Irish Water: How to invent a public service scandal

An extraordinary thing happened in the media over the last 24 hours as the latest Irish Water ‘scandal’ came and, possibly, went.

We saw, not for the first time, that when a prominent economist makes a statement the media does not necessarily feel a duty to question his assertions. ESRI economist John Fitzgerald was widely quoted as saying just 1,700 staff were needed to provide Ireland’s water services. No source for, or explanation of, that figure was given or sought by the journalists who reported the story. The question was only put to Professor Fitzgerald after a trade union analyst raised it on RTÉ’s Prime Time, more than 12 hours after the story broke. The professor answered that he was “not sticking to the figure” on which the entire story was based. He wasn’t pressed on the matter.

So, nobody is standing over the assertion that just 1,700 staff are needed, and that the rest are surplus – not even Professor Fitzgerald. Yet this morning (Tuesday) it is received wisdom across the Irish media.

Once the 1,700 figure is undermined, it is hard to demonstrate that “between €1 billion and €2 billion” (Professor Fitzgerald’s original assertion) in savings have been foregone. But nobody interrogated this assertion in any case. Obvious questions might have been: “Which is it: €1 billion or €2 billion?” (there’s a substantial difference) or “what will determine whether it will be €1 billion or €2 billion?” Again, Professor Fitzgerald wasn’t asked. And, again, he backtracked during his Prime Time appearance. So, the supposed savings might be €1 billion, €2 billion, something in between, or another figure altogether.

In the same interview Professor Fitzgerald instead introduced the idea that savings of 20% should be made in the first five years of Irish Water’s operation. Up to then, the public had been left with the impression that potential/supposed savings should already have been delivered and were now irrevocably lost. Only Irish Water itself had made the point that savings (from staffing and other costs) would be substantial – €2 billion – but would accrue over time and following the installation of meters and badly-needed investment in infrastructure (ostensibly one of the main reasons for establishing Irish Water in the first place).

The apparent lack of any ESRI research on the issue may help explain the confusion (to those, at least, who want an explanation). Professor Fitzgerald has done research on Scottish Water (which is not directly comparable to Irish Water), but a look at the ESRI website suggests that neither he nor his ESRI colleagues appear to have completed any actual research on the staffing or cost of Irish water services. Perhaps it’s in the pipeline.

Finally, the arguments put forward throughout yesterday and this morning – and reported largely without question – assume that any alternative arrangement would be zero-cost. In fact, any alternative to the Irish Water/local government approach would involve costs to the exchequer:

  • If only 1,700 local authority staff were transferred to Irish Water (or allocated to water duties) the remainder would remain in local authorities and would be reallocated to other duties (compulsory redundancies are precluded by the Haddington Road agreement which, with its predecessor, has delivered billions in savings including through an 18% reduction in local authority staffing).
  • If all local authority water staff were transferred to Irish Water, the laws governing staff transfers (Transfer of Undertakings Regulations) would come into play.
  • Even if the staff concerned were made redundant, the exchequer would carry the burden of redundancy costs and subsequent social welfare payments.
  • If the status quo remained (ie, local authorities continued to own the assets and directly provide water services) taxpayers would not benefit from a substantial reduction in the national debt of almost 2% – or around €3 billion – which will help Ireland’s debt sustainability and potentially have a positive effect on the interest rates paid on our national debt.

In short, yesterday’s media maelstrom shed no light on the amount of savings – actual, potential or foregone – related to the establishment of Irish Water or its ‘service level agreements’ with local authorities. And we have no real idea of what the optimum staffing level for Irish water services is now or in the future. But, just months before domestic water bills appear through our letter boxes for the first time, a bewildered public is left with the firm impression that our water services are overstaffed and too costly.

Bernard Harbor
Head of communications