Water privatization

Permabear · 24-11-2014 12:18pm #1

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Colm R · 24-11-2014 12:39pm

The opposition to it comes in two forms:

1. The pro water charges side say they will not privitize it because they don't want to be seen to be enabling private industry to make profit on the back of public investment.

2. The anti water charges side argue that what is happening now is the first step to privatization.

Like everything, there is pros and cons. But I don't think it should be privatized fully. For example, with Eircom (and I accept that water is very different to phone lines), this country made a huge mistake in what was privatized. Essentially, 'Telecom Eireann' should have divested itself of being a service provider to end users, and should have taken ownership of the lines and exchanges. Which is essentially what the ESB is now.

As for water, personally I am not against part privatization - but its too soon for that.

What do I think should be publically owned:

- the pipes (every pipe running for a water source to everybodys home and every sewage pipe running as far as it enters the treatment plants should be 100% publicly owned.

- the source of the water - I'm not sure really. Obviously every source of water currently in place is publically owned and perhaps it should remain so. However, if some private company in the future somehow wants to drill a huge well or construct a massive water reservoir, and supply water into the public grid, I would not be against that. The question is, Irish Water pay them for the water they provide or would they be able to bill the customers directly.
I think the former is very likely to happen.
I think the latter might be better for competition but thats highly unlikely.

- However, I think the first part of privitization will happen very soon, and I would doubt anyone would care. And that will be where Irish Water will pay private industry to build and operate waste treatment plants.
I'm not sure if this could be called privatization but I do think its likely to happen. Again however, I would strongly advocate that the pipes leading to the plant would and should remain in public ownership.

mrbrianj · 24-11-2014 1:11pm

Think of the savings and efficiencies a private company implement on IW. If the Energy regulator also did their job, privatisation would be great.

But who would invest? posters on the water charge thread indicate that up to 20 billion need over the next 10 years, but only €160 per year per household. Long term investment of 30 - 40 years would hardly see a return

Permabear · 24-11-2014 1:47pm

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mrbrianj · 24-11-2014 2:34pm

Permabear wrote: »

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But how many require such investment in infrastructure?

I do think the sums required to "fix" the water system are over inflated by IW, but they are the only figures we can go on. Its looking for massive investment in the existing setup but even with commercial rates there is only 1.4 million homes in the country to fund the domestic %.

Look at a similar cost project - Hinkley point nuclear power station. £16 billion 9 years to build (but with an agreed price from UK gov for Megawatts at twice the current market rate for 35 years - yet we are pay less than the original charge for water till 2018). They have a much bigger costumer base than Irish Water will.

24-11-2014 2:36pm

Permabear wrote: »

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It's almost like with some political will the same results could have been achieved without massive profits for investors eh?

FreudianSlippers · 24-11-2014 2:50pm

Permabear wrote: »

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All my money is already in Cocoa

FreudianSlippers · 24-11-2014 2:52pm

Colm R wrote: »

The opposition to it comes in two forms:

1. The pro water charges side say they will not privitize it because they don't want to be seen to be enabling private industry to make profit on the back of public investment.

2. The anti water charges side argue that what is happening now is the first step to privatization.

Like everything, there is pros and cons. But I don't think it should be privatized fully. For example, with Eircom (and I accept that water is very different to phone lines), this country made a huge mistake in what was privatized. Essentially, 'Telecom Eireann' should have divested itself of being a service provider to end users, and should have taken ownership of the lines and exchanges. Which is essentially what the ESB is now.

As for water, personally I am not against part privatization - but its too soon for that.

What do I think should be publically owned:

- the pipes (every pipe running for a water source to everybodys home and every sewage pipe running as far as it enters the treatment plants should be 100% publicly owned.

- the source of the water - I'm not sure really. Obviously every source of water currently in place is publically owned and perhaps it should remain so. However, if some private company in the future somehow wants to drill a huge well or construct a massive water reservoir, and supply water into the public grid, I would not be against that. The question is, Irish Water pay them for the water they provide or would they be able to bill the customers directly.
I think the former is very likely to happen.
I think the latter might be better for competition but thats highly unlikely.

