State will double flood-defence spending to €100m by 2019
Brian Hayes says storm damage could affect tax taken while Noonan warns insurers have duty to bear costs
Published 08/02/2014 | 02:30
THE severe storms and flooding may now hit government tax revenue targets.
Office of Public Works Minister Brian Hayes admitted that the Coalition is now carefully monitoring the impact the freak winter weather is having on traders and consumer spending.
The disastrous flooding is now expected to have a double whammy impact on the Exchequer with fears of less tax being taken in, coupled with additional funding having to be allocated to build flood defences.
"I have had discussions with the Department of Finance regarding the damage," said Mr Hayes last night.
"It may well affect the degree of tax that we will see this year. (The department) have their own modelling system for an event like this in terms of the impact it has on the tax take.
"Given the severity of the storms and the way commercial operations have been knocked out in Cork and elsewhere we are going to have to profile that in terms of how it's going to affect the tax take this year in terms of VAT and other tax takes that could be detrimentally affected."
He made the comments as the Government confirmed that it is to double flood-defence spending over the next five years amid warnings that floods and storms will become more frequent and damaging.
But despite proposals to double spending to €100m, that sum would be only enough to protect Cork, and leave nothing for other towns that suffer regular flooding.
Environment Minister Phil Hogan will brief the Cabinet next Tuesday on the response to last week's disastrous floods nationwide, where the damage in Cork and Limerick cities alone is estimated at €50m.
However, Finance Minister Michael Noonan said the insurance industry – and not the State – must cope with the insurance costs of rare floods. The industry's job is to "insure against risk, not just collect premiums," the minister said.
It would be very hard for the State itself to become the insurer of last resort, especially against rare flooding such as those occurring every 30 years, he said.
For floods occuring more frequently, solutions such as flood defences were needed, he said.
But the insurance industry must then be prepared to cover homes and businesses in areas previously prone to flooding, as soon as adequate defences have been put in place.
With the State and local authorities putting as much as €50m to €100m into flood defences for Cork, for example, he said insurers should offer cover once those defences are in place.
Mr Hayes, who toured storm-hit parts of Cork yesterday, confirmed flood-defence spending would be "ramped up".
Both men have also vowed to fast-track access to a €25m aid scheme for flood victims.
Ireland will spend €45m on flood-defence projects this year – but it is to consider proposals to boost that spending to almost €100m by 2019.
Mr Hayes acknowledged that Ireland's flood-defence spending has, to date, fallen far short of other EU countries but declined to comment on the scale of proposed increases.
The long-awaited Cork defence plan will cost €100m-plus over its three-year construction phase.
OPW official Liam Basquille defended the agency amid criticisms over the scale of nationwide flooding.
"It isn't fair to say nothing has been done. An awful lot of work has been carried out since the last (Cork flood) event in 2009," he said.
The Government insisted that the OPW has taken flood defences seriously over the past decade, with Kilkenny, Waterford, Mallow and Clonmel all getting very successful flood defences. Flood-protection schemes are currently under way for Fermoy, Bandon, Skibbereen and Claregalway.
Mr Hayes said he hopes the Cork city flood-defence project can start construction in 2015 while other flood-hit areas – Bandon and Clonakilty – will see long-awaited schemes started next year as well.
"We cannot have a situation where the second-largest city on the island of Ireland (Cork) is brought to a standstill every six months or so because of a flooding threat," Mr Hayes said.
Ralph Riegel and Jerome Reilly