Many people will remember Deputy Phil Hogan telling the Irish public that 'water pressure will be turned down to a trickle for people who don't pay' their domestic water charges.
Hogan, now a Commissioner with the EU, has now been outdone by his Fine Gael counterpart Brian Hayes MEP.
On Tuesday, Mr Hayes voted to allow water disconnections by water suppliers to households.
As the European Parliament debated the human right to water, a number of amendments were put forward that would give legislative protections for poorer householders. They included: “Amendment 219: (ba) banning water disconnections by water suppliers to households.”
Mr Hayes decided that water companies should have the right to shut off a vulnerable persons water if they cannot afford their water bills.
Many people may believe that this is not a major issue for European citizens. However, all across Europe, in Italy, France, and parts of Eastern Europe, thousands of households have had their water shut off. Generally for being too poor to pay their bills.
Water companies in the United States are practicing this behaviour too.
Since 2014, more than 110,000 households have had their water shut off. This usually occurs as “customers” fall 60 days behind their bills. Those bills are now an average of $900 per year.
Right2Water and all those involved in the water movement in Ireland want to condemn water shut-offs anywhere in the world.
We would also like to apologise to the people of Europe for the stance taken by Fine Gael’s Brian Hayes MEP, Ireland’s MEP, who does not represent the majority of decent Irish people.
Other Irish MEP’s voted to prevent disconnections including Sinn Fein’s Lynn Boylan, Martina Anderson and Matt Carthy, along with Independent representatives Luke Ming Flanagan MEP and Nessa Childers.
Should the Irish public not receive a referendum on the public ownership of our water in the near future, it is entirely possible that Fine Gael will privatise our water. Once this happens, if Brian Hayes’ votes are anything to go by, it is possible Ireland could face water disconnections similar to that occuring in Italy, France and Detroit. This is why we must prevent domestic water charges and the commodification of our water.
If you would like to contact any of your MEP’s, their details are available here.
In 2014, Detroit kicked off a campaign to disconnect water to customers who were 60 days behind their bills. The effort was supposed to change a culture of nonpayment. Here’s a look at residential shutoffs by year in Detroit.
2018: 11,422 (through August)
Source: City of Detroit
The Beast from the East and Storm Emma have provided right-wing politicians and the mainstream media with a badly needed opportunity to promote domestic water charges, again. This time, however, they have to resort to fake news because we now have evidence to contradict every single aspect of their claims.
That won’t stop them from demonising water protesters and childishly blaming them for water shortages though.
On the 6th March the Irish Sun published an article by Adam Higgins with a headline:
“THE STATE OF WATER - TDs say Ireland needs water charges to prevent future pipe chaos in storm weather, as 20,500 people are without water.”
The article continues, “Speaking to the Irish Sun, Fine Gael’s Alan Farrell said if water charges had been brought in then the country could avoid the current water chaos from happening again in the future.”
He said: “The water restrictions at night are as a result of critical supply issues. Critical supply issues are, of course, a direct result of the inability of Irish Water to invest in the infrastructure in the same way they might have been able to do had they been in receipt of direct household funding.”
So there you have it. Domestic water charges would have prevented water shortages. How is it, then, that the United Kingdom faced the exact same water shortages following the exact same storm when they have had water charges in place since the 1980’s?
This is the same TD who made the argument in 2015 on RTE’s Claire Byrne show that domestic water charges needed to implemented so that commercial water charges could be reduced for multinational corporations.
In reference to water usage increasing by 10% during the storm, Green Party TD Eamon Ryan added:
“There’s little doubt that the current water shortages are being caused mainly by leaks, but households running taps continuously contributed. In some cases, people had no water because their neighbours were running taps constantly.”
In both instances, neither TD was asked for evidence, a core element of a journalist’s role. Instead they were given free rein to spout whatever pro-water charges diatribe they wanted without any request to justify their claims.
The truth is that water usage increased during the extreme weather because people were confined to their homes for a number of days where they had to cook, clean, shower and flush toilets. This is sometimes referred to as living, with hygiene.
Incidentally, this only serves to prove Right2Water’s argument that those who would have been impacted hardest by a metered water charging regime would be our poorest and most vulnerable citizens - pensioners, the underemployed, unemployed and the disabled - because they spend a disproportionate amount of time in their homes.
The Sunday Business Post published an editorial last Sunday: “Storm Emma water crisis shows folly of scrapping charges.”
The article rightly condemned the water crisis, but apportions blame in entirely the wrong direction.
"There was a predictable response from the opposition – spend more money on the country’s water infrastructure. But some of the calls were coming from the very TDs who fought to abolish water charges. That meant Irish Water lost €239 million which was being billed to customers,” said the editorial.
“To put that in perspective, Irish Water is spending around €125 million per year on reducing leaks in the public water services. All that income from water charges would have replaced a lot more leaky pipes.”
So the Sunday Business Post is still under the illusion that every penny from domestic water charges would have been spent fixing leaks?
Can the editor explain how Irish Water were going to pay for the metering of households which was to cost more than €800 million?
What about operating the Abtran call centre which cost €9.2 million in 2014; €30.2 million in 2015; €21.2 million in 2016 and €15.2 million in 2017 – a total of €75.8 million? In fact, an answer to a Parliamentary Question asked by Joan Collins TD states: “The reduction in costs paid to Abtran since 2016 is reflective of the suspension of domestic billing”. So you can thank water protesters that up to €30m is now going towards fixing leaks rather than on a call centre.
Further costs for Irish Water included consultancy fees of more than €90 million, with ongoing operations consultancy costs of €7 million per year.
The advertising costs for the firm were approximately €3 million per annum.
The postage and billing system was costing €6 million per annum (not to mention the environmental damage of 6 million bills being printed and posted on an annual basis).
The ongoing costs for the maintenance and replacement of meters is estimated to cost €50 million per year, but that would be quite conservative.
All of this adds up, and as Senior Executive Engineer for Water, Gerry Concannon stated to government representatives back in 2010: “the cost of unmetered water is currently about €350 per annum per domestic unit. When all of the costs of metering involving installation, maintenance, administration and replacement are considered, this cost almost doubles in the medium term.”
As Fianna Fail TD Stephen Donnelly pointed out a number of years ago:
"Not one penny of the money they’re demanding you pay will be used to run, or to upgrade, the water system.In fact, even if everyone paid their water bill, every penny of the money would be spent on the admin involved in issuing us with bills."
But, why would anyone want to double the cost of water infrastructure? Especially economists who are supposed to understand these things.
Take, for instance, Ronan Lyons, Assistant Professor of Economics with Trinity College, who got in on the act with a ridiculous tweet:
As Dublin faces months with limited water, I'd like to thank residents who selfishly left their taps on - "just in case" - as well as the policy system, for messing up the chance to bring in the water charges that would have prevented this from happening.https://t.co/AxskgFJVra
— Ronan Lyons (@ronanlyons) March 5, 2018
Notwithstanding the fact he has no evidence that householders were doing this, it was pointed out to him that leaving taps running doesn't work, and that perhaps an education campaign would be appropriate in that regard.
Shortly after he was backed up by Stephen Kinsella, Senior Lecturer in Economics at the University of Limerick and columnist with the Sunday Business Post.
If only there was some way to get people to limit their usage by showing them how much they are using. Say by charging them, using, perhaps, prices?
— Stephen Kinsella (@stephenkinsella) March 5, 2018
A number of activists immediately came onto the thread with information and facts which neither Lyons nor Kinsella appeared to know or understand. Yet they maintained their position, implying they support water charges for two key reasons (myths):
Let’s address both of these issues.
Firstly, let’s look at water usage. The government appointed “expert commission on water” produced a well-researched report which showed that Irish households use between 15-25% less water than UK households – where they have had domestic water charges since the 1980’s.
The Water Commission’s report stated:
“Irish Water presented consumption data to the Expert Commission based on metered consumption to date, which indicated that domestic consumption is relatively low in Ireland with average consumption of 123 litres per capita (compared, for example, to 140 litres per capita in the UK).”
“While comparison of domestic consumption with other European countries is difficult due to differing methods of measurement and because the data can be out of date, this most recent consumption data suggests that Ireland is at the lower end of the spectrum of EU countries with regard to domestic consumption.”
Greek economist Yanis Varofaukis explained in his recent book that economists generally cannot comprehend a world outside of commodities. They know the price of everything, but the value of nothing. Nothing can exist outside the world of supply and demand and therefore they find it impossible to understand what they believe is irrational human behaviour. He uses blood donations as a way to illustrate his point.
Countries who pay for blood donations have a lower uptake than countries who rely on unpaid donations. This is because when you commodify an item, it loses its goodwill factor. A donor who was willing to donate blood on the basis that they wanted to help someone in need may feel cheapened by the process of being paid, and change their mind about donating.
Water is no different. When you introduce a cost, in many instances, high income households in particular will use more of it stating: “I’m paying for it anyway, so I can use as much as I want,” as they fill up their swimming pool for the second time in a week.
This is important to understand because high income households will never worry about a €700 bill coming through their door.
On the other hand, a householder on the minimum wage will spend a much higher proportion of their income on the same bill – and again, as stated throughout the Right2Water campaign, domestic water charges are an attack on the standard of living for the poorest in our society.