- However, I think the first part of privitization will happen very soon, and I would doubt anyone would care. And that will be where Irish Water will pay private industry to build and operate waste treatment plants.
I'm not sure if this could be called privatization but I do think its likely to happen. Again however, I would strongly advocate that the pipes leading to the plant would and should remain in public ownership.

I was saying something quite similar in another thread:

FreudianSlippers wrote: »

Here's what should have been done: UÉ should have been put to tender as a private utility regulated by the CER under a design–build–finance–operate scheme. The Government is the beneficial owner of the infrastructure, but the private company is responsible for all aspects of the operation of the company, the building of the infrastructure, the raising of finance and the operation of water metering.

You'd have little to no cronyism, a competitive wage/bonus model, a competent board and a highly-but-fairly remunerated management. Best of all, the cost is off the government books, but the CER can insure that prices aren't artificially inflated.

Separately, the government should have used the €1.2bn in savings to give a greywater grant to homes to pay for installation of greywater recovery and rainwater harvesting for non-potable purposes.

You won't please the "anti-everything" brigade, but it solves a lot of issues that I have seen raised here.

Permabear · 24-11-2014 3:12pm

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mrbrianj · 24-11-2014 4:54pm

Yes countries do require significant investment - no doubt there.

and not argument on the need to privatise water either. I am just pointing out that on the 'advised' figures for investment required in the infrastructure and the potential customer base, in this case its not a business model that will have lots of investors lining up.

For example Thames water is also thinking about investing 2 billion in their water systems over 10 years from 2015, but they have 15 million customers - IW will have 4 million customers.

Privatising IW wont happen until some of the investment that was needed over the last number of years is provided. Of course the Government could taken on the investment debt and still privatise(in effect whats happened with IW) - but I think that would cause a meltdown in the anti water charge ranks.

Macha · 24-11-2014 5:14pm

I see no difference between the provision of water than any other utility - electricty, gas, phone and internet. The infrastructure should be treated as a natural monopoly, the same as the transmission electricity or gas grid and held as a public asset.

After that, I believe there should be competition for the market, not in the market to give them some investment certainty and cut financing costs - unless all these private water utilities are going to be providing fantastically different services, which I really doubt.

Drumpot · 24-11-2014 5:16pm

I have a fundamental issue with our water supply being ever made private in any form. .

Do people honestly think that putting the control of the single most important resource for humans in the hands of private institutions as prudent? What good is regulation exactly ? Regulation is only as good as the regulator and we don't exactly have a history of good regulation of pretty much any private industry. In fact, we aren't even any good at regulating public bodies either. Health, financial, solicitors, pretty much any industry you can think of is poorly regulated, with concurrent governments looking like rabbits in headlights anytime reform is required.

Its not like humans can just switch to sea water or some other form of substance instead of water. Its vital for survival and as such people could literally held to ransom for something they just absolutely require.

I would rather pay for a mismanaged, poorly run, state owned body , then an efficient profit targeted company. Whatever anybody says about how private companies are run, the bottom line is always the long term strategy. Once you open the door to private companies, it is extremely difficult to close it.

What happens if there is another crash in the economy and the EU again puts us under pressure to sell this resource as collateral?

Perhaps in the shorter term, the cost, infrastructure and use of water would improve, but I would be extremely concerned about what happens down the road when shareholders (banks anybody) start demanding bigger returns and/or if water shortages become a regular thing. What about the cost of areas where its a significant cost factor to supply?

I don't see any situation where privatising water can be good in the long run for people. To presume that regulation or the "efficiency" of private companies (like broadband in this country) would mean that we would have a fair, affordable, efficient functioning water supply is just madness when you consider how important water is and that the priority of any private institution is profits (not efficiency).

Drumpot · 24-11-2014 5:21pm

Macha wrote: »

I see no difference between the provision of water than any other utility - electricty, gas, phone and internet. The infrastructure should be treated as a natural monopoly, the same as the transmission electricity or gas grid and held as a public asset.

