The Truth About The Money In Irish
Water
Yesterday, by
coincidence, one of the national newspapers reported that the “regulator” has
confirmed that the water (tax) bills for families will reach €600 when the
government end their subvention to Irish Water in the form of free water
allowances.
I have been looking at
the numbers over the past few days and the math is quite simple … and
unfortunately the headline is perfectly accurate.
THE FIGURES
In Ireland, water
authorities supply 1.6 million ltrs of water every day for users. That
equates to 584,000 million ltrs annnually.
(Engineers of Ireland
Report 2011)
The average daily
consumption per person is 150 ltrs. That equates to total personal
consumption of 251,207 million ltrs annually.
(Census 2011 and other
sources)
Of the 584,000 million
ltrs supplied, 41% is “lost” through deteriorating infrastructure. That’s
239,440 million ltrs wasted. Leaving 93,353 million ltrs for commercial
consumption.
We have a population of
4,588,252 people. There are 1,658,243 households. (Census 2011)
251,207 million ltrs
divided by 1,658,243 households equates to a usage figure of 151,490 ltrs per
year per household.
A family with two
children under the age of 18 will get total allowances of 72,000 ltrs.
(30,000 household allwance and 21,000 for each of the children)
The amount of water
billable by Irish Water will therefore be 79,490 ltrs.
At € 4.88 /000 ltrs the
water bill will be € 388. The total revenue to Irish water from customers
will therefore be € 643 million pa.
Irish Water will also
get € 351 from the government for the water that is supplied ‘free’. This
adds up to € 583 million pa and will be payed from the € 1.2 billion that you
will STILL be paying to the government for water through general taxation including
the 5% on motor tax and 2% on VAT which they have not given you back despite
setting up a company to make you pay for water…
Irish Water total
revenue then will be … € 1.2 billion … exactly the figure that the government
says it costs to supply water (Dept of Finance Budget estimates. € 715m
operating cost and € 500m Capital Expensditure)
That’s an important
phrase to remember … Irish Water and the government clearly say that they are
supplying your water AT COST!
In 2015 the public will
therefore pay € 1.2 billion to the Irish government (no change to taxation
which would have actually transferred the taxation revenue to Irish Water) …
PLUS … € 643m paid directly to Irish Water, excluding revenue from Call Outs
and other Service Charges.
So when the government
said that people havee to pay for water, what they have actually done is
increase the price of water by 50%.
PRIVATISATION
When Irish Water is
privatised a number of things will happen.
Firstly, The government
will no longer be able to provide a subsidy to a private company for the ‘free’
water you have been getting in allowances.
The new owner’s (VEOLIA)
shareholders won;t be happy with their company supplying product free-of-charge
to customers so the cost of the subsidy will IMMEDIATELY be passed to the
consumer.
Your bill of € 388 will
now be a bill of € 739.
but that’s only half the
story…
The second thing that
happens is that VEOLIA will have no interest in supplying a product AT COST!
Remember? It costs
€ 1.2bn to supply the water, and the company wil be getting € 1.2bn in revenue.
That means only one
thing … cost cutting and price increases.
Shareholders will be
looking for decent return on their investment … anything from 5 to 10%. I’ve
no idea what that will mean in terms of retail price but it at 5%, your bill
will then be close to € 800.
On the cost side, the €
500m that is spent annually on Capital Expenditure by the government (improving
the system to make Irish Water a more saleable asset) will be cut by the new
owners to generate significant increases in profit. That means the user
will have to pay for repairs, new installations (new housing estates, factories
etc).
THE HIDDEN VALUE
Irish Water today is a
legal entity charged with the collection of tax for the water supplied.
When VEOLIA buy the company they won’t simply be buying a company with annual
revenue of between € 1.2bn and € 1.3bn (excluding other income from call-outs,
service charges and other work), they will have sole and clear rights to the
fresh water natural resource of our country.
Can we put a figure on
that?
Yes.
That is verifiable with
some rough math : (584,000 million ltrs supplied to users from a total annual
rainfall of 84 trillion ltrs allowing for 50% evaporation etc.)
If we use 2% of our
fresh water resource, worth € 1.2bn, it means that we are sitting on an unused
asset with a value of € 64bn. And remember … that is not a finite
asset value like an oil field or a coal mine which can be exhausted. That
is an unlimited, inexhaustible ANNUAL REVENUE value of € 64 bn for as long as
rain falls on earth.
Of course that’s a
virtual figure. We could never access 100% of our surface and ground
water. However, a company like VEOLIA, which has annual revenues of €
30bn worldwide (the Irish government has annual tax revenue of € 30 bn), has
the resources to access potentially 5% of that asset.
VEOLIA won’t
be buying a company with annual revenue of € 1.2bn from Irish customers, they’ll
be buying a company with potential global sales of € 2bn to € 3bn.
Demand for
water is predicted to increase by 40% up to 2050.
85 % of the world’s population live in the driest parts of the planet and the
popluation of the planet is expected to increase by approx. 3 billion people by
2050.
Water will become an
even more valuable resource than oil. It is a raw material for a
multi-billion euro industry that doesn’t have to be mined, drilled (in Ireland
most of our water comes from surface water), manufactured, grown or
synthesised. It falls out of the sky. For free.
If you owned a business
that got it’s primary raw material for free you’d have a very profitable
business. Or a very wealthy country.
Which would you prefer?
When our
fresh water rights have been ‘sold’ to VEOLIA, our rights to use our lakes and
rivers will be revoked. We will no longer
be able to fish or enjoy other activities without permits because we will be
trespassing on priivate property. VEOLIA are a corporate entity with no
regard for ‘rights’. VEOLIA have significant business interests in Egypt
and at this moment are suing the Egyption government in the courts because the
Egyptian government raised the national minimum wage … cutting into VEOLIA’s
profits.
Irish Water
has been setup by the government to do one thing: take more tax from Irish
people to pay Bond Holders.
Reported previously in the press but requiring confirmation since October:
Irish Water will be allowed to retain profits for 6 years before they pass any
benefit back to the consumer. That
means all revenue can be used to repay the interest on Bond Debt ( € 8 bn in
2015).
Once the government have
deemed that purpose to have been fulfilled privatisation will be swift and
final. Then they will claim they have ‘no power’ to interfere in the
operations of a private company…
By Paul Madden
(Facebook)
Alt Ireland Radio
Local Demonstrations, Portlaoise and Portarlington @ 2pm 1/11/2014
Sinn Fein
Mountmellick – Serving The Community