Financial implications if water fees scrapped with no contingency plan is made to fund it

There could be financial implications if TDs vote to permanently scrap water charges next year and no contingency plan is made to fund it, Public Expenditure Minister Paschal Donohoe has confirmed.

He was responding to concerns and questions regarding the budget at RTÉ studios yesterday. The Irish Examiner reported yesterday that there could be a €300m ‘black hole’ in the finances next year if TDs vote to scrap water charges and no contingency plans are made for the 2017 budget.

The claim was made by Labour leader Brendan Howlin, Mr Donohoe’s predecessor at Public Expenditure.

Fianna Fáil wants to scrap charges permanently after successfully getting them suspended under the current confidence-and- supply deal for the Government. Fine Gael wants to keep charges.

Mr Howlin claims a €300m black hole is looming if water charges are abolished and this would require a mini-budget. Asked about what spending plans were in place if water charges were permanently scrapped, Mr Donohoe said: “This is a matter we will deal with when the expert panel makes its recommendation, later on in the year.

“We have always been very clear that if there was to be any permanent change in the future charging structure, there will be resource implications for that.

“But if we were to make a decision on that now, we would prejudge both the recommendation that will come from the committee and prejudge the decision that the Oireachtas will make and that would not be the right way to handle such a matter,” he said.

Sinn Féin’s Eoin Ó Broin said he believed the actual shortfall from a cancellation of water charges could be much less.

“The next cost of scrapping water charges is €129m. If water charges are scrapped next March where will the Government get this money from? What services will they cut?” he asked.

The €1.3bn budget makes no allowance for the situation if water charges are not reintroduced once the current suspension period ends in May. The Dáil has agreed to suspend bills for nine months while an expert water commission reviews the charging system introduced by the last government.

It is scheduled to report back to the Dáil by the end of November, when an Oireachtas committee will study its findings before the question of water charges it put to TDs again.

Details in this week’s budget show the Government has planned to invest €270m in water infrastructure next year.