After that, I believe there should be competition for the market, not in the market to give them some investment certainty and cut financing costs - unless all these private water utilities are going to be providing fantastically different services, which I really doubt.

You can physically survive without electricity , gas, phone and internet. .

Imagine there is water shortages and the cost goes sky high, what then ?

I can envisage a world where water prices end up like oil prices, with major corporations setting the cost. I don't think people understand the importance of privatising our water in any form or the potential ramifications.

FreudianSlippers · 24-11-2014 5:25pm

Drumpot wrote: »

You can physically survive without electricity , gas, phone and internet. .

Imagine there is water shortages and the cost goes sky high, what then ?

I can envisage a world where water prices end up like oil prices, with major corporations setting the cost. I don't think people understand the importance of privatising our water in any form or the potential ramifications.

How can you not trust the government to regulate water prices whilst at the same time trusting them to manage the infrastructure.

I'm in favour of a system of beneficial ownership whereby the government owns the resource and infrastructure but a private company deals with all of the constriction, planning, management, supply and billing (controlled by the CER)

Macha · 24-11-2014 5:29pm

Drumpot wrote: »

You can physically survive without electricity , gas, phone and internet. .

Imagine there is water shortages and the cost goes sky high, what then ?

I can envisage a world where water prices end up like oil prices, with major corporations setting the cost. I don't think people understand the importance of privatising our water in any form or the potential ramifications.

Sorry I just don't get this argument. How do you heat your home, heat water, cook food or contact emergency services without these other utilities? Hell, you need shelter but we've privatised the rental/sale of residential property. You need food but you don't pay for it through the central exchequer.

Water is a utility like the others and should be regulated as such.

Drumpot · 24-11-2014 5:38pm

FreudianSlippers wrote: »

How can you not trust the government to regulate water prices whilst at the same time trusting them to manage the infrastructure.

I'm in favour of a system of beneficial ownership whereby the government owns the resource and infrastructure but a private company deals with all of the constriction, planning, management, supply and billing (controlled by the CER)

The government is accountable to the people, a private company is accountable to its shareholders.

Banks are the perfect example. Not a natural resource, but institutions that are the water of capitalism. The reason that they were bailed out was because we absolutely needed a functioning banking system (of some sort) to survive. Literally nothing has been able to stop banks from pretty much doing whatever they want, not even 2008 changed the banking culture. They know that they can do whatever the f**k the want (just look at some of the libor scandals or banks laundering drug money!").

Now, how is this relevant ? When private entities become too big, they in essence do whatever the f**k they want, with zero accountability and the major casualties are usually their clients..

Sure we could bring in some legislation and regulation to reduce the chances of this happening, but all you need is idiotic concurrent governments laxing legislation and/or being under pressure to change the conditions/paramaters of the water company. Whether it be if the country gets into financial difficulty or our EU friends start to bring out greater good legislation that we get forced into following, I can see this ending badly.

Considering we get a lot of visionless, talentless politicians that lack any foresight, there is a good chance that opening up to the possibility of privatising water on any level could see us in big trouble.

Drumpot · 24-11-2014 5:54pm

Macha wrote: »

Sorry I just don't get this argument. How do you heat your home, heat water, cook food or contact emergency services without these other utilities? Hell, you need shelter but we've privatised the rental/sale of residential property. You need food but you don't pay for it through the central exchequer.

Water is a utility like the others and should be regulated as such.

How many different ways can I heat my home ? How many different foods can I choose from ? How often would I need to contact emergency services in a lifetime?

We have social housing available for people and social welfare so people can afford food/clothing.

Water is the one thing on this list that only comes in one form and you can only survive around 3 days without it. I don't see how you can compare it with any of those other utilities as none of them (food aside) are as important to the survival of humans . . Food is probably the closest, but like I said it comes in many forms so there is plenty competition keeping it affordable and even at that you can survive up to 3 weeks without food.

The only thing that makes anything competitive is choice, but look what happens in any private company (airlines, electricity, mobile phones) etc in Ireland. They basically benchmark their prices and we end up paying more because we have a smaller market. And the regulation in pretty much any industry in this country is just short of useless.

