The Grumpy Old Man

Index Home News Eco Life Etiquette Big Bro Business Money Contact Forum About


....Somebody Else Can Pay; the View of Many?....

....when many people have a problem they are quick to blame somebody else, frequently the government of the day....

The view of a huge number of people these days seems to be 'whatever the problem, someone else is to blame'. A subset of this approach seems to be, when a bill requires settlement it is someone else's responsibility.

As an example of this approach I think the current situation regarding water charges in Ireland can be used to demonstrate both of these approaches. I might add that the parliamentarians and the public hardly come out smelling of roses in either situation.

For those readers who do not live in Ireland, excuse me for a brief history lesson. Six years ago, at the time of the global financial crash, Ireland was virtually bankrupt in that far more money was being spent than was being earned. The first manifestation of this was that a number of prime retail banks came within a whisker of being unable to open their doors for business as they had run out of cash. The day was saved by emergency government injections of cash and guarantees. This ultimately resulted in financial assistance (to you and I a huge loan) being negotiated with the European Commission, the European Central Bank and the International Monetary Fund, colloquially known as "The Troika".

A number of hugely unpopular financial measures were introduced by the government to rescue the situation and bring the national finances closer to a position where expenditure was more related to income. It is reassuring to see "open government" in action as for many of these measures politicians were regularly interviewed (some in plain terms, were actually grilled) on national television. What was interesting was that the majority of them used the same excuse for any measure by saying that it was a requirement of "The Troika". In other words they were saying that it was not the governments fault, but they were being forced into it and someone else was to blame.

One of these measures was a charge for water supply and foul water disposal. Hitherto neither of these essentials was paid for directly by the public.

Since people had not paid directly for these (i.e. by forking out a sum of money from their own pocket against a bill), many considered them to be free. This view seemed to be held by a huge number of people who then decided to protest against the charges. In recent weeks these protests have been held up and down the country with tens of thousands of people marching on the streets protesting at the imposition of these charges.

Grumpy feels that there is a common factor in both of these situations. In the first part, politicians were failing to face up to a basic fact that they were the ones who had been elected by the electorate to run the country. An election is not (or should not be) a popularity contest. It is a sad fact that many politicians seem to have more of an eye on re-election than on doing what is right, no matter how unpleasant, for the current situation and the country as a whole. There will always be times when difficult and unpleasant decisions have to be made. This was one of them. It is quite possible that "The Troika" observed that certain draconian financial steps needed to be taken. It is also highly possible that a wide variety of suggestions were made by them as to where these measures might be considered. However it was ultimately up to the civil servants and government of the day to decide which, if any of the suggested measures were to be taken. The decision to take these steps was that of the government, and it is morally wrong for them to hide behind anybody else and say "The Troika told us to".

On the matter of water charges, the bottom line is that although the stuff falls out of the sky for free, somebody has to collect and store it, purify it, dispense it to the end user and dispose of the soiled variety after it's been used. In Grumpy's view this is a simple summary of what the company 'Irish Water' is all about.

Let's face it, none of these measures can be done for nothing. Previously much of it was provided by local councils and paid for out of their overall funding. (And where does that funding come from? It comes from, amongst others, central government and business rates. Ultimately where does that money come from? It comes from Joe public, i.e. you and I. With that as a situation it is the water department of local councils who had to fight for funding. This funding was always a proportion of the total council budget. It is clear from a report of the state of the national water system that the "water departments" in many councils were not very successful in this fight. In a nutshell, it is reputed that forty percent of drinking water is lost through leakage from the supply main. It is also suggested that there are far larger quantities of lead piping in the supply system than had previously been thought, to name but two factors. Clearly a significant (capital) sum of money needs to be found to bring the supply system up to modern day standards. In addition to this, new and improvements to existing water treatment works are required. At the other end of the process, as mentioned in some eco-grumps, many communities have no wastewater treatment works at all and many more have inadequate treatment works. In other words, the water system in Ireland is crap (excuse the pun!) needs an absolute shed load of money to be spent on it.

So where is this money coming from? I must confess that the establishment of a separate company rather than using central government funding is actually a stroke of genius. The reason for this is that 'Irish Water Plc' can raise money on the international markets by issuing a long-term bond at (currently) very low interest rates. The bond would be 'backed' by the payments made by Joe Public for their water. This money would be used to update and install a modern water supply and disposal system throughout Ireland. The beauty of 'Irish Water' doing this is that the money raised by this bond would be used solely for that purpose. (I remind you that in the early days of "motor tax", it was sold by the government of the day as a means of raising money for the maintenance and update of the road system. The inference being that the user should pay for what he uses. Unfortunately as the money went into central government coffers, over the years it just became a source of revenue and was used for all sorts of non-motoring purposes.) Ergo, money raised by Irish Water Plc would only be used for the Irish water system and not be available for other government departments to raid willy nilly. The use of a long-term bond as access to large sums of money also provides for the cost of this new infrastructure to be spread over a much longer period. Additionally as a corporate bond, I am sure that it would not count as "government debt".

I have just read that the perishing European Commission Audit department as other views. If only as Government debt for a year. I suppose, that means that Irish Water Plc must get their skates on and launch a long term bond.

Finally Grumpy feels he must observe that one of the objections of the current protesters is that water is an essential and should therefore be supplied free. If one allows that as an argument, why in the world do they accept that they have to pay for electricity, gas and the telephone? Each of these, in varying degrees, is essential to modern day living. They do not balk at having to pay for the amount of electricity, gas and telephone that we use. So what in the world is different about water? It is surely patently fair that we should pay for what we use. As an added bonus if we pay for what we use, perhaps we will be a little more careful in how we use it.

It is obvious to Grumpy that the system being proposed is actually quite a good way of approaching a potentially knotty problem. What is actually causing all the protests is ignorance caused by inadequate PR, publicity and communication from the government as to the necessity for these charges and the reasons for following this particular route. By failing to communicate adequately on the common sense and logic of their approach, they are letting the electorate down by allowing the protesters to cause major disruption without actually giving any counter response.

Lets face it folks, you don't get 'owt for nowt', these days, as said earlier, someone, somewhere down the line (usually you and I has to pay). After all, the government, wherever you are is only spending YOUR taxes or money.

Since this particular grump was published, I must confess Grumpy's been having another go on the subject. To .....read more..... about this follow the link to money 4-1.

The saga runs on and gets even more convoluted. So, since this particular grump was published, Grumpy's had another go on the subject talking about the involvement of the EU and some lovely legal problems that this has thrown up. To .....read more..... about this follow the link to money 4-2

There is a common theme running through this and other grumps. Click here to .....read more......