The strange paradoxes of Irish Water

How is it possible to hold mutually exclusive beliefs publicly and not be called out for these beliefs, while at the same time moving forward as if each contradictory belief was simultaneously true?

Because we live in Ireland.

Last week saw the effective abandonment of the principle of charging individual households for their water, while retaining the hated semi-state body responsible for charging people for water. It saw a ‘postponement’ of water charges combined with a commission to examine how best to charge people into the future. It saw politicians walking out of rooms in which they reached agreement and loudly declaim that very agreement they had agreed to not hours before. And everyone is somehow fine with this blatant set of contradictions presented as straightforward, even logical, propositions.
Perhaps the only recent policy hated more than the imposition of Irish Water was the universal social charge. The USC was a perfect income tax, levied initially on almost everyone. In the book Brian Lenihan: In Calm and Crisis (edited by Brian Murphy, Mary O’Rourke and Noel Whelan), the rationale for bringing in the USC was described by many of the authors as arithmetically necessary, in that the state needed to balance its books, but also philosophically necessary, in that almost everyone would make a “collective contribution to public services”, and by doing so, show their support for the state.

They wrote:

“It was [Lenihan’s] firm view that citizens only feel they have a stake in the state if they pay, according to their means, for the services it provides. In this context, he referred to the bin charges strike in his own constituency in the late 1990s. His analysis was that those engaged in the protracted protest at that time regarded the state as alien, precisely because they had no sense of ownership.”

Another paradox. Hurt your own disposable income to show your solidarity with the state.

Lenihan’s successor as minister for finance has returned the USC to a more targeted income tax and has made an electoral virtue of the removal of this tax from low-income earners. This week sees the death of Irish Water as an entity, but its zombified remains will still be there for all to see.

Yet another paradox. Everyone agrees we need lots of treated water, which almost uniquely in Europe, mostly falls out of the sky and so is much less costly than aquifer extraction (the norm elsewhere). Everyone thinks this should be paid for from general taxation. And yet everyone wants to pay less tax. It is clear that if that is the goal, we are not paying enough tax.

Irish Water estimates that €13 billion will be needed to upgrade our water networks in the coming years. The capital investment alone will be one of the most significant in the history of the state. The chances of that capital investment happening when placed in priority with housing, hospitals, roads and every other important thing are vanishingly small.
So expect more boil water notices and water shortages. That’s what we’ve signed up for. It’s what Fianna Fáil – which introduced water charges as a general policy instrument, removed them in 1977, reintroduced them in 2011 and now wants to remove them in 2016 – has just agreed to do with Fine Gael.

The country needs a single supervisory body responsible for the coordinated production and distribution of treated water. The actual delivery of that treatment will always be local because of engineering and geography, as much as anything else. The data-gathering elements for a national water authority shouldn’t be discounted either, by the way. In its most recent submission to the Commission on Energy Regulation, for example, Irish Water revised its estimates of just how much piping we have, from 58,000km to 63,000km. In other words, before this, we didn’t even know how many kilometres of waters mains the country actually had. That’s the state of our water system in 2016.
Nobody likes Irish Water. Fine. Make it a full part of the government. Make all the workers public servants (or sack them). Deal with the evaporation of the fiscal space this will cause. And move on to the more pressing matters at hand. But don’t pretend there aren’t costs to this move, or that ‘abolishing’ Irish Water means we’ll have good water ever after. We won’t.

To think anything else is, guess what, paradoxical. Someone has to pay to fix generations of underinvestment. That someone is us. The means for that payment and that fixing need to be agreed in a democratic way, but after that, it’s a straight-up policy choice.

Last week, the Central Statistics Office published its annual Measuring Ireland’s Progress report. In a more rational country, this would be a bestseller. The CSO reported we had the second highest percentage of population in the EU in 2013 at risk of poverty, before pensions and social transfers, at 49.8 per cent. Yet, when pensions and transfers are included, that drops to 14.1 per cent, one of the lowest across Europe. That means almost 37 per cent of our society would have been much, much poorer without the state.

By definition, these households are going to be at the lower end of the distribution of income – exactly those the state should be helping. In 2004, almost 21 per cent of the population was at risk of poverty, and in 2014, it was just over 16 per cent. The state is largely the engine of that improvement.
So it seems paradoxical, then, that there is no sense of ownership of the state by these households benefiting from transfers from the state, as Lenihan’s biographers argued.

This week also saw the publication by the Department of Finance of its Stability Programme Update. You might remember it as the Spring Statement from last year. The SPU shows an economy firing on all cylinders. Net public indebtedness, after allowing for the government’s ownerships of liquid and semi-liquid assets, will end up being about 76 per cent of GDP by the end of this year, a major improvement since Ireland exited the bailout in 2013.

The state can borrow freely at large maturities for almost nothing, and our debt levels are dropping faster than Paddy Power’s odds on Leo Varadkar to lead Fine Gael (6/5, if you’re asking). It also needs massive infrastructural investments in water, housing, education and communications. But we’re seeing absolutely none of this discussed.

Why are contradictions like these tolerated?