I think that people shouldn't underestimate the psychological power water can have over society. Letting private companies get any control is opening the door to a world of trouble. Maybe not initially, but eventually the laws of unintended consequences would have me dragging this thread up just to say "I told you so" . .

Macha · 24-11-2014 6:24pm

Drumpot wrote: »

How many different ways can I heat my home ? How many different foods can I choose from ? How often would I need to contact emergency services in a lifetime?

You're changing the goal posts now. Either it's vital for life or it's not. I've argued the other utilities are vital for life and now you're starting to change your criteria.

Drumpot wrote: »

We have social housing available for people and social welfare so people can afford food/clothing.

I'm glad you brought this up. We should also only help people who can't pay their water charges through social policy, not through general taxation.

Drumpot wrote: »

The only thing that makes anything competitive is choice, but look what happens in any private company (airlines, electricity, mobile phones) etc in Ireland. They basically benchmark their prices and we end up paying more because we have a smaller market. And the regulation in pretty much any industry in this country is just short of useless.

I think that people shouldn't underestimate the psychological power water can have over society. Letting private companies get any control is opening the door to a world of trouble. Maybe not initially, but eventually the laws of unintended consequences would have me dragging this thread up just to say "I told you so" . .

The rest of what you're saying is competition is no use and all private companies are bad, which is not really a credible argument. What makes you think we're getting such a good deal on the cost of the water system we have today?

What you actually seem to be saying is that you don't trust the government to properly regulate the industry, which begs the question why you trust the government to look after your water supply and provide it in a proper and cost-effective manner in the first place?

Oh wait, they don't. There are people who have been on boil notices for years.

irishdude11 · 24-11-2014 6:29pm

Drumpot wrote: »

How many different ways can I heat my home ? How many different foods can I choose from ? How often would I need to contact emergency services in a lifetime?

We have social housing available for people and social welfare so people can afford food/clothing.

Water is the one thing on this list that only comes in one form and you can only survive around 3 days without it. I don't see how you can compare it with any of those other utilities as none of them (food aside) are as important to the survival of humans . . Food is probably the closest, but like I said it comes in many forms so there is plenty competition keeping it affordable and even at that you can survive up to 3 weeks without food.

So if the government don't pump water into your home you will die is that it? Amazing how people have survived for tens of thousands of years without having water pumped into their homes...especially in places like Africa and the Middle East...whereas here in Ireland we'd be ****ed within three days if the government didn't pump the water to us...

Drumpot · 24-11-2014 7:06pm

Macha wrote: »

You're changing the goal posts now. Either it's vital for life or it's not. I've argued the other utilities are vital for life and now you're starting to change your criteria.

I'm glad you brought this up. We should also only help people who can't pay their water charges through social policy, not through general taxation.

The rest of what you're saying is competition is no use and all private companies are bad, which is not really a credible argument. What makes you think we're getting such a good deal on the cost of the water system we have today?

What you actually seem to be saying is that you don't trust the government to properly regulate the industry, which begs the question why you trust the government to look after your water supply and provide it in a proper and cost-effective manner in the first place?

Oh wait, they don't. There are people who have been on boil notices for years.

I am actually expanding on my concerns, I am not changing the goalposts. You cant have it everyway, there are not only positives to privatising the administration of water in this country . .

At what time in history has humanity survived without water ? Now, input electricity, emergency services and any other utility you mentioned and remind me how its just as important as water ? Can you understand the point I am making about the actual psychology of a private entity having such power over such a vital source for survival or are you only capable of rationalising this discussion in terms of how it fits into modern day "business sense"?

You actually don't even elaborate on my competition concerns. You just say what value do we get today which doesn't really mean anything in the context of the discussion. We don't actually know what we are getting or what we are paying. Its hard to elaborate or discuss it.

My point on social welfare was to show exactly where the capitalist/privatisation model lets the poorer people down. It didn't add any weight to the privatisation debate, it raised bigger questions on what exactly it may end up costing the state to subsidise.

In fact you don't actually address any of my concerns. This thread was about asking why privatisation of water supply would be so bad. If you think its ok to privatise , then fine, but don't think you can dismiss peoples concerns without actually addressing them.

