Irish Water - Tax or Charge for service?

johnnyskeleton · 19-08-2015 4:54pm #1

Ok folks, I understand that a lot of people want to talk about Irish Water but are afraid of opening pandoras box. So as an experiment I'm opening this thread and we will see how we get on.

This thread is only about the general issues as to whether citizens have a right to water paid for through general taxes, whether it is a service that is to be paid for like electricity or a phone bill, a pay per use amount is fair or whether there should be a means test, whether some people should be exempt, whether some people should pay more, meters vs. fixed charges, the morality of enforcing the payment by garnishing wages or making it a criminal offence etc.

It is not a thread for issues such as whether Irish Water is a corrupt organisation, the protests (good bad or indifferent), glee or disdain about the amount of people that have signed up, discussions as to how many people have actually signed up or paid, whether it is to be kept off books or should be part of the national debt, whether it will be privatised etc etc. All these things are off topic for this thread, although if this thread goes well we might chance some other debates on discrete issues.

TLDR - this is not IW Megamerge and it is not the cafe.

In the spirit of giving my own opinion on the net issue of it being a tax or a charge, I'm inclined to the following views:

It is a charge for a service, you can opt out if you wish;
We had been paying for it through other taxation, but the plan is to make it paid directly, so it is not double taxation it is just changing the method of taxation;
Electricity, phones, gass, television, groceries, rent etc i.e. all other necessities are pay per use. If you are of a limited income you can make savings by reducing your consumption or even opt out.
It is up to social welfare etc to ensure that people can have a roof over their heads or running water as is required and set their rates accordingly. It is for social welfare to increase payments if necessary, the fact that it is a cost for people on welfare is not a reason not to pay;
To be honest, I wish a lot more government services were like this. Imagine if PRSI was an opt in/opt out system. Since I pay into it but get nothing out that is an effective tax and if I could get a private social insurance policy instead I would. Likewise with healthcare if you could choose the level of care vs the price you pay in tax etc

So folks, feel free to discuss the above issues and we will see about dealing with the other things in different threads.

Anyone who tries to derail the thread will be dealt with severely

Mr.Micro · 19-08-2015 6:41pm

It is a charge and there needs to be one. Up to now County Councils have had the responsibility to provide water, with hit and miss results. The whole system needs standardisation, massive investment and infrastructure for now and future generations, hence money is needed. The population of Ireland will increase dramatically, IMO over the coming years and the water system needs to be able to cope. Does anyone seriously think the County Councils are up for this, they can hardly grit the roads in winter or fill potholes. The structure of Irish water management is a whole other issue, jobs for the boys, which is abhorrent.

Dannyboy83 · 20-08-2015 1:42am

johnnyskeleton wrote: »

[*]It is a charge for a service, you can opt out if you wish;

I and most of my colleagues seem to support the fundamental idea and regardless of how we feel about the implementation - we have paid it... while I'm under the impression that most other people I know generally have 'opted out'.

My questions are:
1) What is the threshold below which opt outs cannot fall, if the service is to avoid implosion?
2) How far are we from that threshold?
3) If we cross that threshold, is there an alternative course of action?
e.g.
A) Government subsidises IW

Government makes subscription mandatory like Pension or UHI
C) Government makes subscription mandatory by deduction at source

Quin_Dub · 20-08-2015 10:28am

It's a charge and it should be.

As much of government expenditure as possible should be shifted to consumption based charges as it should ensure a more stable and measurable income stream. Healthcare is definitely one. Arguably, Social Welfare could move to that model as well with compulsory "unemployment insurance" instead of flat rate payments funded from central taxation.

20-08-2015 10:29am

I'll edit/quote in another post I've written elsewhere about the benefits of the chosen model for Irish Water.

Objectively it is quite clear that there are large efficiencies to be had under the proposal.

Metered charging provides;
An incentive to reduce usage / wastage for the end user.

An incentive to fix leaks for the end user.

A viable method to identify locations of leaks which have thus far gone undetected for years.

A centralised system provides;
Reduction in staffing costs* through removal of duplication of positions

Reduction in payment systems' costs through removal of duplicative systems

Reduction in monitoring systems' costs through removal of duplicative systems

Reduction in legal costs through ..

etc.