And before anyone says: “Oh, but there’d be allowances and exemptions,” we all know how that worked out with bin charges.
Throughout the recent “water crisis” we were told to conserve water because it is a “scarce resource”, and it is. Globally water is becoming more scare as populations increase and industry uses it.
But throughout all of the lectures by TD’s, the media and economists, not once has any of them called for the real polluters and users of our water to pay appropriately for their usage.
Most domestic households use water to cook and clean. Most businesses use water in the pursuit of profit. This is an important distinction, yet it is businesses that use most of our water, but for some, householders are expected to pay the bulk of the bills.
According to a 2005 joint report entitled The Wealth of the Poor – Managing Ecosystems to Fight Poverty, produced by the United Nations Development Programme and the World Bank among others, Ireland has 13,003 m3 of “Actual Renewable Water Resources” available per capita.
Compare this with our closest neighbours in the UK where they have 2,474 m3 per capita, or Germany 1,866. We are a water rich country, and again, as the expert water commission stated, we have five times more water available to us than France and fifty times more water available than Israel.
But here’s the thing…according to the same report, industry uses 77 percent of our water while domestic households use only 23 percent.
So why such an emphasis on households reducing consumption? Irish Water’s own estimates, which they have admitted need to be reduced, are that domestic water charges could reduce household consumption by 6 percent.
Do the maths - 6% of 23% is 1.38%.
So, pro-domestic water charges campaigners are arguing to double the cost of our water infrastructure – by introducing meters, call centres, billing systems, advertising, etc – so that we can reduce consumption by a maximum level of 1.38 percent?
And that’s before we take into account that 50 percent of all water is leaked before it gets to the household meaning you can reduce the 1.38 percent by half. It hardly seems worth it.
Try looking at this chart and asking yourself, if you had €2 billion to spare, where would you target expenditure to reduce wastage of water? Would you fix leaks, target commercial water charges or implement a highly expensive domestic metering programme?
In fairness to the expert water commission, they echoed Right2Water’s calls for abstraction charges. In Ireland. If you weren’t already aware, companies like Britvic (Ballygowan), Glenpatrick Spring and Kerry Spring can extract unlimited amounts of water from our wells, bottle that water, and then sell for a profit without paying a single cent in fees.
But what about commercial water charges?
Well, the expert water commission highlighted a serious flaw in the system. They say that half of all businesses are refusing to pay their water bills.
In fact, Irish Water inherited €100 million of debt in relation to unpaid commercial water charges while a further €50 million of debt was written off. Taking account of the figures published for 2015, where Irish Water’s financial statement said that non-domestic revenue brought in €219,872. It’s interesting that this is significantly down on the previous year, before domestic water charges had been implemented, where non-domestic charges raised €248,066.
It’s not possible that Alan Farrell’s announcement on RTE that domestic charges were being brought in to give corporations a cut in their rates was true, is it?
Either way, we can extrapolate that if there is a 50 percent non-payment rate in commercial water charges, and Irish Water took in approximately €220,000 in 2015, then if they pursue the commercial non-payers, we could raise revenue of more than €400,000 per annum from this source.
This, combined with abstraction charges, exploration of increased commercial charges and ring-fencing revenue from the government subsidy (as suggested by the expert commission on water) would provide the necessary income stream for the badly needed investment cited by so many of the pro-water charges lobby.
The argument goes – if we have domestic water charges it will be a guaranteed revenue stream that Irish Water can then use to borrow from the markets. This will then help us to fund the upgrading of our antiquated water infrastructure.
If there’s one thing everyone agrees, it’s that water needs to be paid for and our current infrastructure desperately needs upgrading.
We lose an enormous amount of water to leaks. In some parts of the country, like Dublin, up to 57 percent of all water is leaked through holes in the pipes. This is a scandal.
So who is responsible? The government are. Between 2008 and 2013 the Irish government cut water funding by 65 percent. As recently as 2015, the Irish government of Fine Gael and Labour cut the government subvention to Irish Water by almost €40 million, while allowing commercial companies a reduction of €30 million.
The argument that we need domestic water charges in order to raise funds so we can borrow is a problem for a number of reasons. Firstly, we have given more than €3 billion in tax cuts in recent years, predominantly aimed at the highest earners and businesses. This could have done an awful lot to upgrade our water infrastructure.
Secondly, our government can borrow at record low rates at this moment in time, yet Irish Water would have to borrow at a much higher interest rate off the markets. I’m reminded of a podcast where renowned economist Ann Petifor illustrated the idiocy in this argument.
She pointed out that hospital trusts in the UK are currently borrowing at interest rates of up to 15 percent, yet the UK government can borrow at 0.35 percent. So why doesn’t the government borrow and upgrade the hospitals? The same can be said of our water infrastructure.
Having said that, why would you take out a credit union loan with interest rates if you have the savings to buy the item outright? They could, if the will was there, stop giving tax cuts to the wealthy and fix the infrastructure immediately.
But that doesn’t help them financialise water.
The argument made by Stephen Kinsella on his Twitter account is that water issues will be fixed quicker in the UK due to their investment model they have. What he didn’t realise is that on average, every household in the UK is paying £80 per year to service debt and dividends incurred by water companies. That’s 27 percent of all water bills that is lost to the system because of borrowing and privatisation – which, no matter what anyone tells you, is the end outcome for the imposition of water charges.
Everyone will tell you that there is no privatisation agenda when it comes to water, but very few are campaigning or arguing in favour of a referendum on water ownership. Fine Gael, Fianna Fail and Labour will say they are opposed to water being privatised, but not enough to give us a referendum so we can prevent future privatisation.
These are the same political parties who have collectively supported privatisation of Aer Lingus, Bord Gais, Eircom, Irish Sugar, Irish Life Assurance, Irish Steel, British and Irish Steam Packet Company, Irish Fertiliser Industries, ACC Bank, ICC Bank, Cablelink, Great Southern Hotels, as well as opening up vital public services to privatised competition including - transport, electricity, postal services, healthcare, education.
Why would anyone question their honesty when they say they don’t want a privatised water industry? But even if all those political parties were being honest, there is another threat.
When asked what his position was and whether he would support a referendum on water ownership, Stephen Kinsella said:
“A referendum on it would have my support. But legislation probably the best way to do it.”
The response from Right2Water’s David Gibney was:
“So what happens when we get another bailout in the not so distant future and the EU, ECB and IMF (and others) demand privatisation – like, say, Portugal, Greece or Italy?"
Silence from Mr Kinsella.
The only reason Ireland was not forced to privatise our water during our bailout 8 years ago was because there were no meters and therefore no revenue stream, so no ability to make profits from our water. The first step towards changing that is metered water charges. So in 5 or 10 or 20 years time, it is possible outside organisation will force Ireland to sell off its water if it is not enshrined in the constitution.
Don’t believe us, look at these two quotes from Credit Suisse.
Or what about Citigroup Chief Economist Willem Buiter:
“Water as an asset class will, in my view, become eventually the single most important physical-commodity based asset class, dwarfing oil copper, agriculture commodities and precious metals.”
There is no question, the financial services world is after our water. One of the reasons is that water is now three times more profitable than oil or gas in the UK.
But what happens when you privatise water? Here’s a chart of how water prices increased in the UK compared to the average retail prices. Water has increased at double the rate. And the end result? Water poverty in the UK is now at 23.6 percent compared to 0 percent in Ireland. This is something we should be proud of.
Water companies in the UK have been criticised for their refusal to pay taxes. In 2013 in Britain, private water companies made profits of €2.81 billion, paid shareholders €2.55 billion, while only paying €101 million in taxes. Seven companies paid no taxes whatsoever. Thames Water, one of the largest in the UK, paid an effective corporation tax rate of 0.128% between 2008 – 2013.
Today we learned the sad news that one of the worlds greatest intellectuals, Stephen Hawking, has died. He once said:
“The greatest enemy of knowledge in not ignorance, it is the illusion of knowledge.”
So when Ronan Lyons, a senior economist says that water charges would have prevented water shortages, one would question whether this erroneous statement is through ignorance, or through assumed knowledge.
When people with actual expertise in this matter came to Ireland to talk about our water crisis, they were completely ignored.
Not one media outlet interviewed Maude Barlow or covered the two speeches she made. Maude, if you don’t know, has written four books on water and was an advisor to the UN on water, along with dozens of other accolades. She is widely recognised as one of he worlds leading experts on water. Her statement simply didn’t fit the medias and right-wing agenda.
"The Irish system of paying for water and sanitation services through progressive taxation and non-domestic user fees, is an exemplary model of fair equitable and sustainable service delivery for the entire world”
When the European Water Movement, the activists who are battling against water shut-offs and water poverty all across Europe released their statement on the water privatisation agenda in Ireland, they were also completely ignored.
"It is clear that the best method of securing access to water, and securing funds for infrastructural investment, is through general taxation.
"The European Water Movement views the struggle of the Irish people to abolish water charges, and to secure a referendum enshrining public ownership of Ireland's water system, as yet more evidence of a real European people's movement to democratise water management."
