The Water Services Bill 2014 was debated in the Seanad on Thursday Dec 18th. Senator Zappone raised her concerns regarding the possible privatisation of Irish Water. Senator stated that only public ownership will guarantee fair and affordable charges, transparent and ethical governance and efficient management of the entity.
The Senator said that as the Irish Constitution is currently framed, it allows lawmakers to transfer natural resources from the State's ownership. Hence she highlighted the need for a referendum to enshrine the ownership of Irish Water to the Irish people in perpetuity.
Senator Zappone also spoke about fairness and affordability of water charges, now and after December 31st 2018. She proposed that households should not pay more than 0.5% of their net household income on water charges and the cap in the water charges should be linked to 0.5% of the household's net income when that is lower than the flat charge.
Read Senator Zappone’s full speech here.
I welcome the Minister and thank him for his respectful comments. Two days after the recent national water protest on the streets of Dublin, when a substantial number of citizens and residents exercised their right to free assembly, the Economic and Social Research Institute published a paper entitled Distributional Impact of Tax, Welfare and Public Service Pay Policies: Budget 2015 and Budgets 2009-2015.
The paper examines the impact of budget 2015 on households at different income levels. These eminent social scientists conclude that budget 2015 will have its greatest impact on the 10% of households with the lowest incomes. These households take in approximately €8,700; their net household income - net of income and the revised water charges, inclusive of the conservation grant - will reduce by 1% or approximately €87. Smaller losses will be experienced by most middle-income households, with small percentage gains for higher-income households. The greatest gain will be close to 0.5% for the top 10% of households, which take in approximately €159,000. That means they will gain approximately €795. When the ESRI professors analyse the combined budgetary effects of 2008 to 2015, they find that households with incomes in the middle, or approximately €35,000, had substantial losses from budgetary action at between 10% and 11%, or approximately €3,500.
This is the evidence, so I do not find it surprising that the people I witnessed and spoke with on the 10 December protest were deeply concerned about the affordability of water charges and their ability to pay. As the Minister and Senators are aware, much of the mobilisation of protestors is based on a belief in "the right to water". I am not a member of the Right2Water campaign because I do not agree with its entire platform but the right to water and sanitation are included in the United Nations interpretation of economic, social and cultural rights. The right to water does not mean that we should not pay for it but it does mean that charges which control access to water and sanitation should be affordable and fair.
I suggest that if this Government is genuinely committed to affordability and fairness, it should accept the recommendation of the Constitutional Convention that our Constitution should be amended to strengthen the protection of economic, social and cultural rights. If the Government is not willing to put a referendum to the people to make a choice to guarantee public ownership of water - our collective natural resource - the next best action would be for the Government to accept the convention's recommendation on economic, social and cultural rights. I was very disappointed that "strengthening economic, social and cultural rights" was not chosen this week by the Cabinet as another referendum to put to the people.
Many critics of the Government's establishment of Irish Water call it a quango. We have already heard the word this afternoon. That is a derogatory term, although one definition indicates that a quango is simply an organisation that is financed by a government but acts independently of it. How can we transform a quango into a public utility that provides people's right to water in a fair, affordable, efficient and effective manner? It can be done in this Bill but not without some further amendments. I am not of the view that we need to abolish Irish water and as lawmakers we have in our power the ability to transform it. I hope the Minister and Senators will grasp that opportunity.
I have two primary concerns about the Water Services Bill 2014. The first is the public ownership of Irish Water. The Minister has said that the Bill before us, in its new form as well as in its earlier form, as introduced in the Dáil, gives people certainty that Irish Water will remain in public ownership. I do not agree with that assertion. However, I am in agreement with the Minister that in this law the Government should give people such certainty. Public ownership is the best way to protect our collective natural resource and to ensure the right to water and sanitation. Many Deputies on both sides of the other House spoke and many Senators, I am sure, will speak eloquently about this. What I want to say is that public ownership, and only public ownership, will guarantee that charges are fair and affordable.
Only public ownership will require transparent and ethical governance. Only public ownership will insist on efficient management free of cronyism and an unacceptable bonus culture, and only public ownership will provide structured customer engagement and influence in setting the charges and maintaining an ethical form of governance and an effective management. The plebiscite as framed within this Bill is a proposal that asks the people if they would agree to privatisation. It is not a plebiscite that asks the people if they would agree to public ownership. That is how it is framed in the Bill. It is a plebiscite framed to ask the people would they agree to privatisation. Therefore, a plebiscite framed in this way simply does not guarantee public ownership of Irish Water. Why is this?
Under Article 10 of the Irish Constitution, the Oireachtas is empowered to enact legislation for the purpose of regulating the alienation, whether temporary or permanent, of lands, mines, minerals and water. What does that mean? In a nutshell, it means that our Constitution allows for the Oireachtas to pass law that sells, transfers, leases or gives away our natural resources. Our Constitution, as it is currently framed, allows lawmakers to transfer natural resources from the State's ownership to someone else. Therefore, the promise of a plebiscite to the people to ask them if they agree with an Oireachtas proposal to privatise or to alienate hardly provides an adequate guarantee.
Even if this law is enacted in its present form, the constitutional guarantee will continue to be that lawmakers can transfer natural resources from the State's ownership to someone else. Only a referendum could change that foundational constitutional guarantee to elected representatives that they can make law to privatise water. I heard some of the Minister's comments on why the Government is not going for a referendum. I heard, "We cannot do it; it is too complex", or: "We will not do it; it is too complex." I heard, "We will not do it", and not: "We cannot do it because it is too complex."
My second primary concern is fairness and ability to pay. All of us in this House know that the capped charges are an interim measure that responds to the crisis of public trust in politics. Many of us are concerned that the revenue raised from households as suggested in this Bill will not sustain Irish Water financially and, hence, these charges will have to be raised in 2019.
The people who protested on the streets of Tallaght and throughout the country know this as well. They do not trust the promises made by Government that the water charges will remain affordable until 2019 when the charges regime provided for in this Bill expires. People need financial certainty and this Bill does not provide it beyond 2018. Water charges need to be affordable and fair for the people. They need to promote water conservation and be economically sustainable, both for the utility and the State.
It is vital that Irish Water passes the market corporation test in April, because the reverse would have serious consequences for the Irish economy. Hence, the economic as much as the political sustainability of the fee structure needs to be considered. I do not believe it is fair, cost-effective or practical for the State to subsidise the water bills of the nation's top earners for the same value as the low income groups.
My positive proposal is that households will not pay more than 0.5% of their net household income on water charges, neither now nor after 31 December 2018. The charging regime set out by this Bill for the three-year period provides this guarantee for households earning more than €34,000 a year. In other words, it provides a guarantee that they will not pay more than 0.5% of their net income, but it does not provide a guarantee for those earning under €34,000, even when taking the water conservation grant into consideration. Therefore, it does not provide a guarantee that those earning under €34,000 will pay only 0.5% of their net income. I will be bringing forward amendments therefore that will ensure the cap in the water charges is linked to 0.5% of the household's net income when that is lower than the flat charge.
This will start to bring more fairness and ensure affordability in the charges regime.