And finally, moving this out of the Government's hands directly **
Reduces the Government direct liability and costs which means that the funding that is sorely needed to upgrade and update our water infrastructure is moved away from the Government Balance sheet, which given the targets that we've signed up for (and are still not yet meeting) is a very useful way of reducing our need for more austere measures.

Have we absolutely zero time for these important ancillary aspects of the proposal? Each of these benefits reduces the Total Government / Average Irish Person's cost of water provision. What proposal do you have to reduce the costs by anything near a comparable amount?

*Though I'll readily admit that in IW's case this aspect was bastardised & delayed by signing up the LA staff for 5 years in a populist nonsensical manner.
** Again, another fail here due to EuroStat ruling (failed for tinkering and pandering)

My position on IW is extraordinarily simple. The model (as originally envisioned) has objective benefits over the previously existing model for water provision (LAs). The costs that those benefits have are (imo) very small. And so in a simple cost-benefit analysis, this model is an improvement on the last version.

Any other model proposal, which can demonstrably show a 'positive' in a cost/benefit analysis vs Irish Water would earn my preference. However there's not been any other models proposed that get near to that.

We are moving from a "shared charge" (through General Taxation) to a "personal charge" (through metered charging). Which gives people responsibility over their usage, conservation, habits and ultimately, final charge.

Blackjack · 20-08-2015 10:36am

Deleted User wrote: »

I'll edit/quote in another post I've written elsewhere about the benefits of the chosen model for Irish Water.

My position on IW is extraordinarily simple. The model (as originally envisioned) has objective benefits over the previously existing model for water provision (LAs). The costs that those benefits have are (imo) very small. And so in a simple cost-benefit analysis, this model is an improvement on the last version.

Any other model proposal, which can demonstrably show a 'positive' in a cost/benefit analysis vs Irish Water would earn my preference. However there's not been any other models proposed that get near to that.

We are moving from a "shared charge" to a "personal charge". Which gives people ownership over their final bill.

This.
From my own perspective - if treated water is being supplied to and waste water being removed from your house, it should be paid for like any other utility.
If you are managing this yourself by your own well and sewage tank (which comes at a cost to yourself) then no reason to have to pay anything over and above the cost of maintenance of pumps, filters etc and the registration, emptying and safe disposal of the contents of your sewage tank.

Permabear · 20-08-2015 11:32am

This post has been deleted.

20-08-2015 11:38am

Permabear wrote: »

This post had been deleted.

Which dovetails beautifully with the income tax cuts, the USC cuts, and the social welfare increases that also came into effect at the same time as we moved from a shared charge to a personal charge

http://www.irishtimes.com/news/politics/budget-2015-top-income-tax-rate-cut-usc-rates-changed-1.1962809

Quin_Dub · 20-08-2015 11:38am

Permabear wrote: »

This post had been deleted.

Indeed...

Unfortunately it's another example of an Irish Government implementing the right thing at the wrong time and doing it poorly.

Permabear · 20-08-2015 11:45am

This post has been deleted.

20-08-2015 11:51am

Permabear wrote: »

This post had been deleted.

True. However, that's a public perception issue.

The facts are that as we did move from a shared charge to a personal charge, the amounts levied on incomes by the government did fall and the amounts given to social welfare recipients did rise.

Undoubtedly the PR could have been handled better to paint these changes as 'not unrelated' in the public eyes. Some populism to balance the pragmatism perhaps.

20-08-2015 12:14pm

Dannyboy83 wrote: »

I and most of my colleagues seem to support the fundamental idea and regardless of how we feel about the implementation - we have paid it... while I'm under the impression that most other people I know generally have 'opted out'.

My questions are:
1) What is the threshold below which opt outs cannot fall, if the service is to avoid implosion?
2) How far are we from that threshold?
3) If we cross that threshold, is there an alternative course of action?
e.g.
A) Government subsidises IW
Government makes subscription mandatory like Pension or UHI
C) Government makes subscription mandatory by deduction at source

These are exceptionally difficult questions to answer without explicit details and knowledge of the entire Water System network, and all costs associated with the maintenance, provision and infrastructure of the network.