And yes, my argument is better the devil you know, then the one you don't know. Not only are you advocating that a private company , that's primary target is profits, take over the water supply, you then advocate that its monitored and regulated by a state that cant even regulate its banks properly. .

So, yes, I would rather the state badly run the resource in a manner that at least the people can hold them accountable to, then a private entity that's only accountable to the bottom line. We own the banks and look how much they listen to the government, what in the name of god makes you think that the government would be any more capable of forcing a water company to tow the line ? What actual evidence do you have to back it up ?

Drumpot · 24-11-2014 7:08pm

irishdude11 wrote: »

So if the government don't pump water into your home you will die is that it? Amazing how people have survived for tens of thousands of years without having water pumped into their homes...especially in places like Africa and the Middle East...whereas here in Ireland we'd be ****ed within three days if the government didn't pump the water to us...

Ah, way to completely misinterpret and misquote my post while simultaneously ignoring any relevant points made. . Just the kind of "debating" that goes on in government and a very good example of how the art of debating nowadays is all about insulting the person, as opposed to addressing any relevant points,.

Oh, and just because something doesn't concern you, it doesn't mean its not relevant . .

Permabear · 24-11-2014 7:30pm

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Valmont · 24-11-2014 9:40pm

Drumpot wrote: »

You can physically survive without electricity , gas, phone and internet.

Maybe until your late thirties.

Permabear · 25-11-2014 12:59pm

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jank · 25-11-2014 1:28pm

I must agree with the general sentiment here. We often hear that water is essential for life and should not be commoditised yet, food, fuel and electricity already is... so whats different?
Local authorities have had control of the water supply for decades yet half of the water is leaked... yet we still think water should be looked after some state body enough though people recognise the mess IW is. We give out yarns about quangos and state bodies like the HSE but in the same sentence will reject privatisation. Does not make sense.

Permabear · 25-11-2014 1:50pm

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karma_ · 25-11-2014 1:52pm

Ah the old invisible hand of the market, the fixer of all things bad in the world.

But Jank, there is no general consensus here, the only consensus i see here is those who promote this mystical ideal patting each other on the back and nodding in self agreement. Everyone else is ignoring you. What you should take out of this is that you are a in a minority, for there are those of us who don't mind paying taxes to the state and in return we expect things like a good health service, infrastructure and yes even that our water is provided for us. This IS what the majority want and we don't want everything to be privatised.... where do you stop? Fire service? Police?

Permabear · 25-11-2014 2:17pm

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karma_ · 25-11-2014 2:25pm

Permabear wrote: »

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I'm not arguing that those things are perfect as is, for they are not, but they could be fixed without privatisation.

Permabear · 25-11-2014 2:32pm

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Valmont · 25-11-2014 5:49pm

A privatised IW would indeed be beholden to shareholders - but shareholders are beholden to consumers. Even still, the current IW system will be beholden to its unionised employees above all else (HSE for example) and they do not give a sweet ****e about you or your water, only their wages and pensions. In fact, if they muck the whole thing up, they will get even more funding to fix it!

Karl Stein · 25-11-2014 7:14pm

Permabear wrote: »

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So they've decided that this relatively short sample length where private companies took over billions worth of water infrastructure that had been already paid for by the public is now deemed 'private' sector efficiency? What would the costs have been if the 'private' sector had not inherited the infrastructure that has been built over generations?

Valmont wrote: »

A privatised IW would indeed be beholden to shareholders - but shareholders are beholden to consumers.

In an ideal world.

The £4.2bn cost of the Thames Tideway Tunnel project is to be wholly funded by Thames Water customers. This has angered some customers who believe the company has benefited from tax breaks sanctioned by industry regulator Ofwat, when it was allowed to add huge amounts of debt to its balance sheet reducing its tax payments while at the same time allowing its shareholders to receive large dividends - money they feel should have been spent on the Thames Tideway Tunnel.

Wikipedia.org

Permabear wrote: »

So why is this option such a nonstarter in Ireland?

See above.

