Sunday 26 February 2017

Families face being hit with water tax to fund upgrades

* Expert Commission report spells end of hated charges
* But question marks remain over €1bn annual cost of water

Paul Melia and Luke Byrne

The Vartry Reservoir in Co Wicklow: Irish Water has been granted permission to upgrade the 150-year-old drinking water treatment plant which provides for 200,000 people in south Dublin and north Wicklow. The project is expected to cost up to €100m, with the three-year construction expected to begin late next year.
The Vartry Reservoir in Co Wicklow: Irish Water has been granted permission to upgrade the 150-year-old drinking water treatment plant which provides for 200,000 people in south Dublin and north Wicklow. The project is expected to cost up to €100m, with the three-year construction expected to begin late next year.

Families face being hit with fresh taxes to cover the €1bn annual cost of providing water services as the hated charging system faces abolition.

A report from an expert group established to determine the best way to fund day-to-day operations and upgrades says that “normal” domestic consumption should be funded from general taxation.

But it opens the door to a new water tax or increases in income taxes to fund the works.

And the ‘Report on Funding of Domestic Public Water Services in Ireland’ also says the Government should hold a referendum on public ownership of the network to allay fears of eventual privatisation.

It also says that all new homes should be fitted with low-flow taps, cisterns and rainwater harvesting systems to reduce consumption.

Asked about the prospect of income tax hikes to bridge the funding gap, a spokesman for Housing Minister Simon Coveney said the issue “will have to be thrashed out at the committee stage”.

The Expert Commission, chaired by former Labour Court chairman Kevin Duffy, says that although households which use excessive amounts of water should face a charge, the water regulator and Public Water Forum should conduct an investigation to determine what ‘average’ consumption is.

It also says that measures outlined around charging for excessive use could form a “cogent” argument to the European Commission that Ireland is in compliance with the Water Framework Directive. This requires member states to implement the “polluter pays” principle and recover the cost of treating water and wastewater.

Mr Duffy told RTÉ’s ‘Drivetime’ the recommendations of the report were “fair, balanced and practical”.

He said the proposal to make any attempt to privatise Irish Water unconstitutional was a response to one of the “biggest concerns” surrounding the utility, and that you would “have to live on the dark side of the moon” not to understand the context in which the work of the committee took place.

Ireland was among the only countries in the OECD not to charge for water, until Fianna Fáil and the Green Party agreed to the imposition of charges as part of the 2010 bailout from the troika.

Examining how other countries fund investment in water services, the committee said that suggesting a “best practice” model would “not be useful” here due to public opposition.

“The Expert Commission... believes that making recommendations that meet the standard criteria and that may theoretically align with best practice but do not take account of the relevant background and context in Ireland – including the criterion of acceptability – would not be useful,” it found.

It also says that charging did not enjoy popular support which was evident from various changes to the tariffs, allowances and introduction of a water conservation grant as the previous government of Fine Gael and Labour desperately attempted to make them palatable. The group was “not convinced” that the water conservation grant was “well-targeted” to help address affordability concerns.

“It is also clear that the charging framework... has not been able to deliver enduring political support nor did it attract a sufficient degree of popular acceptance,” it added.

The decision to recommend that services be funded from general taxation will impact on the ability of future governments to deliver tax cuts and improvements in local services. This is because domestic users were expected to pay some €270m a year towards the cost of water treatment.

The report also notes that a “much more proactive”

approach was needed to promote conservation.

It comes after consumption increased by 5pc in May after charges were suspended. This equates to an increase in daily use of 85 million litres.

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