When Wenonah Hauter, Executive Director for Food and Water watch provided the Irish media with some relevant and valuable information about water, again, ignored. Remember, Wenonah is based in a country where up to 70,000 families had their water shut off in one city alone, Detroit.
“Metering and water pricing, the policies that many economists have advocated for encouraging conservation, is a wrong minded strategy.”
“This market-oriented pricing reform is fundamentally flawed. It assumes that households can or will reduce water use when faced with metering and higher prices. However, residential water use is a small fraction of water withdrawals and even draconian water price increases will have little impact on household water consumption. For most households, water goes towards essential uses like drinking, cooking and sanitation; consumer demand for water does not really change, regardless of price. Economists call this price inelasticity. Consumers will not drink twice as much water if the price of water falls by half, nor will they reduce the amount of water they drink by half if the price of water doubles. A Food & Water Watch review of the economic literature found only a very modest consumer response to rising water prices. Households generally reduce water use slightly in the face of even steep price increases.”
Maybe we don’t get balanced coverage because the Irish media, who are currently struggling to make a profit, with many relying on paid advertorials from the government, were also receiving up to €3 million per year in advertising revenue from Irish Water?
Even when the government’s own "expert commission on water” published the facts and figures behind our water usage - supporting what Right2Water Ireland has been saying for years – the line from the media was that we need water charges.
Put simply, water can be paid for through three distinct methods:
1. Metered domestic charges (England, France)
2. Local rates (Northern Ireland, Scotland)
3. General taxation (Republic of Ireland)
The question everyone should be asking is, which is the optimum method of paying for water from an environmental, economic and social perspective.
With abstraction charges, effective commercial water charges and government subvention, Ireland can ensure we never have water poverty while at the same time providing the badly needed investment in our water infrastructure.
Don’t let ill informed 'know-it-all' economists or the media spin their ignorance or their propagenda in pursuit of a neo-liberal policy of water commodification and financialisation. They did it in housing, health, education and other sectors of our society with devastating impacts, let’s keep our water out of their ideology and their ideology out of our water, and let's not make the mistakes that the rest of the world has already made - and is paying for now.
Oh, and if you protested against the introduction of water charges, you are a hero, and you should be proud. Do not let them blame you for water shortages, that responsibility is entirely down to those who refuse to tackle the real wasters (commercial enterprises) and those who cut funding for water infrastructure (Fianna Fail, Fine Gael, Labour and the Green Party).
Now, can we please stop the waste of money on meters, advertising, call centres, consultants, etc, and use the savings to fix the damn pipes? And finally, sign the petition and call on your local TD's to support a referendum on water ownership.
For more, read "Why can't we have an mature debate about water" published by Right2Water more than a year ago.
The Right2Water campaign held a public meeting of supporters yesterday (Tuesday, 29th August 2017) in order to agree a final River Basin Management Plan (RBMP) Submission to the Department of Housing, Planning, Community and Local Government as part of their consultation process.
The meeting, which was attended by 40 representatives of community groups, trade unions and political parties, unanimously agreed the submission which is available here.
Participants were encouraged to send their own submissions into the Department of Housing, Planning, Community and Local Government, using the Right2Water submission as a template should they wish to do so.
Submissions should have a cover letter and should be emailed by no later than 5.30pm on Thursday, 31st August 2017.
Further details on the RBMP are available here.
The Right2Water campaign are today (Monday, 28th August 2017) publishing a draft River Basin Management Plan (RBMP) Submission to the Department of Housing, Planning, Community and Local Government as part of their consultation process.
The submission follows a survey of supporters of the campaign conducted in recent weeks and is available here.
The Right2Water campaign will host a public meeting tomorrow (Tuesday, 29th August) in Unite Trade Union offices on Middle Abbey Street at 5pm to discuss the proposed document. All supporters are welcome.
The government's public consultation phase for the River Basin Management Plan ends this coming Thursday, 31st August 2017.
We are encouraging all activists, community groups, trade unions and political parties to lodge their own submission also. More information on the RBMP and the consultation phase is available here.
If you cannot attend tomorrow evening's meeting, please feel free to send your feedback to firstname.lastname@example.org
The Right2Water campaign is currently developing a submission in relation to the River Basin Management Plan (RBMP) which will be submitted to the Department of Housing, Planning, Community and Local Government as part of their consultation process.
In order to ensure all Right2Water Ireland's supporters' voices are heard and are involved in this process, we are asking you to fill in this short survey.
The government's public consultation phase for the River Basin Management Plan ends on 31st August 2017. Therefore, we are asking that you fill in this survey by Friday, 4th August 2017.
We are encouraging all activists, community groups, trade unions and political parties to lodge their own submission also. More information on the RBMP and the consultation phase is available here.
Thank you in advance for your cooperation.
Water is now the most valuable resource on the planet. In the UK, water companies generate three times the profit levels of oil or gas. With water becoming scarcer, and the planet’s population growing, the battle for water ownership and privatization is only going to continue and escalate. Big business knows this:
“Water is a focus for those in the know about global strategic commodities. As with oil, the supply is finite but demand is growing by leaps and unlike oil there is no alternative.” – Credit Suisse.
Household names such as Goldman Sachs, JP Morgan Chase, Citigroup, Credit Suisse, Allianz, Deutche Bank and HSBC have joined companies such as Nestlé in securing a stake in the privatisation of water. Others firms such as Veolia Water, a company intimately linked with Irish Water, form part of a conglomerate known as the Global Water Summit, whose domain name (www.watermeetsmoney.com) tells us everything we need to know about the agenda being pursued by those involved.
So with this in mind, we must accept that elements of the Irish political establishment and the elites of the world will always be trying to commodify and get their hands on our water so they can hand it over to private profiteers, and that the battle will never, ever end. There’s simply too much money to be made from water for them to ever walk away from obtaining its ownership – so we can’t either.
Much criticism has been made of a number of TD’s who support Right2Water declaring a victory on the plinth of the Dail on 5th April 2017. At that particular time, the Joint Oireachtas Committee on Water had agreed a draft report stating that charges were to be abolished, mandatory metering would end and the referendum to enshrine public ownership of our water supply would take place. Had that Report been adopted, it would indeed have been a massive victory for everyone who had campaigned against water charges.
Instead, Fianna Fail and Fine Gael conspired to change the report outside of committee hearings, a scandal in itself, undermining the democratic processes of the Oireachtas, and not for the first time. In the same week, Simon Coveney, the Minister responsible for water, issued threats to the committee when he wrote to the Chair.
The result was another flip-flop from Fianna Fail who were now back in favour of water charges. Remember, before the 2016 general election, Fianna Fail not only declared that they would scrap water charges, but that they would also abolish Irish Water.
Here’s a direct line from Fianna Fail before the election:
“Fianna Fáil is committed to:
- Abolishing Irish Water
- Suspending water charges
- Investing in infrastructure
- Returning services to democratic local councils under a national framework.”
What happened after the election was that more than two thirds of all TD’s elected were officially opposed to water charges. Yet the charges remained. As David Gibney said in 2016, this is an affront to democracy.
But back to the victory. Was it a victory? Not exactly. The government are continuing to ram water charges in through the back door. They will do anything they can to keep this project alive. After losing half of their seats in the last election, you’d wonder whether some of these government TD’s have shares in private water companies.
The call of a ‘victory’ was a bit premature. However, was it a scandal that they spoke on the Dail plinth and declared a victory? No. It was naieve to trust the Fianna Fail and Fine Gael members of the committee but with an Independent chairing the committee, one might expect a bit of honesty. Furthermore, it must be remembered that Fine Gael members of the committee were out lobbying the media on the plinth for weeks, trying to get favourable coverage for their arguments, which they obviously received. The Right2Water TD’s had to challenge that.
The Right2Water campaign has also come in to criticism for declaring a “substantial victory for people power.” Now this, I believe, is true.
Think back to 2010 and the original plans for water charges. John Gormley from the Green Party had planned to raise €1 billion from domestic water charges. By 2014, that had reduced to €300m. By 2015 it was down to €271m and now it’s down to €0.
In terms of households, a four person family in 2014 was expecting a bill for €480. By November 2016, that was down to €260. And everyone was offerred a €100 ‘conservation grant’ to subscribe to Irish Water. Three years later and there are no bills and those who were intimidated into paying are expecting a refund.
Furthermore, Irish Water is no longer looking for your PPS number, they are no longer threatening to turn your water down to a trickle for being unable to pay your bills, the government were forced to legislate to keep Irish Water in public ownership and there has now been a unanimous vote in favour of a referendum in the Dail, Eurostat ruled against the government in their off-balance sheet exercise, and there are many, many more victories. Arguably, the greatest is the increased level of cooperation of TD’s opposed to austerity as was seen throughout the water committee hearings. Does this mean the battle is over? No, it never will be, as mentioned previously.
Importantly, the next two steps in this battle are to:
Despite mischievous reports to the contrary, the Right2Water campaign has continually called for the utilisation of the Water Framework Directive 9.4 exemption from domestic water charges. The campaign shared Kathy Sinnott’s article on the exemption in 2014. We also shared Marian Harkin’s video in relation to the exemption. In fact, in a letter of complaint to RTE about their coverage of water charges, the campaign coordinators were highly critical of the portrayal by the State broadcaster that the derogation was gone.
