Total cost of water would be €1.2bn if State was ‘sole customer’ of Irish Water

The cost to the State of funding Irish Water as its ‘sole customer’ would amount to some €1.2bn this year, a committee examining the future of water services heard.

Total cost of water would be €1.2bn if State was ‘sole customer’ of Irish Water

The Department of Environment confirmed the amount which would have to be provided if there are no charges imposed, and if the company’s costs and services are all supplemented by the State.

Maria Graham, a department assistant secretary, confirmed the figure to Fine Gael TD Colm Brophy, who asked what the bill would be if the State is the only customer.

“If we spend it on water charges, we won’t have it to spend on other stuff like doctors or hospitals,” he said.

Ms Graham explained how this will be the cost in 2017 if there is no income from any charges or excess use.

Income from domestic charges is estimated to amount to €270m, the committee heard. This reduces to €240m when the annual costs for the billing system are included.

It does not include the €100m annual cost of the so-called ‘conservation grant’, cancelled this year while charges are frozen.

The committee is examining how services might be funded going forward.

The partnership deal between Fine Gael and Fianna Fáil has agreed charges remain stopped or frozen until the end of March this year, by which time a Dáil vote is scheduled to decide how services are funded.

If all charges were to be collected, it would reduce the bill to around €1bn, committee noted.

But Fianna Fáil TDs Barry Cowen and Willie O’Dea were surprised yesterday when Department of Finance officials at the committee were unable to say what the net gain is once the billing system and Irish Water’s setting up costs are taken away from the amount in total that can be collected from users.

Mr Cowen said he was surprised the net figure was not available from the department and suggested all it might amount to would be €30m once costs were added in and charges collected.

Department of Finance assistant secretary general John McCarthy also questioned the logic in investing large amounts of money in a system if there was a low return.

He said, ultimately, it had to be decided if charges would apply or if a separate ringfenced amount of money would instead help pay for services.

This system — or hypothecation as it is called where a third source of income would supplement services — was part of the current debate, the committee heard.

But Mr McCarthy questioned if other types of charges were abolished, there was no supplement or ringfenced fund that helped users pay for gas or electricity.

“From an economic perspective, there would be reservations about this [system],” Mr McCarthy told the committee.

Any ringfenced fund coming from other sources might have to be curtailed from time to time depending on funding needs elsewhere for a government, added the department official.

It was also confirmed to the committee that if charges are suspended for all of 2017, that this will cost an additional €114m, bringing to €239m the extra money needed this year with bills being frozen.

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