. I call on Deputy Cowen to commence.

Deputy Barry Cowen: Information on Barry Cowen Zoom on Barry Cowen I thank the witnesses for making themselves available. Unfortunately, they could not be here on the first day of this series of meetings but I am glad that they are here now. I have seen their submission and note it refers to their original submission to the expert commission. I am more interested in the comments that have been made on the group's behalf since the expert commission reported on its findings. Mr. Gibney and Mr. Brendan Ogle signed the original submission but I can only comment on what Mr. Ogle has said in public since then.

As the witnesses will know, the committee has been charged with the responsibility to investigate, analyse and scrutinise the recommendations made by the expert commission to see if we can come up with a formula whereby we can all agree on a way forward based on those recommendations. Since we began the process one of the issues that has crystalised is the fact that district metering can play a role in identifying individual leakage and, therefore, excessive usage. We now know, in more stringent terms, that metering is not the only show in town for the conservation of water. Other options need to be explored and could be incorporated into the overall solution.

I will quote directly what was said by Mr. Ogle when he was interviewed by Sean O'Rourke who sought his immediate reaction to the expert commission's recommendations. Mr. Ogle said that the bottom line for him was that the report confirmed that Ireland was not wasteful in terms of its usage. He also accepted the findings in the report and confirmed that he was opposed to people wasting water. Sean O'Rourke asked Mr. Ogle the direct question, "Are you opposed to charging for wasters?" The interviewer meant people who waste water excessively. Mr. Ogle replied, "I am not opposed". Sean O'Rourke then asked him, "How would you do it?" Mr. Ogle said, "I think people who waste water, well the CER has been given the job of working out what the limits are, and I do believe we need to stop waste". We have since qualified and possibly quantified excessive use through district metering that remains outstanding. Can the witnesses qualify Mr. Ogle's remarks? How would they penalise anyone who uses excessive amounts if and when we have identified what is excessive? Let us say the Minister said 123 litres a day was acceptable and we suggested the limit should be two or three times that amount and recommended a swimming pool take for beyond that amount. How would the witnesses penalise people who use more than that amount of water?

Mr. David Gibney: I thank the committee for the invitation to attend. I apologise for being unable to attend on the last occasion but, as people are probably aware, there was a union emergency due to the Tesco dispute.

In terms of the words spoken by Mr. Ogle, I cannot remember them but I can outline the perspective of Right2Water. Ireland, as the report proves, is not a wasteful country when it comes to water. In fact we are one of best countries to conserve water in the EU and the broader world. As the report states, Ireland has more water available than almost any other country in Europe or the world. Ireland has 50 times more potable water than the likes of Israel and far more than France.

In terms of penalising people for excessive use of water, there is a provision in the 2007 Act, as I am sure the committee is aware. All we need to do is implement the provision.

Deputy Barry Cowen: Information on Barry Cowen Zoom on Barry Cowen I ask Mr. Gibney to elaborate in order to assist the people who do not know the provision.

Mr. David Gibney: The 2007 Act provides that local councils can write to people who abuse water or over use water and ask them to address their behaviour. As far as I am aware, local councils can prosecute them if they do not take action. Provisions already exist.

In terms of swimming pools, I live in a community that does not have a swimming pool and I do not know anyone who owns a swimming pool. Right2Water is not opposed to the Government introducing a swimming pool tax. There might be a provision in terms of commercial water charges and taxes.

If we want to address waste then let us address areas where water is wasted. As much as 41% of water is lost through leaks. The Government instead of funding measures to address the leakage problem has funded the installation of unnecessary and unwanted water meters. Household water meters have shown up approximately 3% of the leaks. Therefore, the remaining 97% is not on the household side. I disagree with the report's claim that wastage happens in households. The wastage is due to leakages across the country. As much as €1 billion or whatever has been spent on water meters. Had we spent the money on addressing the leakage problem we would have addressed the crisis in the water services.

There is a provision in the 2007 Act. It is a false argument to claim that households are wasteful. We contend that they are not wasteful and there is no evidence to support the claim. In fact, Ireland conserves more water than almost any other country in Europe.

