The question posed in the title of this piece is not only fair, but it is also pertinent. Did Ministers Actually Read the EUROSTAT Letter?
Having listened to the spin coming from Government over the past number of days following the publication of the EUROSTATS advice on the classification of Irish Water, one is forced to question from what information are they basing their statements?
Their overall argument is that EUROSTATS finding that Irish Water be classified as an arm of Government is based solely on the failure to achieve the much coveted quantitive 50% test; and that this will be achieved in short order once they have bullied, bribed and cajoled more people to register and pay their bills, with Minister Leo Varadkar going as far as to describe the advice from EUROSTAT as a ‘minor setback’.
The complete disregard for the qualititve issues outlined in clear detail in the letter is astounding! This goes beyond denial a moves into the arena of pure delusion.
After reading the letter in full, it is crystal clear to any right-minded individual that the 50% test is the least of the Governments worries.
First of all the document highlights that –
“a significant component of the strategy to establish Irish Water is that Irish Water will be classified, from inception, as a Market Corporation under Eurostat rules (as government documentation provided to Eurostat clearly recognises), rather than so to align with best commercial practices.”
In order to achieve this classification the Irish Government threw over €730m in taxpayers money at Irish Water. They secured veto rights of board member selection through ministerial control and rented out local authority staff through service level agreements (SLA’s).
Still they failed!
I summed the three points above up in one line, but their significance cannot be underestimated. In these actions the Government have essentially secured their place as the main source of funding for what is now a cross between a traditional QUANGO and a non-autonomous ‘private’ company providing billing and financial services, in some form of strange hybrid monster.
In their zeal to retain control, through board member selection and by the capping of fee’s, as well as providing €730m in funding, they have removed any autonomy from Irish Water. How can a company be considered independent, if the board is selected by an outside entity and the fee’s they charge are dictated to them?
Furthermore as it turns out, the parent company of Irish Water, Ervia, does not consolidate Irish Water in it’s financial accounts. As such Ervia has no incentive to strive for profitability!
Finally by staffing Irish Water, via SLA’s, with local authority staff, the Government ensured there would be no competitive hiring process. That’s just bad practice! In fact non of the above could be considered good business practice, and non can be considered a ‘minor setback’.
To add to all of this, EUROSTAT, like the majority of Irish Citizens, opposition parties and political commentators, were not fooled by the Governments attempts to pass of the €100 bribe as a ‘conservation grant’ paid by Government and not attached to Irish Water stating –
“The intention of the grant of 100 euro per year is clearly to partially compensate for the new domestic billings……..In total, Irish Water domestic customers will receive 130 million in grants to compensate for the 270 million of new domestic billings. Eurostat therefore considers that the 100 euro grant should be netted from Irish Waters customers’ revenue – at least for the 50% test”
Nor were they willing to accept attempts at creative bookkeeping –
“Eurostat also considers that the CSO should envisage, when calculating the sales for the 50% test, to net household grants as well as the billings expected not to be collected (those provisioned) should the amounts be based on solid estimations, or to record such amounts on a cash basis if in a situation of high uncertainty concerning the total amounts which will be collected (which is to be expected, especially at the beginning of the activity of Irish Water, given that households will be called to pay water fees for the first time ever)”
Going further, EUROSTAT advise, that when all these issues are considered and consolidated, and with an independent assessment the CSO’s estimate of 54% of Irish Water revenue coming from market activity by 2016, is optimistic in the extreme –
“if more realistic or prudent capital costs were considered, the ratio would then fall to 27%, which is a very low ratio and which would reinforce Eurostat’s assessment of the appropriate clarification of Irish Water”
That covers some of the issues the Government face in relation to the classification of Irish Water, but there is more! Much more!
How will we the people react to all of this? And on the cusp of a General Election to boot!
There are a number of points in the letter to pick up on.
In terms of the overall cost to the taxpayer, EUROSTAT outline that ‘aside from current payments, government will also to a large extent fund the massive investment programme of Irish Water, foreseen to encompass €5.5 billion euro over 8 years’.
This tears apart the entire economic argument for the establishment of Irish Water. With the Government having essentially just reorganised the provision for water services, we are now on the hook to pay for the salaries of people like John Tierney who is essentially overseeing the same infrastructure with increased Government funding! The very thing we were told the Government could not afford!
In plain terms, the real world outcome would have been the same, had the Government have simply increased the funding to local authorities for the provision of water services. Although it would be less the cost of setting up and staffing the new utility and paying out millions in grants to people who simply could not afford to pay in the first place.
There are implications for those on Group Schemes also. Living in Monaghan, where schemes are prevelant I have been privy to many conversations where those whom are provided water through a ‘Group scheme’ have claimed that they are insulated from the issue. This has never been the case, and it is just a matter of time before the cuts to funding for these schemes hit those households – this is eluded to in the letter –
“Whilst billings to ‘domestic users’ of local authorities (now Irish Water) will be introduced in 2015, billings to ‘non-domestic users’ will continue unchanged, pending further decisions. In parallel, subsidies to “Group Schemes” appear to have been at the same time reduced, so as to largely equalise the charged water price for domestic users across schemes in Ireland”
Finally there is the overall tone of the letter. Make no mistake EUROSTAT is not a friend to the anti-water charge campaign. They talk about the ‘monopoly’ on water and privatisation. Their advice, if followed to the letter, would see Irish Water become a privately owned organisation, with a strangle hold over Irish people and their right to water. Subsidies would be scrapped and profitability would be the sole aim!
For the right winger’s this is of course the ultimate aim, the only difference being that they would never spell it out in such clear terms as EUROSTAT technocrats.
For those whom agree with the concept, that is those who agree that water must be conserved and should be paid for, this should serve as an eye-opener. That €730m that the Government have put in to Irish Water is taxpayers money, you can sleep easy, you have already paid. Not to mention the fact that we have been paying for water for years through general taxation.
As for conservation, I agree, water should be conserved, but I’m sorry to say you have been sold a lie. Conservation is not even on the Governments agenda. The grant is nothing more than a bribe, designed to gain compliance with a view to passing a test, which they have just failed.
Irish Water is now nothing more than a face saving exercise. The Government will not back down and be seen to fail. But they have failed. They have failed in the eye’s of EUROSTAT, they have failed the people by setting up this disastrous entity and putting us all on the hook to pay for it over and over again.
So how will you react? In the face of utter incompetence and outright delusion! What will you do?
Vote them back in? Elect people who cannot admit that they got it wrong. People who will happily allow citizens to suffer to buoy up their over inflated ego’s?
That would be the biggest failure of all!