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Phil Hogan, T.D., Minister for the Environment, Community and Local Government, stated today (16.1.12) that the water reforms the Government has planned will create 2,000 construction related jobs in the economy on an ongoing basis. This will be achieved through the planned roll-out of a universal programme of water metering this year which will lead to the creation of up to 2,000 jobs for the three year duration of the metering installation programme. Once the metering programme has been completed, a steady level of capital investment of potentially €600 million per annum in water services, facilitated through a new public utility,

will see this level of construction employment sustained on an ongoing basis through capital investment in new infrastructure.  The Minister’s announcement  follows the announcement yesterday of  a public consultation on a suite of fundamental reforms of the water sector.

Minister Hogan said: "Jobs are at the core of this Government’s plan and the water reform programme will form a key element of our job creation strategy. The rollout of the water metering programme will result in direct employment for approximately 2,000 much-needed good quality jobs for the construction sector. A commitment to establish Irish Water as a public utility will allow for a higher level of capital investment in the sector through a long-term multi-annual programme sustaining and creating further jobs in the sector for construction workers, engineers, quantity surveyors, technicians, plumbers and others involved in the water industry generally in Ireland. This will have a real economic and job creation impact and the certainty of funding will be welcomed by the construction sector, which has seen a reduction in employment of 60% between 2007 and 2011."

The Programme for Government commitment to create Irish Water is an important plank of the NewERA plan to make significant additional investment in next generation infrastructure. The Government has been preparing the groundwork for these fundamental changes in the water sector over the last few months.

Fergus O’Dowd, T.D., Minister of State with responsibility for NewERA said: "The Government made a decision to manage its portfolio of semi state companies in a better way and to use them to invest in new areas vital for economic development. NewERA will drive a new organisational model which is now required to deliver water services, building on the existing local expertise and commitment to service. Irish Water will have the capacity to develop a sustainable financial model, leverage additional funding for investment and achieve significant efficiencies through greater economies of scale."

Minister O’Dowd acknowledged the good track record of the local government sector in delivering water service infrastructure, particularly over the past decade, and in addressing customer needs, as demonstrated in their response to severe weather events.

Minister Hogan said: "The provision of a continuous supply of clean water is such a fundamental requirement for society, it is vital that a high level of ambition will be set for Irish Water. It will need to plan strategically for the decades ahead to ensure that Ireland, which is rich in water resources, can continue to exploit this natural advantage to attract foreign direct investment, high end employment, and meet the needs and demands of our existing businesses and communities for high quality water and security of supply."

"While water and waste water treatment capacity has increased substantially over the past decade, there will continue to be a very significant demand for water services from certain industries and sectors such as pharmaceuticals, chemicals, food production and processing. Industries that are heavily reliant on substantial quantities of good quality water are some of our best performers at the moment." said Minister Hogan recalling the recently published export figures for Irish food and drink which reached record levels last year with the value of sales abroad increasing by 12% to almost €9 billion. Ambitious production and growth targets set out in Food Harvest 2020 for the agri-food sector in particular, and the expansion of the pharma-chem and IT sectors, which are major employers in Ireland, will continue to rely on the capacity of the State to assure these key industry sectors that it can provide a good quality and responsive water service.

The first phase of the independent assessment on the establishment of a public water utility provided for in the agreement with the EU/IMF/ECB has been completed and the report of the independent assessment has been considered by Government.   This reform package envisages:-

1. The establishment of a new public utility, Irish Water to take over the responsibility for the delivery of water services from local authorities;

2. The commencement this year of a universal domestic water metering programme;

3. The introduction of independent economic regulation of the water sector under the Commission for Energy Regulation.

The independent assessment (undertaken by a team led by PricewaterhouseCoopers) has estimated that a steady state capital investment in water and waste water services of some €600 million per annum is required. This far exceeds the capacity of the Exchequer to fund in the current economic climate and requires a new approach to funding the sector. Some €371 million is being provided to the sector from the Exchequer in 2012 for capital investment. The financial analysis undertaken by the consultants indicates that Irish Water, as a regulated public utility (similar to the ESB) would be able to access third party funding, based on income from charges from both domestic and non-domestic consumers and ownership of the assets transferred from local authorities. While Government funding will remain in place for a number of years, the burden placed on the Exchequer will ultimately be removed altogether and Irish Water will be a self-financing, fit-for-purpose, well regulated public utility.

This certainty of funding can only be delivered through a sustainable funding model, which includes a fair charging model based on usage. Minister Hogan said: "We have a serious funding challenge at the moment. The introduction of a fair funding model for water services, which will include charges for households, will allow us maintain high levels of investment in water services at a time when it makes sense to invest, especially given as the National Competitive Council reports, the significant cost reductions and improved value for money to be gained at present in the construction sector." A critical element of the reforms will, therefore, involve embarking on a universal domestic water metering programme and the introduction of independent economic regulation of the sector to protect the interests of customers. Installation of the necessary metering infrastructure is to commence by the end of this year. A national procurement strategy for the programme will be developed with the primary objective of maximising value for money and facilitating to the greatest extent possible the scope for participation by small and medium sized enterprises in the overall programme.

Minister Hogan said: "The establishment of Irish Water will provide for better planning for water services nationally in a more coherent and integrated manner, and will mean that a single entity will be held accountable for all water services. Taken together, these reforms offer not only the potential for Ireland to create a world class water service, with certainty on the quality and quantities of water produced for the future, but also the potential for jobs to be created and sustained as the reforms are rolled out."

Minister O’Dowd said: "NewERA’s vision is the capacity to deliver next generation infrastructure while creating employment in the long and short term. These reforms represent a radical change for the sector, and the Government is conscious of the need to manage the transition effectively". This transition requires a robust implementation plan, and so a comprehensive public consultation is being undertaken at this stage to inform the process. This will build on the very useful stakeholder soundings which were undertaken as part of the independent assessment, which were an important contribution to the analysis which resulted in the recommendation to establish Irish Water as a public utility.

Details of the public consultation document and the independent assessment are available on the Department’s website: www.environ.ie