Deputy Barry Cowen: Information on Barry Cowen Zoom on Barry Cowen I do not want to labour the point but I will ask my question again before we move on to the next questioner. Mr. Ogle, like Mr. Gibney, speaks for the Right2Water movement. He was asked specifically if he opposed charging people for excessive use and he said he was not. Does the Right2Water movement share that viewpoint?

Mr. Steve Fitzpatrick: It is the viewpoint.

Deputy Barry Cowen: Information on Barry Cowen Zoom on Barry Cowen Yes.

Mr. Steve Fitzpatrick: It is also our viewpoint that in view of the huge industrial wastage of water through water companies, distilleries and the pollution of rivers by mega farmers that the polluter pays principle must apply to everybody and not just individual citizens. There has been a huge dearth of pointing the finger. We have a huge amount of information. For instance, it takes 35 litres of water to make 1 litre of whiskey so there is a lot of waste along the way. Even the bottle of whiskey gets into the system through the toilet.

In this country huge water companies can take water from natural resources yet not pay for or deal with whatever waste is generated. A big company like Danone can take water from lakes. There seems to be greater concentration on a person who leaves their tap dripping than on a person or company that makes multi millions of euro by taking water from the ground with no heed for the polluter pays principle.

Deputy Barry Cowen: Information on Barry Cowen Zoom on Barry Cowen I ask the witnesses to answer the following. If this committee was in a position to agree a process by which people who use excessive amounts, in the opinion of this committee, were charged, is Right2Water happy with that?

Mr. Steve Fitzpatrick: Yes.

Deputy Barry Cowen: Information on Barry Cowen Zoom on Barry Cowen I thank the witnesses.

Deputy Martin Heydon: Information on Martin Heydon Zoom on Martin Heydon I thank the witnesses for their attendance. I am disappointed that Mr. Brendan Ogle is not here today because he has talked the talk on Facebook and other forms of social media about coming in here and made specific reference to me. After he stood us up on the first day I thought that he might do us a favour and come in today. He seems to have cried off in order to avoid being questioned on his views. Perhaps he was not let out. I do not know.

I have spent the past couple of week in Kildare South dealing with constituents who live in two specific housing estates. I will not name them because I do not want to devalue their houses any more than they have been over what has happened.   The estates in Narraghmore and Newbridge have had raw sewage on their greens for some time. My focus and that of Fine Gael has been trying to fund a mechanism whereby we can address those problems as soon as possible. These are legacy problems with which local authorities have not been able to get to grips. We want to make sure that we have the required funding to fix those problems as soon as possible. The residents of the estates have all told me they would have no problem paying water charges if that meant the fact their children cannot play in open spaces was addressed as quickly as possible.

It is in that context that we come to the decisions that we make here. I passionately believe that has to be our focus. It is crucial that the committee gets this right in terms of the future funding of our water and wastewater services.

If water becomes part of the normal Estimate bidding process, as it was in the past, how do we ensure that the same level of under-investment that has happened is addressed? When water and wastewater services have been in competition with different State Departments, there has been under-investment.

What areas of existing public expenditure would the delegation suggest be de-prioritised if we are to ensure that the money is ring-fenced for water and wastewater services, which, we all agree, is necessary? Would the delegation suggest that the housing, education, transport or perhaps the health sector budgets be cut back? They are the areas that might need to be cut in order to make sure that we have a sufficient amount of water. The general taxation pot is under a lot of pressure from many different sides.

Mr. David Gibney: I thank the Deputy for the question and I am glad he asked it. Let us consider the tax cuts that have taken place since budget 2015 and ask where the money should come from. The income tax change that year resulted in €405 million being lost to the Exchequer as a result of tax cuts. Changes to USC cost €27 million and the USC threshold cut the following year was €772 million. I can list figures for other areas, but the total is €2.7 billion.

If we want to address housing, health care or other areas, perhaps we should stop giving tax cuts as a first priority. In terms of the households the Deputy mentioned where there are problems, that is a direct result of the cut of 65% in the budget for water services. The two points are linked. The €405 million figure I mentioned was targeted at the top 17% of earners at a time when we were trying to impose water charges on the poorest of our population, one in ten of whom is already experiencing food poverty. We also have the highest fuel poverty rate in Europe. The introduction of water poverty is not the way forward for us as a society.