I think the argument made against '1)' in the absence of real data would be that it's incredibly unlikely that a number significant enough to hurt the viability of the centralised provision service would opt-out. To opt-out you would require an alternative system. This is already available for those with wells & septic tanks, as well as those on Group Schemes, but I'd be surprised if even 10% of households currently connected to the water system would benefit (economically) from opting out and procuring their own system. ESB's viability is not under threat from personal generators etc.

'2)' cannot be answered without data;

'3)' Prices would change for those remaining within the system. (up). At some stage this would become unsustainable and alternative (private - non-all encompassing) solutions would have to emerge.

Godge · 20-08-2015 12:39pm

Deleted User wrote: »

I'll edit/quote in another post I've written elsewhere about the benefits of the chosen model for Irish Water.

My position on IW is extraordinarily simple. The model (as originally envisioned) has objective benefits over the previously existing model for water provision (LAs). The costs that those benefits have are (imo) very small. And so in a simple cost-benefit analysis, this model is an improvement on the last version.

Any other model proposal, which can demonstrably show a 'positive' in a cost/benefit analysis vs Irish Water would earn my preference. However there's not been any other models proposed that get near to that.

We are moving from a "shared charge" (through General Taxation) to a "personal charge" (through metered charging). Which gives people responsibility over their usage, conservation, habits and ultimately, final charge.

I agree completely with this.

I have yet to see any coherent argument which sets out how any system other than a variant of metered charges is a better option than metered charges in terms of security of supply, future investment requirements, economies of scale and conservation.

It would be interesting to see how those who oppose water charges explain how an efficient system would work in the absence of such charges.

gandalf · 20-08-2015 1:25pm

Again on principle I have no issue with a consumption based charge once there is reciprocal reductions in the other routes of funding that are being used. It appears that may be happening although as Permabear states I fear that is because the government are trying to buy the next election.

However as it is constituted IW is not encouraging conservation. The noises coming from Government today of extension of the cap for ten years effectively means that the meters that IW have controversially dug up the front of nearly every home in the state for will never see actual use for billing and conservation. Their lifespan is ten years so they will have to be replaced without a bill even being issued from their readings.

The company itself is not cost effective, with senior management who have proven they cannot deliver major infrastructural projects already and vast over staffing. We are certainly not going to get value for money as it is currently constructed. It certainly is an absolute fiasco considering FG's promises to end cronyism, reduce quangos and deliver value for money before the last election.

FreudianSlippers · 20-08-2015 2:14pm

gandalf wrote: »

Again on principle I have no issue with a consumption based charge once there is reciprocal reductions in the other routes of funding that are being used. It appears that may be happening although as Permabear states I fear that is because the government are trying to buy the next election.

I don't see how reciprocal reductions are possible, as we have other sources for funding water at present:

A nebulous portion of general taxation - ok, but we don't have a balanced budget so therefore decreasing spending does not mean there will be an analogous decrease in requirement for tax intake
A nebulous portion of LPT - this money is also required at the rate at which we are paying; unfortunately, it is being diverted to cover a shortfall in water in an attempt to even out the "main" balance sheet;
5% of Motor Tax - even at its highest estimate, this contributes a few hundred thousand to water and it could also be easily redistributed into road infrastructure where it is needed.

So, there we have reasons why tax couldn't be reduced in a corresponding manner.

The nail in the coffin is that under any Irish system, there will have to be significant tax money spent on allowances and grants.

Therefore the whole concept of reciprocal reductions in tax is invalid ab initio.

gandalf wrote: »

However as it is constituted IW is not encouraging conservation. The noises coming from Government today of extension of the cap for ten years effectively means that the meters that IW have controversially dug up the front of nearly every home in the state for will never see actual use for billing and conservation. Their lifespan is ten years so they will have to be replaced without a bill even being issued from their readings.

Agreed.

gandalf wrote: »

The company itself is not cost effective, with senior management who have proven they cannot deliver major infrastructural projects already and vast over staffing. We are certainly not going to get value for money as it is currently constructed. It certainly is an absolute fiasco considering FG's promises to end cronyism, reduce quangos and deliver value for money before the last election.