Permabear · 25-11-2014 8:01pm

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Karl Stein · 25-11-2014 10:04pm

Permabear wrote: »

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Deary me. I introduce some history and I'm the one that needs the history lesson? Good man yourself.

For much of England's modern history, fresh water was supplied by private water companies, such as the New River Company, which began supplying the city of London and other central areas in 1603.

The supply then and the supply after nationalisation is incomparable. Also, you'll note that King James the 1st bankrolled the New River project to the tune of 50%. At best it would be described as a PPP now.

private water companies in London were merged and nationalized with the Metropolis Water Act 1902, which created the Metropolitan Water Board; it was re-privatized again in 1989. So, in London's long history, water has been a public utility for just 87 years.

The Private companies were inadequate and were supplying people with dirty, diseased water until they were regulated (oh no regulation!) in the 1850's. You'll note that the vast majority of people in large cities lived in squalor with no running water or sewage.

After nationalization:

The Metropolitan Water Board opened the East London Waterworks reservoirs Banbury Reservoir and Lockwood Reservoir, and the Bessborough Reservoir, Knight Reservoir and Island Barn Reservoirs at Molesey. It also opened the Kempton Park Reservoirs in around 1907.

In 1910, extraction facilities were opened at Hythe End and the Staines Reservoir Aqueduct was built to supply water to Hampton. The Metropolitan Water Board Railway was opened in 1916 to carry coal from the river at Hampton to Kempton Park. An engine house with powerful steam engines was opened at Kempton Park in 1929, which has now become Kempton Park Steam Engines museum.

The MWB opened a succession of reservoirs - King George V Reservoir, (Lea Valley) in 1912, Queen Mary Reservoir (Ashford) in 1925, King George VI Reservoir (Stanwellmoor) in 1947 William Girling Reservoir (Lea Valley) in 1951, Queen Elizabeth II Reservoir (Molesey) 1962, Wraysbury Reservoir 1967, and Queen Mother Reservoir (Staines) 1976.

I'd imagine the vast majority of water to the home infrastructure was laid in the above period too.

Permabear · 25-11-2014 11:38pm

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micosoft · 25-11-2014 11:59pm

mrbrianj wrote: »

Think of the savings and efficiencies a private company implement on IW. If the Energy regulator also did their job, privatisation would be great.

But who would invest? posters on the water charge thread indicate that up to 20 billion need over the next 10 years, but only €160 per year per household. Long term investment of 30 - 40 years would hardly see a return

It will be funded by both state coffers and direct payments. Have no doubt that in ten years time we will be paying the full economic cost of water directly to IW.

As for who would invest, the same that invest in Utilities generally. Utilities tend to make low (about 3-5%) but steady returns on investment as they are exceptionally capital intensive but relatively immune to economic cycles. Therefore pension funds tend to put a significant proportion of their portfolio into utilities. Which is good for private sector investors.

Again, we learnt our lesson with Eircom and with both Electricity and Gas grid are maintained in a heavily regulated entity that others can utilise. This brings the best of competition together with the natural monopoly that is a utility grid network.

Karl Stein · 26-11-2014 1:14am

Permabear wrote: »

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No, no I can use google too.

If you did, you'd know that England and Wales still had over 1,400 separate water supply systems by 1945; massive consolidation of water services only began in 1973, with the creation of regional water authorities.

Call me a sceptic but I simply don't believe you knew this until you googled it after my post. Well done on the googling though.

We were previously talking about the supply to London. Of course there will be multiple water supply systems because all the fresh water in England and Wales does not collect in one gigantic hub lake that supply pipes spoke out from (I didn't have to google that response)

But thanks to decades of socialistic mismanagement, the UK in the '70s was broke.

There you go with the reductive propaganda again. 'Socialistic mismanagement'.. nothing to do with WWII, a collapsing empire, huge debt, the oil crisis, British industry in decline, (Rolls Royce was bailed out by the state and is now one of the World's great 'private' companies btw).

Investment in water services remained inadequate until the late 1980s, when privatization produced increased capital investment in water and sewage systems as well as significantly improved quality of drinking water.

