Another fine mess made by Coalition - Irish Water

It is hard to imagine that things could get any worse for the Government when it comes to its handling of Irish Water.

Then again, the Coalition has an unnerving knack of making life difficult for itself. While it should be riding the crest of a wave with an improved economy and a sharp drop in unemployment, it is still straddling in the opinion polls.

Yesterday’s decision by Eurostat, the EU’s statistics agency, will not help matters.

It has ruled that State funds spent on Irish Water will have to stay on the exchequer balance sheet until 2020.

The unexpected decision is a blow to the Government’s strategy on water investment.

It will also mean that a hoped-for boost to the 2016 budget figures will not now emerge and that Ireland’s national debt will, in effect, increase by about €600m.

With the establishment of Irish Water, one of the main goals was to get its finances off the State balance sheet to ensure the Government’s annual spending on the utility would not count when the EU calculated Ireland’s deficit and debt.

To pass the so called market corporation test, Irish Water would have to cover more than half its operating costs from income earned from customers.

But the decision by the Government to charge customers on the one hand and give each person who signed up for Irish Water a grant of €100 on the other was seen for the sleight of hand that it was.

Finance Minister Michael Noon is attempting to shake off this ruling as something of little consequence, insisting that it will make no difference to Irish Water customers or to the 2016 Budget, and that he will still have a leeway of €1.2bn to €1.bn to allow for tax cuts and increased funding for services.

That may well be so, but the real effect will be political. The opposition parties could hardly contain their glee yesterday when the Eurostat ruling was announced.

Sinn Féin’s finance spokesma, Pearse Doherty, said his party had predicted last November, when the Government introduced its charging regime for Irish Water, that it would fail the market corporation test.

Fianna Fáil’s spokesman on the environment and local government, Barry Cowen, accused the Government of incompetence over Irish Water, saying the EU has seen Irish Water for what it is — that there are “grants on the one hand and bills on the other”.

People Before Profit Alliance TD Richard Boyd Barrett, who is on the steering group of anti-water charges campaign group Right2Water, said the decision “exposed the ludicrous financial structure of the water utility and removed yet another of the claimed reasons for its existence”.

We are within — at most — eight months of a general election and if this were an All-Ireland final, the Coalition would be three goals down with eight minutes to go. Perhaps it is time to rethink Irish Water, conduct a transparent review of its financial model, and consider a regime that would be simpler and less costly both in political and economic terms.