This is an argument I've been trying to make for some time now. Privatisation of the company with State ownership of the infrastructure and commodity would significantly deal with this issue. The rest could be dealt with by giving the CER actual teeth and powers outside of the government. Unfortunately in this country, we seem to be intent on giving the government as much control as possible, letting them tell us what's best for all of us and then inexplicably complaining about the government being corrupt and too powerful - when we gave them all this power to avoid (boo*hiss) privatisation!

Dannyboy83 · 20-08-2015 4:02pm

Deleted User wrote: »

These are exceptionally difficult questions to answer without explicit details and knowledge of the entire Water System network, and all costs associated with the maintenance, provision and infrastructure of the network.

I think the argument made against '1)' in the absence of real data would be that it's incredibly unlikely that a number significant enough to hurt the viability of the centralised provision service would opt-out. To opt-out you would require an alternative system. This is already available for those with wells & septic tanks, as well as those on Group Schemes, but I'd be surprised if even 10% of households currently connected to the water system would benefit (economically) from opting out and procuring their own system. ESB's viability is not under threat from personal generators etc.

'2)' cannot be answered without data;

'3)' Prices would change for those remaining within the system. (up). At some stage this would become unsustainable and alternative (private - non-all encompassing) solutions would have to emerge.

Thanks for the answer.

it's incredibly unlikely that a number significant enough to hurt the viability of the centralised provision service would opt-out

This may be down to misinterpretation on my part, but the impression I am currently under, is that this has already occurred i.e. more than half have already opted out:

http://www.independent.ie/opinion/comment/it-really-is-time-to-put-irish-water-out-of-our-misery-31464273.html
Here's what we do know, though.
Irish Water began billing in January and collected €30.5m instead of €66.8m for that three-month period. So something has gone radically wrong.

Only 46pc of water bills for the first three months of the year have been paid

Environment Minister Alan Kelly has given Irish Water permission to borrow a further €550m from commercial banks

20-08-2015 4:09pm

Dannyboy83 wrote: »

Thanks for the answer.

This may be down to misinterpretation on my part, but the impression I am currently under, is that this has already occurred i.e. more than half have already opted out:

Those people are currently consuming Irish Water's services without paying for it. They will eventually though.

They are not opting out. Opting out would be to remove yourself from the Irish Water network, no longer having access to IW services, and instead move to self-provision. This would necessarily entail both fresh water delivery and waste water removal. (Also possible to have 'some' IW Services - not all, which means a smaller bill afaik)

Quin_Dub · 20-08-2015 4:16pm

Deleted User wrote: »

Those people are currently consuming Irish Water's services without paying for it. They will eventually though.

They are not opting out. Opting out would be to remove yourself from the Irish Water network, no longer having access to IW services, and instead move to self-provision. This would necessarily entail both fresh water delivery and waste water removal.

True - Cash-flow vs. Liquidity to a certain extent..

Arguably IW has a cash-flow problem right now as people aren't paying their bills , but ultimately they will either have to pay or leave (presumably they'd still be liable for arrears , just as with any other utility)..

It's the leaving that is the risk to long term sustainability , not the current non-payment.

Deleted User wrote: »

(Also possible to have 'some' IW Services - not all, which means a smaller bill afaik)

Indeed - I am only liable for a "half" bill as I have my own Waste water system, but get mains water from IW.

Colm R · 20-08-2015 4:51pm

Quin_Dub wrote: »

It's the leaving that is the risk to long term sustainability , not the current non-payment.

Is leaving the network really a risk to the sustainability of the system. For example, I have a well, and nearest well to me is about 200 meters away. Within 1 square km of my home, there is probably 5 wells.

In an urban setting, could you seriously drill so many wells in such close confines to other wells?

Also, the trucks to do wells are huge.

I guess, you could see some level of community effort to set up their own system on say a street by street basis, or house estate basis. But would this be cheaper for the end user than Irish Water?

It depends. My water and waste cost me about 750 a year. But if I allowed a neighbour to connect to my water and waste, I'd doubt the cost would double.

Quin_Dub · 20-08-2015 5:02pm

Colm R wrote: »

Is leaving the network really a risk to the sustainability of the system. For example, I have a well, and nearest well to me is about 200 meters away. Within 1 square km of my home, there is probably 5 wells.

In an urban setting, could you seriously drill so many wells in such close confines to other wells?

Also, the trucks to do wells are huge.