For anyone interested, Right2Water sent a detailed submission to the Expert Commission on Water which is available for anyone to read in full here. This is a good resource for anyone wishing to understand Right2Water’s true perspective on water charges. But specifically in relation to the exemption – or derogation, as it’s often referred to, the excerpt is here:
“In response to a question from Irish MEP Marian Harkin in June of this year, the European Commission stated that:
‘Ireland made a clear commitment to set up water charges to comply with the
provisions of Article 9(1) [of the Water Framework Directive] ... Ireland
subsequently applied water charges and the commission considers that the directive does not provide for a situation whereby it can revert to any previous practice.’
However, the Commission is also on record as stating that it considers “established practices” to be those practices which were “an established practice at the time of adoption of the directive”. This Directive was adopted on October 23rd, 2000, and transposed into Irish law in 2003, when it is beyond doubt that Ireland used general taxation as its established practice. Indeed, this was the established practice right up until the introduction of domestic water charges in October 2012 in a project which has now been resoundly rejected by the majority of Irish citizens.
On this basis, Right2Water believes it is the Irish government’s duty to use its derogation, justify its approach to river basin management and, if necessary, challenge the Commission through the EU courts. If the political will is there this could be done with reference to the 2014 landmark case on EU water recovery rules whereby the European Court of Justice found in favour of Germany, after the European Commission tried unsuccessfully to take that state to court for, in its opinion, failing to fulfil its Water Framework Directive obligations. This judgment conclusively stated that it cannot be inferred that the absence of pricing for water service activities will necessarily jeopardise the attainment of the Water Framework Directive.”
To clarify this matter further, every time you call for water charges to be scrapped, you are calling for the use of the derogation. If the government were to agree to the scrapping of water charges, or the Joint Oireachtas Committee was to recommend in favour of scrapping water charges, this would obviously have to be done by using the 9.4 exemption.
However, those who have insisted that the Right2Water campaign prioritise the 9.4 exemption above all else are playing a very dangerous game. Even if the government include the derogation in the River Basin Management Plan, the government can still bring in or continue with water charges. Simply utilising the exemption does not scrap water charges, abolish Irish Water or end metering for that matter. Are those who portray the inclusion of the derogation as the only way to achieve success unaware that the derogation has been in existance since 2003, and yet the government brought in water charges anyway? Are they ok with water charges in place, as long as we have the exemption?
Having said that, it is true that if the government does not include the derogation, it will be devestating for the campaign. Over the coming weeks and months we need to focus our attentions – collectively – on those who can ensure the exemption is included in the River Basin Management Plan. This includes Fine Gael, Fianna Fail and the Independent Alliance. You can find out more about the RBMP here and we will be lodging our submission shortly which will be available to the public.
It’s important also to remember that the 9.4 exemption is not permanent. It has to be included in the RBMP by the government of the day. They and they alone have the right and, in our opinion, obligation, to compile and submit such plans. Each RBMP covers a six year period and the current plan is overdue and will apply until 2021, when again, we will have to demand it is included again. Remember we said this is a permanent battle? This is also one of the reasons why all those opposed to water charges must get sufficiently organised. More on this later.
Right2Water is a broad based campaign, deliberately so. Since the beginning we have encouraged all activists to utilise all peaceful methods to prevent water charges from being imposed on the Irish public while not focusing on one tactic alone. This included support for those boycotting bills, blocking the installation of water meters and lobbying of politicians. This strategy has been a success, so far. Through mass mobilisation on numerous fronts, and through unity, together we have delivered some major victories along the way.
However, since the beginning of the campaign, there has been powerful opposition. The Irish State has come down heavy on protesters like those from Jobstown in recent weeks. The mainstream media has continually misrepresented the anti-water charges movement and protesters have been labeled ‘dissidents’, ‘sinister fringes’, and even been equated to ISIS. Irish Water has been spending more than €3 million a year on advertising, so we were never going to get a fair hearing. So called ‘experts’ have been rolled out for a well resourced pro-water charges lobby. The EU has set up fiscal rules which incentivise commodification and privatisation of water. This is all to be expected.
What is unexpected and unexplained is how many who say they want water charges scrapped continually misrepresent others in the campaign. Why do some attack politicians who have continually voted to scrap charges and refuse to vent their anger or attention at politicians who vote in favour of them – like Fianna Fail or Fine Gael? They criticise five TD’s on a committee of 20 for not being able to include the 9.4 exemption, yet have never criticised the person who drafted the report or any of those who voted in favour of it.
When you look at the facts and the statements linked above, you wonder what motivation some of these activists have in trying to undermine the Right2Water campaign?
Right2Water’s most recent blog has one sentence which captures the demands of the campaign:
“Irish Water should now be abolished, wasteful metering programme should be ended, a referendum must be held and all charges against water protesters should be dropped.”
This has been consistent throughout the campaign, so those who refer to political parties, independent politicians, Right2Water representatives or anyone else within the campaign as ‘sell outs’, must have some other agenda? Again, for clarity, this is the official Right2Water policy and it hasn’t changed since it was adopted.
All Right2Water meetings are public and anyone can attend and have their say. If anyone has genuine criticisms of strategy or tactics, they can contact us at email@example.com. It is important to note that this campaign does not have and never had anyone working full-time on it.
In the meantime, those who have experienced and felt the power we have all felt over the last number of years through the water charges movement, and are genuine about achieving real change in our country, can attend a ‘Congress for a New Ireland’ on Saturday, 9th September 2017 to establish exactly how we can work together to achieve more successes, including the future abolition of water charges. Please register to attend the conference here.
The Right2Water campaign attended the Oireachtas committee today where the group said applying a charge for excessive water usage would be a waste of taxpayers’ money.
David Gibney, spokesperson for Right2Water said if the committee were to pursue households for excessive water usage it would cost almost €300 million but the maximum return would be €30 million if you apply the criteria recommended by the Expert Commission on Domestic Public Water Services.’
Mr Gibney pointed out that there is absolutely no evidence to suggest that Irish people are profligate with their water. In fact, he pointed out to the committee that Ireland has among the highest amount of available water in the EU and uses less water than almost any other country in the developed world.
“We have 50 times more water available to us than Israel, and yet we use 25 percent less water than the UK – where they’ve had water charges in place since 1989,” said Mr Gibney.
He added that there was already provision for dealing with excessive water usage through the Water Services Act 2007.
Steve Fitzpatrick, who also answered questions at the committee on behalf of Right2Water highlighted the fact that certain politicians and the government are determined to penalise domestic citizens while ignoring the problem of corporations using excessive amounts of water.
After the Committee hearing, Mr Fitzpatrick said, “It’s clear some parties want to ignore the democratic will of the public where two thirds of the population want water charges scrapped. They are using a false argument about excessive domestic usage to vindicate pushing through their water privatisation agenda without any democratic mandate.”
He added, “If politicians are serious about implementing the ‘polluter pays’ principle, it is our view that the huge industrial wastage of water through distilleries, the pollution of rivers by mega farmers, the free water obtained from our springs by multinational companies like Britvic, and the almost half of all companies who are currently refusing to pay commercial water charges should be addressed.”
Mr Gibney concluded, “Right2Water does not believe that a charge for excessive water usage on domestic households makes sense. The real waste is in the 41 percent of water that is leaked before it gets to your tap – of which only 3 percent is on the household side.
“Yet, instead of investing in upgrading the infrastructure and fixing the leaks, some political parties are persistent in pursuing a fictional line about Irish families wasting water despite their own expert commission saying, ‘The expert commission has not seen any evidence that Ireland has particularly high levels of domestic water usage’, and indeed, Irish people are at the ‘lower end of the spectrum’ when it comes to comparing water usage to other European countries.”
The Right2Water campaign is calling on the two thirds of TD’s elected to the Dail on a mandate for scrapping water charges to quit playing games, stand by their electoral promises and end water charges before they waste any more taxpayers’ money.
Dr Rory Hearne, Researcher & Author of Public Private Partnerships in Ireland: failed experiment or the way forward? (2011)
Fears about the privatisation of public water provision was a central motivating factor behind the Right2Water protest movement but concerns about the privatisation of water are held by many other political and civil society groupings. The recently published Expert Commission on Water Services Report highlighted a widespread public “concern about the potential privatisation of Irish Water”. They stated that public responses to their consultation “expressed concerns that water charges, and metering of domestic households, could eventually lead to privatisation”. The Report notes that this “was sometimes set in the context of wider concerns about privatisation of public services, and the commodification of water”. However, it is widely known that various public and private interests have been preparing the ground for the potential privatisation of the Irish public water system. In this article I provide evidence that should concern all those worried about the potential privatisation of Irish public water. This centres on the on-going implementation of Public Private Partnerships (PPPs) in the provision of public water infrastructure in Ireland. These PPPs are a form of ‘creeping privatisation’ that makes the full privatisation of our public water system a real possibility in the future.
