Establishing Irish Water heralds its privatisation – John Gormley

While the Green Party was in government it had a number of redline issues: key among them were the refusal to contemplate a flat rate property tax for the primary residence and a resistance to any movement towards the privatisation of water. We now know that the government has made a dog’s dinner of the property tax but there has been less scrutiny of the creation of Irish Water, the Fine Gael brainchild. Most of the political comment from the opposition is focused on the apparent unfairness of water charges and in particular the costs of installing the water meters themselves. But they’ve managed to ignore the beast in the room that consumes over 200 litres of water a day in the wild. Let me state it bluntly: the creation of Irish Water is the first step in the privatisation of water. No doubt about it. And we haven’t heard a squeak from the Labour mice, except yet another flat denial from Eamon Gilmore.

Let’s ask a number of pertinent questions, the questions that Labour haven’t asked or simply don’t want to think about. Why are we setting up this new entity when local authorities have managed successfully to provide water to the citizens, albeit with a leaking pipe network due to lack of investment? It was because of leaks that the local authorities themselves were the greatest advocates of charges, knowing that extra investment was badly needed for the creaking system. Fine Gael have made no secret that they intend to follow the British model, a model which led inevitably to privatisation but was found wanting, as we know, in Northern Ireland when many were left with no water during the cold snap. And what about the loans from the National Pension Reserve Fund (NPRF)? How is the loan from the NPRF to Irish Water secured. The Greens had proposed that the loan should just be secured on future water charges, i.e. the NPRF would be able to call on future water-charge revenues to ensure their loan was paid back. However, government departments were suggesting that the loan would be secured on the assets of the water service itself, raising the prospect that the entire water system could be used as collateral for the loan.

As the NPRF is part of the state, this obviously wouldn’t amount to privatisation, but the move of transferring ownership of the water assets to Irish Water suggests that Irish Water could in the future raise commercial capital using these assets as collateral, which would mean that the water service could end up in private hands by default. But it won’t be by default. Privatisation is fully in keeping with the ideology of the Sate’s most right wing party, Fine Gael, bolstered by their Blairite lackies in Labour. Even a cursory reading of their own document provides a enough signposts towards privatization. This model proposed is recognised in capital markets as the most attractive proposition to lenders and is understood by investors who lend to the water sector in other countries.

A key factor in evaluating the merits of the new operating model is the possibility that the borrowings of Irish Water could be outside the General Government Balance (GGB). Its capacity to borrow on the international markets would be a key factor in enabling the company to become financially sustainable and separate from the Government. It is proposed to transfer all infrastructure to this new body and allow it to go to the market to borrow money using Ireland’s water infrastructure as security. It is this drive to remove funding of the water sector from the Government that is pushing water infrastructure into the hands of private investors.

The funding of water services is proposed ultimately to come from two sources, the consumer and private investors. The current system requires €600million annually in capital investment, with a backlog of €500million for essential projects being experienced already. The significant level of investment required indicates that majority control over water infrastructure would be wielded by private investors should the Government pursue its plans.

The report repeatedly states that the new model will drive efficiency. Any reorganisation of the current system would improve efficiency – once there’s a commitment to reinvest the money from charges back into the system. However, once profit becomes the main motive, efficiency for the public good becomes secondary. There are people in the Labour party who get this, but they remain silent as their leaders take them into hostile territory for any self-respecting socialist.

Recognising these potential difficulties, the Green Party raised the prospect of protecting our water resources from privatisation in the Constitution. Is it too much to ask that Labour would include this idea in their deliberations in the Constitutional Convention?