I guess, you could see some level of community effort to set up their own system on say a street by street basis, or house estate basis. But would this be cheaper for the end user than Irish Water?

It depends. My water and waste cost me about 750 a year. But if I allowed a neighbour to connect to my water and waste, I'd doubt the cost would double.

No.. In reality it's not really a risk at the macro level..You are correct, the overwhelming majority of urban households would have no means provision of an alternative supply.

I guess that's the point. The current non-payment despite what the protesters might say is not really a challenge to the sustainability of IW. People will eventually have to pay, until then it is just a cash-flow issue.

Godge · 25-08-2015 10:46am

http://www.independent.ie/opinion/comment/its-hard-to-swallow-but-irish-waters-here-to-stay-31469645.html

This article by Eddie Molloy addresses many of the issues raised in a discussion about how we should charge for water.

"Water is indeed a human right, but it has to be paid for just like education or food. The idea that water can be paid for out of "general taxation" is a blatant political deceit that ultimately will impact most on poor people. By driving the debts of Irish Water back on to the Government's balance sheet, the effect will be two-fold. Firstly, investment in water will have to compete with restoration of vital social services decimated over the past decade. Every day we hear of nursing homes unfit for purpose, long waiting lists for children needing psychiatric care, families made homeless - and so on. Not one of those who rails against Irish Water has come anywhere near calculating the full costs of meeting all of these pressing needs, while blithely conceding that the utility's requirement for hundreds of millions over the next decade should compete with these priorities.
Secondly, the impressive programme that Irish Water engineers have mapped out to provide clean water, to stop fouling our lakes rivers and beaches, and to replace lead pipes, will slow down because the quantum of funds needed to carry out these planned works will not be forthcoming from the Government's coffers."

That extract above makes a very strong case for a charges-based system.

lawred2 · 25-08-2015 11:34am

Deleted User wrote: »

True. However, that's a public perception issue.

The facts are that as we did move from a shared charge to a personal charge, the amounts levied on incomes by the government did fall and the amounts given to social welfare recipients did rise.

Undoubtedly the PR could have been handled better to paint these changes as 'not unrelated' in the public eyes. Some populism to balance the pragmatism perhaps.

it's not really a perception issue

the bold claim was 'we need to put more money back in people's pockets'

not; we're reducing your tax bill so you can pay your water charges

nice_guy80 · 25-08-2015 11:36am

Godge wrote: »

http://www.independent.ie/opinion/comment/its-hard-to-swallow-but-irish-waters-here-to-stay-31469645.html

This article by Eddie Molloy addresses many of the issues raised in a discussion about how we should charge for water.

"Water is indeed a human right, but it has to be paid for just like education or food. The idea that water can be paid for out of "general taxation" is a blatant political deceit that ultimately will impact most on poor people. By driving the debts of Irish Water back on to the Government's balance sheet, the effect will be two-fold. Firstly, investment in water will have to compete with restoration of vital social services decimated over the past decade. Every day we hear of nursing homes unfit for purpose, long waiting lists for children needing psychiatric care, families made homeless - and so on. Not one of those who rails against Irish Water has come anywhere near calculating the full costs of meeting all of these pressing needs, while blithely conceding that the utility's requirement for hundreds of millions over the next decade should compete with these priorities.
Secondly, the impressive programme that Irish Water engineers have mapped out to provide clean water, to stop fouling our lakes rivers and beaches, and to replace lead pipes, will slow down because the quantum of funds needed to carry out these planned works will not be forthcoming from the Government's coffers."

That extract above makes a very strong case for a charges-based system.

The main problem is the way it was set up. Why wasn't it split up into two separate companies, like ESB?

For some reason there is a holding company behind IW, where executive staff are being paid ridiculous amounts of money to do, what exactly? And then add in the executive staff and other management staff in IW

There should have been an assets company to invest in the water network. metering etc and then a separate services company to run the billing and other aspects.

BoJack Horseman · 25-08-2015 1:02pm

Isn't that parent company just Bord Gais?

And yes, I would have liked the opportunity for a deregulated 'customer supply' wing & an infrastructure company.

It would have been fruitful for the consumer to have all the utilities, IW/ ESB/ Airtricity/ Energia etc all undercutting to bundle all utilities together.