We have evidence across Europe and the rest of the world from all of the people we have met from Detroit, Berlin, Rome and France about the implications of introducing water charges. Every single one of the places I have mentioned now has water poverty. The UK has a 23.6% water poverty rate. There is a 15% water poverty rate in Wales.

Let us address the core issue of what is best economically, environmentally and socially. In terms of economics, in 2011 Gerry Concannon warned the Government that introducing water charges would mean doubling the cost of providing our water services from €350 per annum per domestic unit to €700. All of that involves extra costs such as the metering process and the advertising budget - Irish Water spent €3 million in 11 months on advertising and €6 million on postage costs. There is a significant cost to introducing water charges. The best way to address the water crisis is to stop giving tax cuts and instead invest in the water infrastructure which has been severely damaged by the underfunding that has happened as a result of successive Government cuts.

When we talk about ring-fencing money, the expert commission's report covers that area. An excessive charge for over 150% of domestic usage could raise between €14 million and €30 million. To me, economically it does not make sense to try to raise €14 million to €30 million chasing down 7% of households. Spending €270 million for a return of €30 million makes no economic sense.

In terms of environmentalism and conservation, the report states that there is no evidence that there is any excessive wastage of water in Ireland.

In terms of social implications, 70,000 families across Detroit have had their water shut off. People say that happened in America and could never happen here, but the same has happened in Rome, parts of France and in the UK. Five people from the Detroit Water Brigade who have no access to water because they could not afford to pay their bills came to visit us. One of them has had her water shut off three times. In Detroit, if one's water is shut off one has 48 hours to have it switched back on, otherwise the authorities can take dependants away because it is a requirement to have water running in a home. After 72 hours one's house becomes condemnable. That is what we are trying to prevent by bringing in water charges.

The first part of that process involved installing water meters, and that is why the Right2Water campaign and the 62% to 66% of the population who are opposed to water charges are mobilising on the streets and saying this is not good enough. We need to stop giving tax cuts and instead invest in water infrastructure.

Deputy Martin Heydon: Information on Martin Heydon Zoom on Martin Heydon I thank Mr. Gibney for his response. We talked about taxes. Many people on his side of the argument refer to taxing the wealthy, which is a fairly easy mantra. At times the general public do not realise that 6% of the highest earners in this country pay 49% of the income tax and USC, which is a fairly substantial figure. They are also the key people who drive business and economic activity in this country.

I am surprised that Mr. Gibney is opposed to cuts in income tax for ordinary workers. When I was first elected as a Deputy in 2011, I was surprised by the number of people who came to my office who were in receipt of social welfare and told me it did not pay to go back to work because the gap was too big. We knew we needed to cut direct taxation on work in order to make work pay.

Let me be very clear. In my mind, the greatest beneficiaries of the recovery from recession have been householders who in 2011 and 2012 did not have a job but who now have one or two earners and children who know what it is for Mummy and Daddy to get up in the morning and go to work. That is why we made changes and have 190,000 people in work today who were not in jobs in 2012. That is why this year alone we will create an extra 45,000 jobs in the economy. Everything is focused on that.

I am surprised by Mr. Gibney's proposal regarding why we should not have water charges and should instead increase direct taxation and income tax on workers. Ultimately, he is talking about calling a tax a different name and money would not be ring-fenced for the water services that are needed.

Chairman: Information on Pádraig Ó Céidigh Zoom on Pádraig Ó Céidigh I need to proceed.

Mr. David Gibney: Can I respond very quickly? The Deputy put words in my mouth that I did not say.

Chairman: Information on Pádraig Ó Céidigh Zoom on Pádraig Ó Céidigh Mr Gibney can speak for two minutes because I will not have an opportunity to invite Deputy Ó Broin in and I want to give him the chance to ask a question.

Mr. David Gibney: Please do not put words in my mouth. I did not say that all of the tax cuts should not have happened. I mentioned €2.7 billion and the first two or three taxes.

Deputy Martin Heydon: Information on Martin Heydon Zoom on Martin Heydon Mr. Gibney mentioned income tax specifically.

Mr. David Gibney: No, I mentioned income tax and listed the cuts that have taken place. I said we should stop giving tax cuts. I did not mention cuts to motor tax for employers, which was €43 million.

