Irish Water may need €3.5bn more in taxes

Taxpayers could be stung for up to €3.5bn to further fund Irish Water, the chairman of the Dáil’s spending watchdog has warned.

Public Accounts Committee head John McGuinness said a triple funding stream would be flowing into the utility — from general taxation, some €300m a year from motor tax, and the actual direct water charges themselves.

Mr McGuinness branded the funding details of Irish Water “a financial mystery tour” as officials from the environment department gave evidence to the committee.

He said investment in the utility between 2017-2022 could amount to €7bn, as he expressed alarm that the taxpayer could be forced to fund half of that.

“My concern is that PAC has been told several billion euro would have to go into improving and refurbishing the water network,” he told the Irish Examiner.

“A significant amount of that would come from the taxpayer, and could be up to €3.5bn.

“It’s been confirmed that is the case after 2017 as investment will need to be funded by exchequer money.”

The Fianna Fáil TD for Carlow-Kilkenny expressed concern during the PAC hearings that Irish Water did not have a business plan after 2016, noting a credit union would not give out loans on that basis.

The Department of Environment’s accounting officer, John McCarthy, said the next business plan could not be put in place until the energy regulator had intervened, and that there would be a “declining” amount of public investment in the water network after that as more money was raised on the markets.

Mr McCarthy said investment of €5bn-€6bn was expected between 2017-2022, but he did not “envisage the public element will be the majority”.

The Government has consistently defended the creation of Irish Water as the best way to get the massive funding needed to repair the country’s dilapidated supply system as the utility could borrow “off balance sheet” and not have its loans included with the State’s.

With a subvention of €439m to Irish Water coming from the Local Government Fund, which is comprised of just over €1bn in motor tax, and another €500m in other taxes, Mr McGuinness noted drivers were paying a large amount into the utility.

He said he had heard a tweet to a radio station that summed up the situation by stating that the Government had renamed potholes as “taxpayer reservoirs” in order to justify the switch of funds.

Irish Water received a subvention of €290m from motor tax last year, will get €265m from that source this year, and €316m next year as part of the €2.6bn the Government is putting into the utility by the end of next year.

Mr McGuinness also criticised what he termed a “weakness” in the department’s handling of land issues.

Mr McCarthy expressed confidence that Irish Water would pass the EU’s market corporation test, which the Eurostat agency will rule on in April to determine whether the utility is financially independent.

A senior Cabinet source has told the Irish Examiner failure to do so would prompt a crisis general election in May due to the extra debt such a move would place on the State.