This ‘creeping privatisation’ or ‘outsourcing’ of key parts of the public water infrastructure system has been going on for almost twenty years through PPP projects. These PPPs involve private companies providing, operating and managing water and waste-water treatment plants for some of our largest cities and towns. Worryingly most of these private companies are global corporations leading the way in water privatisation internationally. They now control water and waste-water treatment infrastructure such as the Dublin Ringsend Waste Water Treatment Plant, (treating waste water from over 1.7 million people), the Bray/Shanganagh plant (serving a population of 248,000), Sligo (serving 80,000), Waterford (180,000), and plants in Cork, Tipperary, Offaly, Meath, and Donegal, amongst others.
According to Dail records there are, in fact, 115 of these PPP contracts to Design, Build, Operate and Maintain (DBO), water and waste-water treatment plants across 232 sites in Ireland. The contracts are worth a massive total of €1.4bn and most are set to run up to 2030. It is estimated that Irish Water (previously the local authorities) are paying out €123 million per annum to the private companies to cover the operation/maintenance/repayment costs of these PPP contracts.
Drawing on figures from the Comptroller and Auditor General, Dail records, and information gathered from the websites of private water companies, I have compiled information on the twenty largest water/waste-water treatment plant PPPs in Ireland. The value of these, at €680 million, is almost half the value of all the water/waste-water PPPs. This information is presented in the table below[i].
Table 1 Details of the 20 largest Water/WasteWater PPP Projects in Ireland, 2015
Public Private Partnerships introduced in 1999 in Ireland
PPPs were first introduced in the delivery of public infrastructure (schools, motorways, social housing, water treatment plants etc) in Ireland by the Fianna Fail and the PD Government in 1999, following lobbying by IBEC and the Construction Industry Federation. Pilot PPP projects were developed in the delivery of motorways (toll roads), schools, rail (the LUAS), and water and waste-water treatment plants. New PPPs were developed in these sectors through the early 2000s and extended to include social housing regeneration projects.
PPPs are different from public delivery of infrastructure. For example, in 'traditional' public water and waste-water service and infrastructure delivery, treatment plants would be designed and planned in-house within the local authority (and if they required additional finance, also by the Department of Environment), and then either directly built by public labour or, in recent decades, contracted out to a private company to build. Then the infrastructure was taken and managed by the local authority. By contrast DBO (or DBOM as they are also referred to) PPPs involve the ‘outsourcing’ of the entire process, including design, operation and maintenance of the infrastructure, to commercial private water corporations, for contracts usually lasting twenty years. Some PPPs also include the use of private finance to fund the infrastructure (referred to as DBOF PPPs).
In the various National Development Plans in the 2000s Irish governments outlined how they aimed to increase PPPs to 15 per cent of all public capital investment by the end of that decade. In 2012 the C & AG showed that PPPs to the value of almost €8bn had been developed in Ireland, mainly in Schools, Roads and Water/Waste water sectors (figures show that, excluding water/waste water, €2.3bn has been spent on PPPs, and there is €4.1bn outstanding in commitments to be paid to PPP projects).
Ten ways PPPs are privatisation
A major issue of debate and concern about PPPs has been their role in the privatisation of public infrastructure and services. Governments, civil servants and local authorities have been arguing from the start of PPPs that they are not a form of privatisation as there is no ‘asset transfer’ or disposal of assets. For example the DOE stated in 2010 that, “A fundamental principle of DBO’s in the water services sector is that, while the infrastructure is operated under contract to the water services authority, it remains at all times in the authority’s ownership.”
However, the evidence and research (detailed in my book Public Private Partnerships in Ireland, which was based on my PhD research) into the practical outcomes of PPPs in Ireland and across the world proves conclusively that they are a disturbing form of privatisation through outsourcing.
In the early 1990s, particularly in the UK and Latin America, PPPs were promoted by governments, in response to growing public opposition to privatisation, as a new method of public infrastructure and service delivery that did not appear as privatisation. But PPPs, as I will show, actually continue the privatisation and neoliberalisation of public services. They were strongly promoted by New Labour in the UK, and by key international institutions, such as the EU, IMF, OECD and the World Bank.
In the following sections I show ten ways by which PPPs are a form of privatisation of the public water/waste-water system and lead to a further embedding of privatisation, marketisation and commodification processes within the public water/waste-water system.
1.PPPs mean loss of control to global water corporations
Firstly, there is the loss of control over public water and waste-water infrastructure from accountable public agencies (local authorities) to global commercial corporations. Analysis of the data in Table 1 shows that, of these 20 largest PPPs, 90% (18) of the companies were foreign multinationals or Irish subsidiaries of foreign multinationals. This represents a major loss of control over our public water infrastructure. This is nothing short of privatisation. When control over public infrastructure is transferred from the public sector to the private sector, it should be classified as a form of privatisation. The following section provides an overview of these private companies.
Veolia Water Ireland has seven of the largest 20 PPP contracts (35%), at a value of €120 million. These include the two large PPP water treatment plants (Clareville in Limerick and Barrow Abstraction, Kildare) and waste-water plants in Castlebar, Donegal, Mullingar, Wicklow and Dungarvan. But on its website, Veolia explains that it operates many more treatment plants across the country. It states that their “operating contracts provide water-related services for a population equivalent of close to 1,000,000 people in the Republic of Ireland operating more than 30 plants within Ireland, encompassing wastewater, potable water and sludge treatment”. Veolia Water Ireland is a subsidiary of the French multinational company, Veolia, which is the largest private water company in the world. Veolia has global revenue of €24bn and manages 4,245 drinking water plants and 3,300 waste-water treatment plants globally. It also has the contract to operate the LUAS and various private waste collection services. Veolia Water (Ireland) also has non-domestic water metering and billing contracts with a number of county councils.
The company with the next largest share of these 20 largest PPP contracts was Aecom, with five projects (25% of the projects - valued at €99million) including the Balbriggan /Skerries Wastewater Treatment plant, the Rush/Lusk Wastewater Treatment plant and the South Tipperary treatment plant. Aecom (formerly Earthtech Irl) is a multi-billion (revenue of €17.4bn) US multinational engineering corporation. But it combines financing, design, building, and, as it states a “global network of experts delivering water and energy, building iconic skyscrapers, planning new cities, restoring damaged environments, asset management, cyber security operations, education, healthcare, transport.” They are a complete government infrastructure delivery corporation. Aecom has approximately 95,000 employees and is listed on the new York stock exchange.
Next up is Celtic Anglian Water (CAW), which has three projects and operates the largest waste-water treatment plant in the country, the Ringsend Wastewater Treatment Works, which provides secondary and tertiary treatment for a population equivalent of 1,700,000. The contract value is €250 million and runs up to 2022. In 2001 CAW was the first private company to be awarded a contract for the operation and maintenance of a Water Treatment Plant in the Republic of Ireland. It also runs the Galway County Non-Domestic Metering System (including debt recovery, billing etc) – a contract valued at €10.8 million running up to 2018. CAW is a subsidiary company of Anglian Water Group, one of the largest private water companies in England where water is privatised. Anglian made an operating profit in the UK of £452.6 million for 2014/15.
2.PPPs involve privatisation of policy making
Secondly, PPPs involve the loss of control over public infrastructure and governance through the privatization (outsourcing) of the process of policy making including the macro-level analysis of the effectiveness and appropriateness of PPPs as a general policy, the design of frameworks for implementation, and down to the micro-level assessment of Value for Money for individual projects and the design and planning of the infrastructure. One of the major private companies given responsibility for such processes by the Irish state is PriceWaterHouseCooper (PWC) ‘consultants’, one of the big four global auditing, procurement and accountancy firms. PWC have played a central role in advising Irish government Departments to develop PPPs in water and waste water infrastructure. The Department of Finance appointed PWC in 2001 to review the effectiveness of the PPP method and, unsurprisingly, they recommended further expanding the PPP programme. They also outlined the policy framework required to increase the rate of implementation of PPPs in Ireland. PWC were also commissioned by the Department of the Environment in 2001 to develop a framework for PPPs to be advanced in Ireland in the roads, water and waste sectors. PWC also carried out the report in November 2011 for the Department of Environment which advised how Irish Water should be set up (for which PWC were paid a tidy sum of €180,000). They are also involved in evaluating PPP projects on behalf of local authorities and government Departments to assess if they are ‘value for money’ (VFM). The result of their Value for Money (VFM) Public Sector Benchmark calculation provides the justification if infrastructure is to be procured through PPPs or the public sector method. PWC have also been involved in bidding for water privatization across the world, most notoriously in India (where the World Bank was found to have unethically supported them).
There is a clear conflict of interest here as the same private company which promotes PPPs internationally and is set to gain financially from the expansion of PPPs is being used by government and local authorities to advise on the continued use of PPPs and crucially, assess if PPPs provide VFM or not.
3.No meaningful ownership or control held by the state in PPPs
Thirdly, while the state claims they still have the ‘ownership’ of the infrastructure, the reality of PPPs is that when the infrastructure is managed, maintained and operated by the private sector in long term contracts, there is in fact no meaningful ownership or control by the state. The private sector controls the day-to-day operation and thus has control over the knowledge and management of the infrastructure, so in terms of real control and power – the private operator holds it.
