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Watered down (Editorial November 2014)

If a policy goal is legitimate it is legitimate to use taxation to further the policy. It is legitimate to tax junk food, to tax plastic bags and waste, and to tax water. It is not double taxation to impose charges for any of these any more than it is to exact road tax or bus fares. And all are legitimate.
This message has been lost as Ireland’s water tax has been introduced in a furtive and unprincipled (Hoganesque) way and then altered in ways that make it useless.
The water charge should have been a substitute for a component of income tax. Indeed income tax hits the ‘good’ of work in general, and there should be a move towards taxing ‘bads’, like water profligacy.
The problem is that many people simply cannot pay the tax – and that established State systems can deal more equitably with people who can’t pay income tax than new charges.
Furthermore there is concern that there is an agenda to privatise the company, which was established partially to circumvent EU rules on government borrowing, though squeezing the charges may import non-compliance. Pathetically it has been mooted that privatisation would be precluded by constitutional amendment, though Enda Kenny has sensibly ruled it out. Rather than such a random and ad hoc referendum, how much better to constitutionally enshrine that all natural resources must be owned in ways compatible with the pubic interest, or that all decisions should be assessed for their compatibility with improved equality in society.
Worse even than not making the principle clear or fair had been the way the bureaucrats were allowed to go ahead and set up Irish Water without strict scrutiny at every stage. Consultants were over-paid and still extract €1m weekly. Bonuses were made available to underperforming staff – €9,000 even to those “in need of improvement”.
By the time the State company was ready the costs involved meant that the charges for water were going to be far steeper than anybody had anticipated. And the Regulator has set Irish Water a target of only a paltry 8% in cost reductions over the next few years. The percentage is low because it is obliged to maintain double the necessary 2,000 workforce inherited from local authority staffs, until 2025 – following a deal with unions. John FitzGerald of the ESRI has said the extra wages and other costs for the 2000 extra staff amount to around €150m a year, or an extraordinary €90 per household.
Irish Water’s unimpressive managing director John Tierney – former Dublin City Manager, the acme of local government – has now apologised to customers for the bungling. No Minister has apologised, though the issue now threatens governmental stability.
The country is on the march over the issue. Richard Boyd Barrett says the people sense blood. As the Irish Times’ Fintan O’Toole has noted: “It’s an expression of anger about bigger things: command-and-control politics; trust-me-I’m-an-expert arrogance; rotten, feckless disregard for the realities of life at the bottom of the heap; the feeling that nobody gives a curse how you live or what you think. It’s about injustice, and it’s justified. The recent budget was the fourth regressive budget in a row. This has nothing to do with ‘austerity’. The ‘austerity’ budgets under Fianna Fáil between 2008 and 2011 were mildly progressive – they hit the better-off harder than the worst-off. But every budget under Fine Gael and Labour (Labour!) has quietly reversed this trend”.
Originally it had seemed a home made up of two adults and two children under would be spending about €370 a year but Minister for the Environment Alan Kelly has now indicated that he expects imminent changes to the charges to make them “modest” (and opaque). They will probably be capped at around €300 a year per household until 2018. €100 will be rebated to households through the tax or social welfare systems, leaving around €200 (€100 for single-adult homes).
But this was an issue that should have been uncontroversial. Fintan O’Toole has asked “How much political brilliance does it take to persuade the population that it is necessary to change a water supply system that leaves whole cities (Galway) and almost entire counties (Roscommon) without drinkable water for long periods? That wastes through leakage half of all the expensively treated water it produces?”. He might have noted also that, for example, of the 2,450km of pipes in Dublin only 7km was being upgraded annually and that under the disparate local-authorities there was little chance of diverting the Shannon in the direction of the capital, as seems necessary to maintain supplies. Furthermore metering is important because multiple studies show 16 per cent less water is used when metered. Irish Water does make sense.
The controversy may show that in contemporary Ireland if you betray principle you risk derision, dissent and disrespect. If you compound it with spendthrift incompetence, unfairness, short-termist populism and bad communication you deserve nothing but the contempt of the citizenry.
It is however too much to expect that someone would actually promote the charge as the best of some bad options, and point to a fair vision, based on a radically improved policy, not just half apologies and hypocritical U-turn. •