Deputy Martin Heydon: Information on Martin Heydon Zoom on Martin Heydon He obviously feels we should reinstate those taxes to pay for our water services.

Mr. David Gibney: We have published a fiscal plan which over the next five years would raise €10 billion and, therefore, increase funding for all of the things the Deputy mentioned, such as the crisis in health care. One cannot have low taxes and a decent health care system or housing system. It just does not work. In terms of the income taxes I mentioned, I never said I was opposed to them. USC is one example. Richie Boucher, who works for Bank of Ireland, pays €63,000 in USC because he is a high earner. That is equivalent to a salary for two nurses.

Chairman: Information on Pádraig Ó Céidigh Zoom on Pádraig Ó Céidigh I do not think individuals should be mentioned.

Mr. David Gibney: I apologise.

Chairman: Information on Pádraig Ó Céidigh Zoom on Pádraig Ó Céidigh I really want to proceed. I want to call on Deputy Ó Broin. I will have to wind up the meeting because we have to go into private session. I ask Deputy Ó Broin to be very brief.

Deputy Eoin Ó Broin: Information on Eoin Ó Broin Zoom on Eoin Ó Broin I will be very brief. I hope that when Deputy Heydon was visiting the two housing estates he mentioned he told the residents that in the five years-----

Chairman: Information on Pádraig Ó Céidigh Zoom on Pádraig Ó Céidigh I want to move on.

Deputy Eoin Ó Broin: Information on Eoin Ó Broin Zoom on Eoin Ó Broin This is relevant to the question. I will be very quick.

Chairman: Information on Pádraig Ó Céidigh Zoom on Pádraig Ó Céidigh Ask the question. Never mind the relevance around it.

Deputy Eoin Ó Broin: Information on Eoin Ó Broin Zoom on Eoin Ó Broin I will be very quick. In the five years since the European Commission initiated enforcement proceedings against the Irish Government, the Government reduced expenditure on tackling that problem every year for five years. It is important that Deputy Heydon lets those people know the facts in terms of why raw sewage is being pumped into their communities.

Chairman: Information on Pádraig Ó Céidigh Zoom on Pádraig Ó Céidigh I am not interested in political statements. I am interested in the question.

Deputy Eoin Ó Broin: Information on Eoin Ó Broin Zoom on Eoin Ó Broin In terms of international best experience, can Mr. Gibney outline his view and the information he has on the impact of an over-reliance on borrowing in terms of investment in capital infrastructure?  Will Mr. Gibney also talk to us a bit more about water poverty in terms of the way in which he believes water charges are directly linked to levels of water poverty in other EU member states?

Mr. David Gibney: Firstly, water charges and water poverty are linked. Probably the best comparison we can make in terms of our climate and water services is with the United Kingdom. In 1989, water charges were introduced in the UK for the first time. Since then, every single year the price of water has gone up by double the rate of all other goods in the economy according to the retail price index. Because of that, a quarter of all households are now experiencing water poverty. A large part of that is as a result of borrowing. For instance, seven of the biggest water companies in the UK, including Northumbrian Water and Thames Water, borrow excessive amounts of money to fund their water infrastructure. Northumbrian Water borrows at an interest rate of 11%. It does so because it is borrowing from its own bank, which is the owner of Northumbrian Water.

The average household in the UK is now paying £80 per year to fund the debt and interest rates, which ends up being 21% of a water bill. That 21% is servicing the debt. We do not want to go down the road of borrowing because we will end up in debt. Then instead of the money going into water infrastructure it goes to servicing debt for big banks.

In Detroit, it is estimated that 46% of what they pay for water bills goes towards servicing debt. We therefore have big concerns about the terms of reference that were given to the expert water commission, which specified only one way of funding water through borrowings. We would much prefer if the funding went directly through general taxation which would avoid getting into debt on that side of things.

Chairman: Information on Pádraig Ó Céidigh Zoom on Pádraig Ó Céidigh I need to move on now, if that is okay. I wish to thank Mr. Gibney and Mr. Fitzpatrick for attending the committee. I very much appreciate their time. We will now go into private session in order to continue our discussions.

The witnesses withdrew.

The joint committee went into private session at 12.02 p.m. and adjourned at 12.50 p.m. until 1.30 p.m. on Wednesday, 22 February 2017.


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