This lack of control and the embedding of permanent private control and profiteering is shown by the experience of the Dublin (Ringsend) waste-water treatment plant. Local residents have suffered persistent foul odour problems emanating from the plant due to inadequate design and equipment failure in the plant. There has been an on-going dispute between the responsible local authority, Dublin City Council, and the private operator, Celtic Anglian Water (CAW), over the extent of the problems and who should pay for them. CAW argued that DCC would have to pay for any changes as they would be outside the PPP contract. In the end, DCC paid CAW €35million to address the problem.
This contradicts the theory of PPPs where they are supposed to provide a cost benefit to the state by transferring the cost of dealing with unforseen problems such as this (referred to as ‘risk’) over to the private sector. This case shows that as the private company now controls the project and thus has the core knowledge and skills, it can define the issue, the problem and the cost of rectifying it. It can effectively hold the state to ransom and force the state to pay significant additional amounts to get any changes made. That is unless the state is prepared to sanction and fine the company, or at least stand up to and demand lower costs from it. But the Irish state has shown that it is unwilling to do this because it doesn’t want to stop future companies engaging in PPPs. Its part of the price of having a ‘business friendly economy’. The state (the Irish public) keeps picking up the tab and subsidising the private corporations.
4.When upgrading of infrastructure required PPP contracts will continue to go to private operators
Fourthly, what will happen in future years when upgrading, or capacity extension is required in the treatment plants, or new measures to meet new environmental quality standards outside of the original contract are required and thus renegotiation of the PPP contracts? The private operator will hold the control and knowledge and will be able to charge the state significant premiums to make changes. The case of the West-Link toll road demonstrates this point. When the public sector required changes to the service, it had to pay over half a billion euro to purchase the PPP contract from the private operator so that it could undertake the required changes. Furthermore, who is likely to get the new contracts for upgrading infrastructure? A new private company or the state itself? The problem with the PPPs is that the private operator effectively holds a form of monopoly position and thus it is likely to get it. The is shown by the fact that CAW was awarded a further DBOM contract to upgrade the Sligo Plant by Irish Water in April this year.
5.PPPs make private outsourcing of our public water/waste water infrastructure permanent and full privatisation more likely
Fifthly, what will happen when it comes to the end of the PPP contract life in fifteen to twenty years time? Will the plants, as the state claims, revert back to public ownership when the contract ends? This is very unlikely if we continue down the PPP outsourcing path when we have run down and further diminished the capacity of local authorities to manage our water and waste water infrastructure. It is more likely to stay in the control of private operators into perpetuity. This shows how PPPs make private outsourcing of our public water/waste water infrastructure permanent and thus are likely to lead to a continued and deepening privatisation and contracting out.
This is also shown by the fact that DBO PPPs appear to be the only option being made available to (and preferred by) local authorities (now Irish Water) and there is no longer a public sector alternative being made available. Thus PPP privatisation is the only option for upgrading and providing new water services infrastructure. The 2010 Department of Environment Report on the Value for Money for Review of the Water Services Investment Programme 2007-2009, states this explicitly:
“in the case of water services infrastructure, the DBO model is the preferred procurement route in the case of works involving the provision of treatment plants subject to completion”. This review also recommends deepening private involvement further by involving private finance “in the future in relation to some large scale projects”.
Therefore existing PPPs lay the foundation for the further development of PPPs in this area as is shown by the trend towards the increased use of PPPs over time. Getting private companies into design, build, operate and manage the water/waste water infrastructure is thus the thin edge of a wedge that opens up the potential for complete privatisation.
The private companies themselves highlight this as they use their existing contracts to try get more PPPs. Veolia explains how they “leverage the experience, stability and geographical coverage” of their existing 20-year PPP contracts in order to “offer present and future customers a cost effective outsourcing solution”. While CAW is even more bold in their ambitions stating that they aim “to become the leading water and waste water service provider in Ireland”. Is that not the complete private corporate takeover of the public water infrastructure system?
Ultimately these DBO PPPs make it even more straightforward and easier (and thus more likely) to privatise water/waste water infrastructure in the future because the only ‘public’ aspect remaining to be privatised is the official ‘ownership’ of the infrastructure. It is only a Minister’s signature away from the sale and complete transfer to the private sector.
6.PPPs ‘commodify’ and ‘marketise’ public infrastructure
Sixth, PPPs also ‘commodify’ and ‘marketise’ this public infrastructure by creating a new ‘market’ in the provision of public water/waste-water infrastructure, through the conversion of the entire process of the provision of public water/waste-water infrastructure into a ‘contract’ which is a tradeable ‘asset’ or ‘commodity.’ They thus open up public infrastructure and assets as income generating opportunities for the private companies.
For example, EPS, one of the Irish private water companies that has two waste-water PPP contracts (and an annual turnover nearing €70 million) explains how they have been “at the forefront of the development of the Irish water market through successive National Development Plan cycles” and they “have nurtured a market leading share of the Design-Build-Operate (DBO) market in Ireland”. Similarly Celtic Anglian Water refer to the public infrastructure as an ‘asset’. CAW explains that it operates “in the development of water and wastewater assets - providing water supply, wastewater treatment, plant operation and maintenance services”. So these private water companies are quite clear how PPPs are a ‘marketisation’ or market-creating process of commodifying public water/waste water infrastructure.
And make no mistake about it, water/waste-water infrastructure provision is a massive potential market. There are approximately 973 public water supplies and approximately 500 waste water treatment plants in Ireland. That means that based on 115 DBO contracts, approximately 20% of our waste water treatment plants are already part privatised/outsourced. And given the need to upgrade treatment plants to meet environmental quality standards major investment is required into the future in treatment plants. You can also add upgrades and improvements required for the entire water treatment network on top of that. We can see therefore how this whole area is a potentially very large and lucrative future market for the private water companies. And this requirement to upgrade this infrastructure such as water and waste water treatment plants is being eyed up as a big opportunity for profit by many companies. The Irish Times reported earlier this year that “The Denis O’Brien-owned industrial services group Actavo is likely to seek more work from State utility Irish Water… as the State utility moved ahead with plans to renew the Republic’s water treatment and supply systems, Actavo would bid for contracts to work on the various projects that this is likely to involve”.
7. Water infrastructure becomes commodities traded on financial markets-no democracy
Seventh, further marketization takes place as the PPP contracts themselves are a tradeable commodity on financial markets. PPP contracts and companies are bought and sold for profit all the time on financial markets and international asset markets, between various private equity investors, hedge funds, and corporations. They are often loaded with debt from other companies and then ‘asset sweating’ is undertaken whereby the new owners (financial speculators) don’t invest in the project but extract as much profit as possible (through, as I later explain, reducing quality of service, workers pay and conditions, increasing user charges, increasing the cost charged to the state etc).
As I wrote in my book this also has implications for the democratic provision and accountability of public services: "The process of buying and selling public assets as internationally traded commodities could have significant implications not just for the provision of public services and infrastructure, but for the democratic control by national governments over the services for which they have the responsibility to provide to their public."
8.PPPs do not provide Value for Money as profits extracted by private sector
Eighth, PPPs are also a deeper form of privatisation than simple public asset sales because they involve the on-going subsidisation of private corporations by the state and the public (through contract fees, tolls, user charges) for decades through the PPP contracts. Thus PPPs provide huge profits to the private corporations. Take Veolia Water Ireland, for example, it increased its revenue from €36.6 million in 2014 to €40.3 million in 2015. Their profit was €0.8 million in 2015 and €1.2 million in 2014. Financial data for CAW shows that in 2015 it had €30.1 million turnover and made €4.4 million in profit (in 2014 it made €6.6mil in profit). That’s just two companies and based on Dail figures private water/waste water companies are receiving a revenue of at least €123 million a year from the Irish tax payer.
This profit extraction is a key part of the explanation of why PPPs are actually more expensive than traditional delivery. How can they provide VFM when huge profits are being extracted? This is a significant additional cost that is not included or measured in the VFM calculations. This ‘asset’ grab by private corporations is a loss of resources and value for the Irish public as they have to pay for this profit, which does not exist to the same extent in traditional public procurement (provision) of water/waste-water infrastructure.
Dr. Vandana Shiva has written about this in relation to the privatisation of Delhi’s water supply in India through a PPP water treatment plant operated by Ondeo Degremont (a subsidiary of French company Suez Lyonnaise des Eaux Water Division—the water giant of the world):
“Suez is not bringing in private foreign investment. It is appropriating public investment. Public-private partnerships are, in effect, private appropriation of public investment. But the financial costs are not the highest costs. The real costs are social and ecological”. Interestingly, Ondeo Degremont constructed (and is possibly still operating) Corks largest waste-water treatment plant.
The Comptroller and Auditor General has found that PPPs are 8-13% more expensive than traditional public procurement. Reeves (2011) found that for a number of water based PPPs the initial estimation of VFM under PPP was revised downwards from 9.5 per cent to 0.8 per cent (of whole-life cost under traditional procurement) following consultation with stakeholders including trade unions. In another case Reeves (2013) shows that after consultation, estimated VFM was revised from 2.3 per cent in favour of PPP to 2.25 per cent in favour of traditional procurement. These revisions were attributable to a number of shortcomings in the original VFM analyses including the omission of relevant costs including: (i) costs incurred following the re-deployment of existing labour if PPP was adopted; (ii) transaction costs; (iii) and the costs of monitoring and supervising the PPP contract over the 20 year period.
