Irish Water needs overhaul to meet independent status

Irish Water will need to be completely overhauled, becoming much more of a commercial entity and charging more economic prices for water if the Government wants its debts off the national books, according to Eurostat.

The Government hoped the EU’s statistics body would find that Irish Water was more of a commercial body and its finances would not be part of the deficit.

The utility will add 0.2% of GDP, which amounts to €581m to the State deficit this year.

Eurostat’s decision that Irish Water is controlled by Government and merely reorganises work previously done by the local authorities was widely hailed by the anti-water charges lobby that has organised a nationwide boycott.

Eurostat said the non-economic pricing of water and in particular the cap of €160 a year for households and €60 for a single adult disqualified Irish Water being classified as a non-government body. So did what it described as the “significant and continuous government funding and support to Irish Water, mainly in the form of operational grants and capital funding”, and the fact that the Government controls who sits on the board.

Irish Water needs to raise at least half its production costs over a number of years — which is less likely given the big number of households not paying their bills, Eurostat said.

According to Irish Water, just 46% paid for the first three months of this year, bringing in €30.5m.

The Government hit back, saying there were a number of factual errors in Eurostat’s decision. The Central Statistics Office was raising these with them together with some technical issues.

Environment Minister Alan Kelly said he was confident Eurostat would change its classification when the Irish Water model was fully implemented, and disagreed with Finance Minister Michael Noonan, who said the ruling was “embarrassing”.

The Department of Finance included the costs of Irish Water in its forecast for the year, so its do not have to change their budget plans. However, the costs will be carried over for at least the next two years, either slowing the rate at which the deficit is cut, or forcing them to find alternative funds.

Fianna Fáil leader Micheál Martin called on Taoiseach Enda Kenny to make a statement on Irish Water’s future.

“The EU has completely exposed the lie at the heart of the Irish Water horror story,” he said. “Irish Water will not be able to stand on its own without government financial aid unless it increases water charges.”

Socialist TD Paul Murphy said: “If this Government isn’t forced to abolish [Irish Water], the next Government certainly will.”