Government defends set-up cost of Irish Water

Ministers yesterday moved to defuse the controversy surrounding overstaffing at Irish Water by arguing that the existing 34 water utilities were added to the start-up cost.

Minister for Finance Michael Noonan said if a new water utility was being set up in a mythical country, without any existing services, it would not involve so many staff.

He was responding to comments by Prof John FitzGerald of the Economic and Social Research Institute in The Irish Times where he said that the staff level of 4,300 in Irish Water was far in excess of the 1,700 employees necessary to run the new utility.

He estimated the additional costs associated with overstaffing would be €2 billion and said this made all other problems associated with Irish Water “pale into insignificance”.

Speaking in Brussels yesterday, Mr Noonan said: "If you had a situation in a mythical country where there was no water service and you came to set it up, you'd set it up with a lot less people, but the extra manpower arises from the fact that 34 different local authorities are now running the water service and to change that across to a national organisation there are obviously additional start-up costs."
He said the additional requirement for up to 1,000 people to put meters in place would be a one-off requirement.

“The point is that there are additional start-up costs and then it peters down over time, and the savings will start coming in strongly in five or six years.”

Noting that Irish Water was being funded through equity from New Era, a division of the NTMA, he said it was a commercial investment that would remain off the balance sheet.

“Of course, the qualifier on that is Irish Water will have to make a commercial return, as it’s being constructed as a commercial entity.”

However, Opposition parties yesterday berated what they said was the lack of efficiency at Irish Water and what they said were the "gold-plated" salaries and contracts offered by the new utility.

'Mess at the core'
Fianna Fáil environment spokesman Barry Cowen said that as each week passed "the mess at the core of the Government's water-reform process becomes increasingly clear".

“This latest development, where senior ESRI analysts completely undermine the efficiency claims from Government, makes a mockery of the central argument that Ministers have been using to support the establishment of the new super-quango.

“It has spent the last three years and some €180 million on a management structure that will simply sit on top of the team that is actually delivering the service.

“The super-quango will comprise up to 500 managers and administrators, none of whom will be the men and women on the front line actually dealing with the public and fixing problems as they arise,” he said.

Eamon Ryan of the Green Party said Irish Water had been a worst possible example of the introduction of a new State service. "The Government has learnt nothing from the establishment of the HSE and have repeated the mistake of duplicating existing local staff in a new centralised service," he said.

“This is going to cost the Irish people €2 billion unless Irish Water can find a way of not employing all the existing staff numbers from every local authority.”