There is another democratic deficit at the heart of PPPs which links to their inability to prove they provide Value for Money. The Public Sector Benchmark (PSB) VFM calculation (often carried out by pro-PPP companies like PWC) is not available for public analysis due to ‘commercial sensitivity’. Yet this is the key evidence that justifies PPPs- but we cannot see it. Therefore there is no evidenced way of showing these projects actually are value for money.
9. PPPs involve reduction in worker’s pay, conditions and rights.
The ninth way in which PPPs are a form of privatization is the reduction in worker’s pay, conditions and rights. A key method by which PPPs are used to ‘reduce’ costs is through such a reduction in the conditions and pay of employees. As with other forms of privatisation and outsourcing PPPs have been associated with a degrading of worker’s conditions and, in particular, a tendency to refuse trade union recognition. For example, in 2013 it was reported that an employee in the Shanganagh PPP Waste Water Treatment Plant was dismissed 'for trade union organised activity’. Workers there organised a strike as the employers refused to recognise the trade union and there were other issues around fair pay for hours and shifts worked. The private operator of the PPP plant is SDD Shanganagh Water Treatment Ltd, which is a joint venture between the Irish construction company, Sisk, and Spanish companies Dragados and Drace. However, the workers were, in fact, employed by a separate subcontracted agency. Thus we see how PPPs further the process of the casualisation and downgrading of worker’s conditions and undermine and reduce hard-fought rights and conditions of public sector employees such as trade union recognition and collective bargaining. Through PPPs it is the state (which, of course, should be protecting and promoting worker’s rights) that is playing a central role in driving down worker’s conditions.
10.PPPs support water charges and furthers privatisation
The tenth and final way PPPs support privatisation is their promotion and support for user charges such as water charges and the way in which this furthers the privatisation process within the water system.
The introduction of user fees/charges for public services has been central to the neoliberal policy agenda which is about convincing the public to accept that they have to pay for public services through user fees, even if they were previously paid for from general taxation and were free at the point of delivery.
PPPs have already facilitated the introduction and intensification of this policy through the introduction of user fees for toll roads. The Irish state has supported this process of profiting from PPPs. In one of the interviews in my research a senior civil servant working in a Central Government PPP unit told me that ‘it has to be a quid pro-quo that the private sector gets profit, while it might cost more for the user. There has to be profit, otherwise it doesn’t work.’
Indeed, the Irish government has promoted the ‘unlimited’ potential for the development of PPPs funded by user fees. Assistant Secretary of the Department of the Taoiseach, Mary Doyle, speaking at the 3rd Annual PPP Policy Forum (2007) explained that, ‘since Ireland is the home of the entrepreneur there is no limit on any projects that can be undertaken by PPP where they are funded entirely by using charges’. The roads, schools, waste and water/waste-water sectors demonstrate how, because the private sector required an income stream (profit) as the basis of its involvement, the use of PPPs necessitated, the commercialisation of, and private-capital control over, public resources and assets. As a representative of the Department of Environment explained to me in an interview:
“The private sector may be able to generate additional revenues from third parties, thereby reducing the cost of any public-sector subvention required. Additional revenue may be generated through the use of spare capacity or the disposal of surplus assets”
Through the application of these ‘income-generating mechanisms’, PPPs facilitate the implementation of a central neoliberal policy objective of creating ‘unlimited’ market opportunities for the private sector within public governance, services and infrastructure (Bourdieu, 1998; Brenner and Theodore, 2002; Harvey, 2005; Whitfield, 2006).
And, as we see more and more PPP contracts made by Irish water –this increases the financial commitment to PPP companies and, thus in the future, an argument could be made for introducing and/or increasing water charges in order to pay for these contracts with PPP companies. A ‘revenue stream’ will be required to pay the private operators. Thus PPPs open up the argument and requirement for the introduction/increase of water charges and the introduction of water charges opens up, and provides, the revenue stream to pay private operators. PPPs and water charges are, therefore, a mutually reinforcing process as the introduction of one leads to arguments in favour of the necessity of the introduction of the other. And they both provide key steps towards the further privatisation of the Irish public water system.
Overall then we can see from the evidence presented here the dangerous amount of power and influence that global corporations are being given through PPP projects in the water/waste-water infrastructure in Ireland, and the way in which the state is actively facilitating this neoliberalisation of water governance. Private corporations, facilitated by the Irish state, are imposing their corporate model as the future for government and public service and infrastructure delivery. It is a dystopian future for citizens whereby private corporations will provide and profit from (and speculatively trade on financial markets) all aspects of government including public services and infrastructure – through highly profitable contracts paid for by nation states and local government. It is the ultimate privatisation and commodification of all public goods and infrastructure. This is the neoliberal project laid bare. What David Harvey describes as “accumulation by dispossession.” It is about taking the resources (and assets) away from state public services and infrastructure which benefit the working and middle classes and instead funnelling them to the wealthy and private corporations. PPPs are playing a strategic role in this process of capturing public services and assets for private investment and wealth accumulation. The global and EU trade liberalisation rules and new treaties such as CETA and TTIP also support PPPs by further obliging national governments to ‘liberalise’ markets for services and infrastructure on a global scale.
An excellent article critiquing the impact of PPPs and water privatisation in India describes the process of privatisation through PPPs which can also be applied to the Irish case:
“But whatever the nuances, although formal ownership continues to nominally vest with public entities, all these “public-private partnerships” are undoubtedly different forms of privatization, with public bodies ceding varying degrees of control over quantity, quality, coverage and pricing to corporate bodies. Since the private party is in the business for profit, water in such privatized utilities is always viewed, valued and managed in terms of its price. Whatever the specific form of involvement of private players, water moves from being a common good to a commodity, with all that this implies”.
The evidence shows, therefore, that PPPs are a complex form of intensive privatization, marketization and commodification of the Irish public water and waste-water infrastructure system. Private-sector involvement has not guaranteed a better-quality service and additionally, the private operator’s profit maximisation requirements has resulted in the running down of service quality, workers conditions and turning the assets into commodities to be profited from. They ensure big profits for global water and ‘governance/development’ corporations and financial investors and rising costs and ineffective services for public service users, and the erosion of workers’ rights. Thus they contribute to the exacerbation of economic inequality.
The values and ideals of social rights that inform public-sector values and priorities are undermined by the market ethos of PPP policy making. Under this process, public service users are converted into ‘clients’ and ‘consumers’ and a ‘revenue stream’. All of this evidence shows how the pursuit of PPPs are an ideological policy. The evidence does not support the use of PPPs in public water and waste water infrastructure provision. They are being pursued principally because of policy maker’s adherence to (and belief in) neoliberal privatisiation policies rather than any evidence based justification.
In recent years governments and local authorities across the world, in response to the failure of water privatisation such as increased water charges and poor service delivery by the private companies, and under pressure from citizen campaigns asserting the human right to water, have started a process of ‘remunicipalisation’ – taking water and waste-water services back into public management. Our public water future: The global experience with remunicipalisation, a book published last year shows the growing wave of cities putting water back under public control – with 235 cases of water remunicipalisation in 37 countries, affecting over 100 million people, between 2000 and 2015. The number of cases doubled in the 2010-2015 period compared with 2000-2010. France, a country that spearheaded water privatisation and PPPs has lead the way with 94 cases of remunicipalisation. Also recently a large majority of the Barcelona City Council voted to end the private management of water and support the remunicipalisation of the water service in of Barcelona. Barcelona En Comu, the new citizens movement who holds the Mayorality of Barcelona, promoted the measure as it was one of the most popular among citizens in their participatory process carried out to define the Municipal Action Plan (the plan that guides city policy). Barcelona En Comú, believes that water is a human right, a basic service and a common good that should be under public, democratic control.
Slovenia also recently amended its constitution to make access to drinkable water a fundamental right for all citizens and stop it being commercialised.
The new article in the constitution reads that “Water resources represent a public good that is managed by the state. Water resources are primary and durably used to supply citizens with potable water and households with water and, in this sense, are not a market commodity.”
It was reported in the Guardian that the Slovenian Prime Minister encouraged the change because: people should “protect water – the 21st century’s liquid gold – at the highest legal level”…and that “Slovenian water has very good quality and, because of its value, in the future it will certainly be the target of foreign countries and international corporations’ appetites…As it will gradually become a more valuable commodity in the future, pressure over it will increase and we must not give in”. Slovenia is the first European Union country to include the right to water in its constitution, while 15 other countries across the world had already done so.
The on-going implementation of PPPs shows that the Irish public water system has already been part-privatised/outsourced and without a change of direction and policy it is in danger of being further marketised and privatised. This lends support to the case being made for a Referendum that could enshrine the Irish water system as a public good and human right in the Constitution and thus provide a constitutional guarantee on the public ownership of our water. The Expert Commission found that the most commonly expressed preferred method for confirming Irish Water in public ownership “was by a constitutional amendment”, and that the provision for a plebiscite, as provided for in the existing legislation “did not provide the necessary level of guarantee.”
