Michael Noonan ‘flexible’ on water charges to regain power

Minister for Finance Michael Noonan has become the highest-ranking Fine Gael politician to promise flexibility on water charges if the party is returned to government.

“Fine Gael’s position is that we want a national utility for water, rather than it reverting to local authorities,” Mr Noonan said in Brussels yesterday.

“We want water charged for, and it’s within that space that any discussions with a future partner in government will have to take place,” he said.

While he said there was no room for compromise on the structure of Irish Water, he admitted that “there are issues around the edges that could be discussed”.

When asked yesterday if water charges should reflect the economic cost of building and maintaining water infrastructure, Mr Noonan said “not necessarily”. Water charges have become a political bargaining chip following the inconclusive election result, with Fianna Fáil saying they should be scrapped.

Sinn Féin, the Anti- Austerity Alliance and several Independents are also against water charges although a large majority of Irish and other Europeans surveyed by the EU in 2012 said they were in favour of users being charged.

Since 2010, all EU countries have been obliged to charge for water, for environmental reasons and to cover the costs of providing the service.

If a future government lowers water charges, they will have to come up with extra cash to fund upgrades to the infrastructure, which the European Commission called “weak” in its latest staff report on Ireland’s economy.

The commission said in the report the “structure and level” of water charges already means that Irish Water is reliant on government subsidies to fund a “significant” portion of its costs.

It means future water upgrades will eat into any future government’s precious ‘fiscal space’ — the flexibility they have for extra spending without breaking EU budget rules.

The issue of fiscal space caused confusion during the election campaign, but Mr Noonan defended the Government’s figures and repeated that there would be an extra €1.5bn available for any new government under EU rules.