And then then they got it all for a song because of neoliberal orthodoxy. From the very PDF you're found there recently:

The industry was privatised in 1989 ... technically, this involved the transfer of assets and personnel of the 10 water authorities into limited companies. This was accompanied by the raising of capital by floating the companies on the London Stock Exchange, a one-off injection of public capital, the write off of significant government debt and the provision of capital tax allowances.

It is a scientific fact that the quality of drinking water in England has never been as good as it is today, 25 years after privatization.

Whoop-de-doo - they built on the successes of the past. You don't just get to start the narrative in 1989. Also stringent regulation (oh noes Govt/EU regulation) and increasing awareness of environmental issues tends to do that. Moreover there is no reason it could not have happened had the political will been there. I'm sure I could easily google numerous examples of increasing quality in non-private suppliers.

As much as you might reflexively rant at any mention of private enterprise your general tendency across various threads

it's legitimate to ask why privatization, which has worked well in England, has been ruled out as an option in Ireland

Ah but it wasn't just privatisation that brought England and Wales to where they are you see. You're working from ideological orthodoxy that private is always better and that private is solely responsible for clean drinking water. Both demonstrably incorrect.

without any debate, in favor of handing control of water services to a wasteful, incompetent quango.

You're answering your own question there. The fact that a billion euros is being flushed down the drain setting up a Quango is one of the issues that has people pissed off. Personally I believe that 1 billion would have been far better spent upgrading the water infrastructure by transparently tendering the work out to private contractors (OMG private!

)

That would have taken thousands of unemployed construction workers off the dole who'd be spending their wages in the real/local economy in restaurants, shops and bars which would have raised aggregate demand across the country.

FreudianSlippers · 26-11-2014 10:28am

Karl Stein wrote: »

That would have taken thousands of unemployed construction workers off the dole who'd be spending their wages in the real/local economy in restaurants, shops and bars which would have raised aggregate demand across the country.

So instead of €1.2bn (Euro - it's a proper noun and defined in legislation) on the books, creating a deficit of €7bn this year, you'd increase our deficit to €8bn and watch the Local Authorities piss it away as they have done for the past however many years?

Smart economic thinking there. :rolleyes:

dlouth15 · 26-11-2014 11:15am

It is really the creation of an additional usage tax that makes the government's position better off. The creation of an entity, where debt's can be run up "off balance sheet", is really just an accounting trick. The debts run up by Irish Water will still be Irish State debt and individuals will still have to pay to service it.

Having said that, there may be some efficiencies to he had from a national body dedicated purely to water as opposed lots of local authorities handling it.

The danger, of course, is that this body will run up unnecessary expenses, "gold plate" investment with extra costs and use this to justify higher and higher charges.

This problem is not solved by privatizing Irish Water, imo, because although a private company would seek efficiencies, the purpose of this would be greater profit for shareholders rather than savings for the water user.

karma_ · 26-11-2014 12:08pm

FreudianSlippers wrote: »

So instead of €1.2bn (Euro - it's a proper noun and defined in legislation) on the books, creating a deficit of €7bn this year, you'd increase our deficit to €8bn and watch the Local Authorities piss it away as they have done for the past however many years?

Smart economic thinking there. :rolleyes:

Roll your eyes some more, not like there hasn't been successful precedent for this brand of thinking before like.

Godge · 26-11-2014 12:09pm

karma_ wrote: »

Roll your eyes some more, not like there hasn't been successful precedent for this brand of thinking before like.

Such as?

hmmm · 26-11-2014 12:10pm

Why not get the best of both worlds and keep "water" in public ownership, but privatise the operation of the water company. Licenses to run the company could be handed out for 10 years at a time. The same model as Luas, which is the best, most efficient public transport system in the country as a result.

Permabear · 26-11-2014 12:34pm

This post has been deleted.

FreudianSlippers · 26-11-2014 2:01pm

karma_ wrote: »

Roll your eyes some more, not like there hasn't been successful precedent for this brand of thinking before like.

Go on... like...