Right2Water has proposed the following wording that could be inserted into the Constitution to enshrine this:
“The Government shall be collectively responsible for the protection, management and maintenance of the public water system. The Government shall ensure in the public interest that this resource remains in public ownership and management.”
The passing of such a referendum is an essential step in stopping the full privatisation of our public water system and, in particular, would put a halt to the back door creeping privatisation of through PPPs in water and waste-water infrastructure and support the remunicipalisation (taking back into public control) of the existing PPP water projects.
Sources:Hearne, R. (2011) Public Private Partnerships in Ireland: failed experiment or the way forward? Manchester University Press Available at: http://www.academia.edu/30178583/Trends_in_historical_development_of_the_Irish_state_public_services_and_infrastructure Hearne (2012) http://politico.ie/society/public-private-partnerships-ireland-failed-experiment-or-way-forward Hearne (2009) Origins, Development and Outcomes of Public Private Partnerships in Ireland: The Case of PPPs in Social Housing Regeneration Dr Rory Hearne http://www.combatpoverty.ie/publications/workingpapers/2009-07_WP_PPPsIn... Alan Kelly, 28th April 2015, Dail Eireann, https://www.kildarestreet.com/wrans/?id=2015-04-28a.1222 Comptroller and Auditor General (2016) Briefing Note on PPPs https://www.oireachtas.ie/parliament/media/committees/pac/correspondence/2016meetings/meeting4-21072016/PAC32-R-42-B-(B)---Briefing-Note-on-PPPs-from-CAG.pdf Comptroller and Auditor General (2011) Annual Report http://www.audgen.gov.ie/documents/annualreports/2011/report/en/Chapter6_01.pdf Irish Times (2008) Report recommends upgrade of Ringsend waste plant http://www.irishtimes.com/news/report-recommends-upgrade-of-ringsend-was... Hell Bent on Water Privatisatin in Dehli (http://newsclick.in/india/hell-bent-water-privatization-delhi) Oireachtas (2013) Public Private Partnerships Data, July 2013, http://oireachtasdebates.oireachtas.ie/Debates%20Authoring/DebatesWebPack.nsf/takes/dail2013071600112 Reeves, E. (2014) Public Capital Investment and Public Private Partnerships in Ireland 2000-2014: A Review of the Issues and Performance https://www.socialjustice.ie/sites/default/files/attach/policy-issue-article/4004/2014-11-18-eoinreeves-investmentandppps.pdf Shiva, V. (2006) RESISTING WATER PRIVATISATION, BUILDING WATER DEMOCRACY, http://www.globalternative.org/downloads/shiva-water.pdf The 2010 Department of Environment Report on the Value for Money for Review of the Water Services Investment Programme 2007-2009 The Guardian (2016) Slovenia Adds Water to Constitution https://www.theguardian.com/environment/2016/nov/18/slovenia-adds-water-...
[i] I have not, as of yet, been able to gather data on the other 95 water/waste-water DBO PPP contracts because they are of a smaller individual value and have been undertaken directly by local authorities with little input from the Department of Environment. Therefore the C & AG does not provide the same level of detail on these projects.
The publication of the report by the ‘Expert Commission’ on water has vindicated everything the Right2Water campaign has been saying for almost three years. Water should be paid for through general taxation which is the most socially equitable, economically beneficial and environmentally sound.
Frustratingly, had an arrogant government and media listened to our campaign and people in communities across this country, we would not have wasted €1 billion on water meters and establishing Irish Water as a commercial entity. Even Engineers Ireland warned the government back in 2010 that bringing in water charges would mean "spending €1bn of money we don’t have on something we don’t need.”
The key findings of the report include:
Importantly, the Commission states that because the funding of domestic water should come from general taxation in public ownership, it will no longer achieve the ‘off balance sheet’ exercise. This will reduce or potentially eliminate the need for ‘borrowing’ which inevitably leads to debt and the servicing of that debt by households – diverting money directly into the financial services sector instead of the water infrastructure.
The report says that there are 7% of households using six times more water than the average household, although Irish Water have indicated that customer-side leaks contribute to this anomaly. However, it is estimated that up to 97% of leaks do not come from the household side of the infrastructure and the report states “it should be noted that water leaks waste not only water but also energy and public money.” Therefore, it makes sense to divert all money from the domestic metering programme towards a district metering programme as recommended in the report.
The ‘Expert Commission” has suggested that where water is used at a level above what is necessary for normal domestic purposes, that the user should pay for this through tariffs. The suggestion is that an allowance is determined and this allowance could be “regularly reviewed and, if necessary, adjusted to reflect changes in water use patterns in Ireland.”
As stated earlier, the evidence provided shows that Irish people are not profligate with their water and in fact use less water than almost any other country in the Europe despite having more water available to us.
There are also very serious concerns about any allowances being eroded over time, like bin charges.
Therefore, continuing an expensive water metering programme with the added costs of highly paid consultants, advertising, postage, call centres and other costs, for no conservational benefit would be an extraordinary waste of valuable resources, costing up to €300m per year and returning potentially nothing.
The government and the Oireachtas sub-committee should accept the will of the electorate – two thirds of whom voted for parties and individuals who promised abolition. This is now also backed up by an Irish Times MRBI poll which also says two thirds of the population want to scrap the charges.
With all of this in mind, it is essential that water charges are abolished outright.
In addressing the funding of water services, the Commission suggests that the funding requirements which were to be allocated through domestic water charges are now made through the “exchequer rather than by householders directly.”
The current government and the previous government must take responsibility for the leakages and deteriorated infrastructure that Irish people currently have to rely on. In the last three Budget’s alone, tax cuts of €2.9 billion have been implemented. The beneficiaries of those tax cuts are the top 20% of earners and also employers. In ensuring our water system is fit for purpose, the government should immediately:
It is felt that the majority of the Irish media failed in their duty to facilitate an honest and democratic debate about the Irish government’s water policy.
While a number of trade unions, political representatives and community groups were attempting to raise real and valid issues in relation to water charges and their implications locally, nationally and internationally, a compliant media refused to accept the arguments put forward and even refused to allow a debate to ensue.
Even now, faced with all of the evidence which shows that Ireland is a water rich country and that Irish people do not waste water, many media outlets refuse to accept the fact that water charges are economically inefficient, they’re environmentally unsound and socially destructive.
Furthermore, protesters were and continue to be demonised and vilified for their stance on water charges, yet this report now vindicates what they have said all along: that paying for water through progressive general taxation is the fairest and most equitable method possible.
As Maude Barlow, environmentalist and expert on water from the Blue Planet Project and the Council of Canadians said, “The Irish system of paying for water and sanitation services through progressive taxation and non-domestic user fees is an exemplary model of fair, equitable and sustainable service delivery for the entire world.”
Right2Water remains committed to its stated objective of the abolition of water charges and Irish Water.
Next week, on Wednesday, 9th November, Joan Collins TD will move a Bill to hold a referendum to insert into the Constitution an amendment which would rule out any future privatisation of water, or water services.
Forty TDs have signed the Bill including Independents4Change, Sinn Fein, AAA/PBP and a number of independent TD’s. A number of others including the Green Party, the Labour Party and the Social Democrats have said publicly that they would support a referendum on public ownership of our water, so the Bill has a real chance of passing.
Put simply, this Bill will only pass if supported by Fianna Fail. Therefore we are asking everybody concerned about the ownership of our water to use every means they can to contact their local TDs, especially Fianna Fail, by email, letter, phone call or direct lobbying and demand they support the Bill.
We expect the Government (and possibly Fianna Fail) to argue that they are waiting for the Expert Commission on Domestic Water Charges to present their report to the Oireachtas – but public ownership of water is not in the Terms of Reference for the Commission, so this is a smokescreen.
The government deliberately omitted public ownership from the terms of reference in full knowledge that the Commission might actually make a recommendation to enshrine ownership in the hands of the public. This is something they clearly don’t want.
At this very moment in time, any government, including the current one, could legislate to sell off our public water system. Furthermore, even if a government did not want to sell off our water, the EU, IMF or ECB could force the sale in the future – like they did in Greece and Portugal – so we have to protect our vital public water system now!
The devastating impacts of water privatization have been felt all around the world. In the UK, one in four people are now experiencing water poverty. In the US, Rome and parts of France, tens of thousands are having their water shut off. We can prevent much of this by putting ownership of our water in the Constitution.
There are no TD’s in the Dail, even in Fine Gael, who will come out and argue openly for privatization. But can you take their word on this? If they don’t want water privatization, they can prove it by simply supporting this Bill next Wednesday.
Here are the details of Fianna Fail TD’s:
FIANNA FAIL TD LISTINGS
Kevin O Keefe
Cork North Central
Cork North West
Cork North West
Cork South Central
Cork South Central
Cork South West
Margaret Murphy O’Mahony
074 9373131/074 9177282
Pat The Cope Gallagher
074 95 21364
Dublin Bay North
Dublin Bay South
Jim O Callaghan
Darragh O Brien
Dublin South West
Eamon O Cuiv
Frank O Rourke
Fiona O Loughlin
Willie O Dea
061 454488/ 061 454522
071 963 3000
071 9197903/ 071 9302537
Marc Mac Sharry