At tomorrow night’s meeting of Dun Laoghaire Rathdown County Council I will support a motion put forward by the Green Party to call for referendum to constitutionally prohibit the privatisation of Irish Water. The Irish Water issue has exercised most of the population and it is only right that the Irish people get to have some say on at least one aspect of the future of this entity. It is for this reason that I actively support the call to hold a referendum. If and when it comes to a referendum however I will not rush to support the notion that the constitution is altered in such a way as limit some beneficial opportunities that may arise. I am considering one in particular, where the corporate management of Irish Water is replaced with a private operator, I outline this in more detail below.
Firstly, to be completely clear: Do I believe that Irish Water should be fully privatised? Absolutely not.
One of the few things more dangerous than a public monopoly is a private monopoly. But I do believe that certain elements of this new entity that is Irish Water would benefit from the private sector treatment.
The key argument against privatising any company is that out of public ownership that company is naturally motivated to maximise it’s profits, often this comes in the form increased efficiencies and investment in innovation, however often it comes in the form of higher customer prices, particularly if that company is in a monopoly situation.
Even as a state owned company however Irish Water is already contributing to the profits of many others, the design company that charged €20,000 for a logo, the millions charged by consultancy firms, the privately contracted water meter installation company are just a few examples. I can’t help wondering if a privately managed company could not have achieved better value for money in these situations.
Irish Water, at least the hands on operational component charged with treating and delivering water, is staffed by people that have worked in the sector for many years. This aspect of the system has at least a chance of success, albeit somewhat overpriced.
The problem with the current Irish Water set up is coming from leadership and management, or rather the lack thereof. The government, in my opinion, was naive in thinking that such an entity could be successfully set up and run by agents of the state, particularly so given the over ambitious timeline the company was given to take itself from zero to fully operational.
The government should have looked to outsource the management aspect of the company, something that was successfully done with the LUAS. A tender process should have been put in place, and bidders with sufficient experience and expertise invited to apply. Suitable applicants could include Thames Water, Berlinwasser, Veolia or even a consortium consisting of Bord Gais or the ESB.
The successful bidder would be chosen not just on cost but also on service, contracts would come up for renewal on a five year basis which would ensure that the management company remains incentivised to deliver both value and service. Customer communications, an area in which Irish Water is particularly poor, could be one of the criteria on which any management company would be measured. The infrastructure would at all times remain in state ownership and contractual safe guards built in that would ensure the management company could be replaced on the basis of poor performance.
We don’t yet know what the government is going to announce in the coming weeks regarding the future of water charges and indeed Irish Water. It is not however too late to consider winding down the mess that has Irish Water has become and bringing in professionals to manage the corporate, customer facing and administrative layer.