Free water allowance plan deemed ‘costly’ and ‘unfair’

The Government’s plans to give householders a free allowance of water — after which they will have to pay for consumption — have been described as “costly” and “unfair” by one of the country’s top thinktanks.

Tasc said the free allowance proposed under the new water charges plan was an inefficient use of scarce resources.

The body criticised the Government for planning “to subsidise all households regardless of means and circumstances”. The charges are due to begin in 2014.

Spokesman Alex Klemm said any water charges must prioritise equality and the environment.

“Measured against those goals, the system proposed by the Government earlier this week is highly inadequate. The production of clean drinking water is expensive. The proposal to provide a universal ‘free’ allowance to all households, regardless of water requirements or income, is an inefficient use of scarce resources.

“What this implies is that consumers would pay higher charges on water use above the allowance threshold. In addition, if a universal free allowance is allocated on a household rather than an individual basis, larger households would be disadvantaged, especially families with children.

“This universal subsidy would have to be funded either through higher paid charges, increased taxation, or both. This would be neither economically efficient nor socially equitable, with lower-income households likely to pay proportionately more of the incomes [indirectly through taxation] to fund this system.”

Tasc has suggested a means-tested graduated water subsidy be introduced and combined with block tariffs that increase with usage.

The subsidy, Tasc said, would be determined by factors such as disposable income and number of household members.

“In effect, this would mean that, as household income increases, the subsidy would decrease, finally tapering off altogether once household income reaches a certain level.

“At the same time, a system based on increasing block tariffs would ensure that profligate users pay more per unit of water than those who conserve water.”