HEADTOHEAD: Seán Murphysays that it's only by measuring and paying for the use of a precious resource that we will learn to value and conserve it, while Martin Croninsays the savings to the State through the reduction of water usage could be cancelled out by the cost of monitoring and administering the scheme.
Yes: Seán Murphy
SUMMER 2008 will be remembered as the wettest season since records began. Why then, at a time of unprecedented rainfall, does it appear that Ireland may be running out of water? Our growing population and industrial needs mean that we now face a supply deficit. A recent report published by Forfás notes that despite significant investment in water capacity in recent times we face every prospect of water shortages in the medium term unless action is taken now.
The conundrum of climate change brings additional challenges. We have also witnessed significant quality problems arising in a number of towns.
Only last week, we heard that Ireland has been found guilty of failing to provide secondary waste-water treatment plants in towns with populations more than 15,000, in line with the relevant EU directive.
The delay in the delivery of these required services has been 18 years and appears, at first instance, to be a direct result of lack of funding leading to inadequate water treatment investment and provision. The outlook is that significant fines will follow.
A guaranteed clean water supply for homes and businesses is as vital a requirement for investment as international perceptions of our skills base and our corporate tax rate are. We risk this at our peril.
For these reasons we must deal with our water needs in a combined approach that incentivises conservation efforts while guaranteeing supplies for the future.
Local authorities are the vital conduit to deliver on this vision, yet they are not being funded at the levels needed to secure our water needs for the future.
National experience shows that it is only by measuring and paying for a service that we establish a responsible attitude towards consumption of that service. Domestic refuse charges have proven very successful and led directly to significantly reduced waste volumes - down 30 per cent in one local authority alone - while encouraging enhanced recycling rates.
In the short term, domestic customers must at the very least be metered in all new housing, even if not charged, so that water consumption can be measured and real conservation quantified for the benefit of all. This should be complemented by a programme of retrofitting subject to an adequate funding regime being established.
An added benefit would be quicker identification of systemic water loss and the enabling of more targeted investment in the core infrastructure, a major issue given that a stunning 43 per cent of treated water is currently lost in transit from reservoir to tap in our nine regional gateways and hub towns.
In the medium term, reasonable thresholds must then be put in place per capita where an allowance of water is allocated free of charge to all. This would allow those who waste water to pay fairly for additional water which they use at their own discretion.
In addition, metering would allow local authorities to ascertain the true cost of domestic water provision and recoup these costs from the exchequer.
Although some claim that domestic users pay indirectly for their water supply through income tax paid to central government, this money is not being passed on to local authorities. As a result the true cost of provision of domestic water services is not being met. In addition, 38.2 per cent of the labour force does not pay any income tax. Everybody needs to be incentivised to conserve water.
Furthermore, where water quality issues have arisen, such as in Ennis and Galway, non-domestic paying customers should be given a 100 per cent rebate for water supplies that are polluted.
A dual-taxation approach involving income tax and consumption-based taxes must be seriously considered by Government. This would balance the cost burden, ensure greater conservation and guarantee adequate investment in the future to assure our water supplies with consequential benefits for all.
We are now awaking to the significant challenges to be faced in the provision of a clean water supply needed to secure future foreign investment, sustain our tourism industry and assure Ireland's international reputation as a clean, green country.
At a time of straitened Government finances, additional revenue streams need to be identified to secure our water needs for the future. In order to address the emerging disparities in charges for business across local authority areas, reasonable, transparent, consolidated charging for water use together with a single fixed charge for all meter-related costs must be implemented as a priority.
Such full-cost recovery must be accompanied by transparent reductions in commercial rates charged to business.
The contents of Forfás's report demands that debate begins on this issue. Let it do so, but ultimately investment will cost money. All users must pay a fair price for excess, discretionary use of one of our most valuable economic resources.
Seán Murphy is director of policy with Chambers Ireland, representing over 13,000 businesses on the island of Ireland.
No: Martin Cronin
IT SEEMS inconceivable, given the inclement weather of recent months, that within five years some of Ireland's most important cities and towns will be facing water service deficits.
Yet this is one of the key findings of a recent report by Forfás that assessed Ireland's ability to meet the future water services needs of enterprise. The report found that water treatment capacity in Athlone, Dublin, Galway and Letterkenny may be insufficient to meet development objectives by 2013. These urban centres, along with Mallow and Wexford, may also experience shortages of waste water treatment capacity within the same period.
Secure and competitively priced water supplies and treatment services are essential for business and particularly for a number of sectors of strategic importance to the Irish economy including the biopharma and food sectors. In general, water charges in Ireland are competitive, although there are significant variations in different parts of the country.
Successive national development plans have invested heavily in water services to meet the needs of our growing economy and population. The current NDP has earmarked more than €4.7 billion for investment in these areas over the lifetime of the plan.
To date the water services investment programme has focused on improving services and capacity levels across the country and ensuring that water quality levels are in line with EU requirements. These objectives are close to being achieved.
The next phase of water service investment will require a more focused strategy that prioritises investment in the gateway and hub towns, to provide the capacities needed for future enterprise and population growth in these centres. A strategic approach to investment in water service infrastructure should not centre solely on investment in water and waste water treatment facilities, it will require a multi-faceted approach that aims to increase the efficiency of the water and waste water systems.
Firstly, we need to adopt a national approach to the delivery of water and waste water services. Currently 34 local authorities are involved in the provision of these services. Moving to a river basin district provision of services would maximise the potential for economies of scale and enable greater strategic planning.
Secondly, reducing the levels of water leakage occurring and encouraging greater water conservation among businesses and domestic users has the potential to reduce the level of capital investment required.
Ireland has relatively high levels of unaccounted for water. On average 43 per cent of treated drinking water is lost through the distribution network, largely via pipe leakage and illegal connections.
In future, no additional Exchequer funds should be allocated for the building of treatment capacity in urban centres until the local authority takes actions to reduce leakages to economically acceptable levels.
The EU Water Framework Directive requires the implementation of the "polluter pays principle" subject to established practice. This means that all water users should pay the full costs for their use of water and waste water services. The Irish Government has secured a derogation from the directive in relation to domestic water users.
Currently, all non-domestic users (eg businesses, farms, schools, hospitals) are required to pay for water and waste water services. Over the last number of years, local authorities have introduced metering and volumetric pricing for these users.
The cost of providing water services to Irish homes is borne by the State, through local government funding rather than a specific water fund. The full cost of providing water services for domestic users needs to be clearly identified to ensure adequate funding is provided by the Exchequer. Once the cost of delivering water services to domestic users has been established, an analysis of the merits of retaining the derogation for domestic water charges can be undertaken to determine how best to fund water provision between users and the Exchequer.
It cannot be assumed that the introduction of domestic water service charges would be the silver bullet required to resolve local and central government water service funding requirements. As witnessed in other jurisdictions, the introduction of domestic water charging involves not only political challenges but technical and economic ones.
The introduction of quotas, which provide for limited free water and waste water services, would also require an expensive national metering installation programme and could be open to significant fraud. Even if the majority of homes would limit their usage to below quota levels the savings to the State through the reduction of usage could be cancelled out by the cost of monitoring and administering the programme.
Finally, a core element of developing a strategic approach to water and waste water provision must be to enhance awareness of the need for water conservation. Greater conversation will help to protect a precious resource, as well as reducing the need for capital investment in new infrastructure.
Martin Cronin is chief executive of Forfás.