Soldie · 26-11-2014 2:50pm

I always find it strange that those in Ireland dreaming of a democratic socialist paradise where everything is rosy are (a) unwilling to actually pay for it and (b) often unprepared to accept that, culturally, such a system is generally unsuited to Ireland.

The narrative seems to be that these 'punitive' water charges, added to the 'already crippling' taxes that people are paying, are enough to put people below the bread line. Ireland is a relatively low-tax country; the taxes I pay here in Germany are eye-watering by comparison, and I have to pay for my water on top of them. Anecdotally, people here are also far more system-orientated, and are more disposed towards paying a high price for publicly-provided services. This is certainly not the case in Ireland where mé féinerism is rife and the cute hoor is lauded. The prevailing logic seems to be that there are no ill consequences to screwing over the system, as if our laws are still imposed by the British.

You want a high level of services? Then be prepared to pay for them instead of buying into the populist idea that cutting politicians' pay and levying increased taxes on bankers and developers will cover the cost; it won't.

Karl Stein · 26-11-2014 5:39pm

All this is moot anyway. The Irish government should have been more fiscally prudent and built up a large surplus from the taxes they were taking in during the celtic pyramid instead of inflating the public sector and encouraging property speculators.

This is the wrong time to carry out large infrastructure projects. These grand infrastructure projects should be done when the economy is on the downturn to mitigate the neoliberal boom and bust cycle, New Deal style.

Sorry for busting up your circle jerk lads (not really sorry), I'll leave ye to it.

Macha · 26-11-2014 5:50pm

Karl Stein wrote: »

All this is moot anyway. The Irish government should have been more fiscally prudent and built up a large surplus from the taxes they were taking in during the celtic pyramid instead of inflating the public sector and encouraging property speculators.

This is the wrong time to carry out large infrastructure projects. These grand infrastructure projects should be done when the economy is on the downturn to mitigate the neoliberal boom and bust cycle, New Deal style.

Sorry for busting up your circle jerk lads (not really sorry), I'll leave ye to it.

Sure but the electorate was baying for tax breaks instead, and they got them.

This isn't a great time to carry out large infrastructure projects paid for by the state taking on additional debt. Hence, the creation of Irish Water.

Karl Stein · 26-11-2014 6:01pm

Macha wrote: »

This isn't a great time to carry out large infrastructure projects paid for by the state taking on additional debt. Hence, the creation of Irish Water.

It's going to come out of people's pockets one way or another. The Quango will just borrow on the strength of having a guaranteed monopoly and pass on the costs down the line.

Macha · 26-11-2014 8:24pm

Karl Stein wrote: »

It's going to come out of people's pockets one way or another. The Quango will just borrow on the strength of having a guaranteed monopoly and pass on the costs down the line.

Of course, but this is about the best way to finance the investments. I'm no economics expert but my understanding is the idea with Irish Water is that it can borrow money without that borrowing (or at least most of it) showing up on Ireland's national debt.

That's important for keeping our national debt below 3% of GDP, which is the threshold under the Maastricht Treaty, reinforced more recently by the Stability and Growth Pact.

So the implications are a bit wider.

Jolly Red Giant · 26-11-2014 8:34pm

Macha wrote: »

Of course, but this is about the best way to finance the investments. I'm no economics expert but my understanding is the idea with Irish Water is that it can borrow money without that borrowing (or at least most of it) showing up on Ireland's national debt.

That's important for keeping our national debt below 3% of GDP, which is the threshold under the Maastricht Treaty, reinforced more recently by the Stability and Growth Pact.

So the implications are a bit wider.

yes - it is an accounting stunt - and Ireland could, and should, ignore the Maastricht bullsh*t

dlouth15 · 26-11-2014 8:36pm

Macha wrote: »

That's important for keeping our national debt below 3% of GDP, which is the threshold under the Maastricht Treaty, reinforced more recently by the Stability and Growth Pact.

You mean deficit under 3%. The rule for national debt is 60% and the deficit will need to be a lot below 3% if we want to see a 60% debt/gdp any time soon.

But it is still an accounting trick. We are closer to meeting the pact rules, but just because the debt is on another balance sheet doesn't mean it isn't our debt.

Water privatization

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