But I imagine, optically that would have looked too much like comodification.... which was the case anyway.

Sam Russell · 25-08-2015 5:05pm

Why do Irish water charge different amounts to commercial customers than to domestic customers? [€2 for commercial and €3.7 for domestic - in Dublin CC]

Why do they charge the same for waste water as for fresh water? Is there any basis for an equal charge, except the simplicity of it? Rain water arrives free of the meter and goes out with the waste and watering the garden comes in via the meter but does not go out with the waste.

Has any study been done on the cost of operating a waste system compared with the water supply system? Is it really an equivalent cost?

Could they not allow customers a choice of charging regimes? For example - a fixed charge per billing period, or a metered charge with no standing charge, or a standing charge but a lower cost per unit.

Why give 'free allowances'? - they make no sense. I do not get free electricity to heat the babies bottle so why should I demand free water to shower teenagers? It makes no sense.

IW would do better to give a guarantee they will always fix leaks upto the front door where they will fit a stopcock, accessible to the householder. To do otherwise is bad publicity as a second leak could be caused by bad workmanship of the first leak.

For Reals · 25-08-2015 5:54pm

We had a water supply, (with some boil notice etc. exceptions) funded from general taxation.
As noted, now we are faced with individual charges also.

It was a part of general taxation and we are still taxed towards it, with a specific charge added.
It opens the door (further) to taking everything funded from general taxation, compartmentalising it and creating a charge for it, but keeping general taxation at similar rates. It's not acceptable and it's simply not fair.

Not 'it', there is both a charge and a tax, (not to mention road tax).

FreudianSlippers · 26-08-2015 9:07am

For Reals wrote: »

We had a water supply, (with some boil notice etc. exceptions) funded from general taxation.
As noted, now we are faced with individual charges also.

It was a part of general taxation and we are still taxed towards it, with a specific charge added.
It opens the door (further) to taking everything funded from general taxation, compartmentalising it and creating a charge for it, but keeping general taxation at similar rates. It's not acceptable and it's simply not fair.

Not 'it', there is both a charge and a tax, (not to mention road tax).

Again, this argument completely ignores the facts and figures when you look at general taxation. Regardless of water supply, in order to reduce general taxation we would need to make cuts somewhere. If you want general taxation to pay for water without charges, we need to make cuts or increase taxes.

Can you explain how it would be possible to fund water given our current taxation figures as you see it, or is this a cafe sound-byte post?

BoJack Horseman · 26-08-2015 10:58am

FreudianSlippers wrote: »

Can you explain how it would be possible to fund water given our current taxation figures as you see it, or is this a cafe sound-byte post?

The far-left do set out the alternatives.
They are false, but they, for tokenism's sake try.

Howevwr, there is an argument that the status quo is fine, for most people.

Politics is about numbers, while things are OK for most, many see no reason in increasing expenditure.

nice_guy80 · 26-08-2015 12:32pm

FreudianSlippers wrote: »

Can you explain how it would be possible to fund water given our current taxation figures as you see it, or is this a cafe sound-byte post?

Well, the government have already stolen a load of motor tax money to fund the Irish Water bill

so cuts have been made to roads maintenance budget of every county council
and I have noticed a deterioration in the quality of roads, especially the regional roads

BoJack Horseman · 26-08-2015 12:46pm

nice_guy80 wrote: »

Well, the government have already stolen a load of motor tax money to fund the Irish Water bill

Much of motor tax already & always was spent on LA water/sewage services.....
That hasn't changed & won't change while IW isn't self funding.

so cuts have been made to roads maintenance budget of every county council

There isn't & never was a direct link between motor tax & road funding.

The government allocate roughly €450m annually (too little), whereas motor tax returns double that to the exchequer.

The reduction in capital funding has been across the board & was far far more to do with plugging the €12bn annual deficit than the €180m startup monies for IW.

FreudianSlippers · 26-08-2015 1:04pm

nice_guy80 wrote: »

Well, the government have already stolen a load of motor tax money to fund the Irish Water bill

Are you alleging they have taken over 5% as legislated? If so, proof of same? If not, how much is 5% of Motor Tax receipts per annum?

Irish Water - Tax or Charge for service?

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