Contribution by Minister Simon Coveney to Dáil Motion on the Report of the Special Committee on the Future Funding of Domestic Water Services
Check Against Delivery
Firstly, I want to say that I recognise and respect the spectrum of views that people have in this House and across the country on the provision of domestic water and how we fund it. I recognise that it is a very political and emotive issue for many people. However, I also think that as a country we have allowed ourselves to be convulsed by a negative and divisive debate on this issue for far too long.
My focus on water, as Minister since taking office nearly a year ago, has been to put a process in place that could move us on from political division and uncertainty, to achieve a majority consensus to progress a new approach that responds to the various political viewpoints while delivering a water service infrastructure that meets the needs of our society, our growing economy and fulfils our environmental obligations.
Therefore, I welcome the report of the Special Oireachtas Committee on the Future Funding of Domestic Water Services. I believe that it provides a sound basis for Ireland to move forward on this issue in a sustainable way. Let’s remind ourselves of the process by which the Committee reached this point. The terms of reference for the Special Oireachtas Committee on the Future Funding of Water Services were quite clear: it was tasked with considering and making recommendations on the Report of the Expert Commission which was published in November 2016.
It is also worth reminding ourselves what the independent Expert Commission recommended. They proposed the following:
- The funding of water services for normal domestic and personal use should be out of taxation;
- Excessive or wasteful use of water should be paid for directly by the user at tariffs determined by CER;
- Excessive or wasteful use of water should be discouraged by charging for such use and therefore is consistent with the polluter-pays-principle;
- Measurement by meter is the optimal approach to managing consumption.
The Expert Commission argued that this model would provide for clarity around long term investment, support the application of the polluter-pays-principle and meet the requirements of basic equity and fairness and to ensure Ireland complies with EU Water Framework Directive commitments.
I think the Expert Commission’s thinking was correct and has provided the basis for what has now been agreed in the committee report. I want to thank Kevin Duffy and everyone else who contributed to the work of the Expert Commission.
Commissioner Vella in his last letter to me on January 12th this year also emphasised the central importance of cost recovery and encouraging sustainable consumption through metering to our future funding model. The final paragraph of the Commissioner's letter is worth quoting for the purposes of clarity, it says:
"The European Commission encourages therefore the Irish authorities to give particular attention to the following key issues which, taking into account the specific circumstances of Ireland, and at the same time striking a fair balance between the interests of the consumers and the needs of the water sector, are indispensable for an outcome that complies with the Directive:
- the recovery of costs must ensure that the Irish water sector meets its serious needs in terms of both maintenance and investment in water and waste infrastructure
- In order for the charge on excessive or wasteful use of water to attain its purpose, the consumption of water for normal use should be set at a reasonable level, and the charge for excessive or wasteful use of water should be dissuasive. The completion of metering will be instrumental to this effect"
Since it began its deliberations in December, the discussions at the Committee have been wide ranging. It has had the benefit of inputs from regulators from other jurisdictions, our own policy makers and regulatory bodies and other stakeholders from the water sector. As the work of the Committee moved towards conclusion and draft text was presented for discussions there have been robust and on occasions quite fraught exchanges.
Fine Gael and the Government has come to this process willing to engage constructively and to seek a compromise outcome that respected people’s differing perspectives while meeting certain fundamental requirements.
What Fine Gael members of the Committee have been trying to do over the last 4 months of intensive discussions at the Committee is ensure that the final report clearly reflects these fundamental requirements. They did this for a number of reasons, not least the need to make clear to the European Commission precisely how Ireland intends to go about meeting its EU obligations. However, more importantly, the Fine Gael members want to be clear with the Oireachtas and with the Irish people, in an upfront and honest manner, how the changed water funding model will work.
Early drafts of the report last week raised significant concerns for the Fine Gael members of the Committee and more broadly for me and for Government. I believe, on the basis of legal advice before me, that last week's amended report would have clearly failed to satisfy our EU obligations with a significant consequence in terms of EU fines which the Irish taxpayer would ultimately have to fund.
I am very pleased that the report has come back on track now with the benefit of further Committee legal advice around certain key aspects. The Committee has now agreed that households responsible for the wastage or excess usage of water would be required to pay but that a generous allowance would apply for households consuming normal volumes, paid for through taxation. It has agreed that average consumption would be determined independently by the Commission for Energy Regulation and that only those households using 70% more than average consumption would pay an excess usage levy.
It has also agreed that the basis for measuring consumption would be the existing meters – domestic – as well as district meters, and that all new builds or refurbishments would be required to be fitted with meters. It has also agreed that all apartment complexes would be metered through bulk metering, this is particularly welcome given the number of apartments to now come under the new metering program.
Ceann Comhairle, there are a number of facts from which we cannot hide:
- We require significant investment in our water infrastructure to address years of underinvestment and support a modern economy;
- We cannot walk away from our EU obligations, including those we face under the Water Framework Directive;
- The European Commission will not tolerate continued non-compliance by Ireland and has indicated a willingness to go the distance to force Ireland into compliance through the European Court of Justice;
- We will face significant penalties if that happens;
- We have an opportunity now to make responsible, long-term, sustainable decisions around how we fund our domestic water services.
Taking account of these, I have had five priorities from the outset of this process, as follows:
- Maintaining Irish Water as a single utility structure for the delivery of our water services;
- Increased funding certainty for future investment in water infrastructure;
- A conservation based approach based on the use of meters;
- A charging system that is fair for households and that encourages sustainable consumption patterns;
- Equitable treatment for people who currently pay for their domestic water through group water schemes as well as for those households who have already paid their water bills.
I believe that the report of the Committee delivers on these in a reasonable and coherent way that will not only enable us to demonstrate compliance with our environmental obligations but will also secure a sound future for the delivery of high quality water services to households throughout Ireland.
I have a serious responsibility to lead and to legislate for a responsible package that gets Ireland to where it needs to be. Following the Oireachtas vote, my Department will then commence the drafting of a Bill on the basis of the report, and will engage with the Office of the Attorney General as part of this process.
Finally, I want to place on record my thanks to all Members of the Committee for their input to the deliberations. I thank Fianna Fáil, in particular, for its willingness to commit to a process nine months ago and following through on that process. I think it is a victory for sensible politics. I want to thank the Fine Gael Members specifically for their resolve during the negotiations and I want above all to thank the Chair, Senator Pádraig Ó Céidigh for undertaking his role with calm authority and grace under pressure.