Thursday 29 January 2015

The 'squeezed middle' once again picking up the tab

Published 04/08/2014 | 02:30

Paying for water: That'll never catch on
Paying for water: That'll never catch on

COULD water charges prove to be the Coalition's, pardon the pun, Waterloo?

More painful measures have been introduced since the dawn of the age of austerity - most notably the high increases in personal taxation.

And there is, let's not forget, a very strong case to be made for water charges: the conservation argument, the need to raise capital to invest properly in woefully inadequate water infrastructure, and the fact that every other European country has them.

But, to borrow a phrase from Pat Rabbitte, that will butter few parsnips with a family of two adult children facing water bills of almost €500 a year. Even for those not struggling to make ends meet, that's a hefty outlay.

And, coming after six years of pain, the worry for government deputies is that water charges may prove the final straw for many voters. The timing of the arrival of the first bills is also uncomfortably close to the next general election.

That raises the question as to whether the Government would have been better off to fast track the introduction of water charges earlier in its tenure, when it could still have blamed Fianna Fail. Not for the only time in the lifetime of this Coalition, timidity prevailed.

That's, ahem, water long under the bridge now. But more recent mistakes may return to haunt the Government.

Brendan Howlin has already publicly lamented the rush to arrive at a figure for water charges in advance of the local and Euro elections. The Fine Gael counter argument is that if they didn't get Labour on board for the charges at that point then they never would - particularly after a trouncing in the local elections.

That would have sent out the damaging message that the Coalition, minus the troika, was incapable of making tough, but necessary, policy decisions.

There is validity in that. But the "clarity" brought to the water charges issue before the elections didn't offset a meltdown in the Government's vote on the day. And it may also have created unrealistic expectations.

It's now clear many normal-sized families will be facing charges far higher than the €240 the Government said would be the average bill.

Labour's insistence on generous allowances for the 413,000 people - mostly pensioners - receiving the household benefits package was understandable and, arguably, socially just. But it has resulted in a higher unit price per litre of water, which means the so-called 'squeezed middle' will once again feel that they are picking up the tab.

The failure also to deliver real cost savings from the transfer of responsibility for water from local authorities to Irish Water may ultimately prove the major source of regret. The ESRI's John FitzGerald has previously said Irish Water could incur extra costs of €1.5bn plus through the employment of over 2,000 staff it doesn't need.

That has had a knock-on impact on charges. It all seems uncannily similar to what happened when the HSE was set up out of the old health boards. Nobody wanted to take the decision to cut job numbers.

Meanwhile, warnings in yesterday's papers from the ESRI, that there's "every chance" Irish Water's estimate that children will only use 21,000 litres a year is actually wrong, won't do much to inspire confidence among an already confused public.

And that's unfortunate for the Government because there are signs of a tentative return of optimism among voters in light of the economic recovery. A poll in yesterday's 'Sunday Independent' found that a clear majority of people feel they will be either the same or better off next year.

That's definitely good news for the Coalition which is keen to put out the message that the worst is over (it almost certainly is) and take credit for that.

The problem is that the poll was taken before the publication of the Commission for Energy Regulation's consultation document last week, which laid bare the impact of water charges on householders.

People may have answered differently about their prospects for next year, if they knew they were facing annual water bills of €483.

And when such bills start to pop through people's front doors, it's hard to imagine it isn't going to put another dent in government support, even if this October's budget proves largely neutral.

As it is, the party ratings in yesterday's 'Sunday Independent'/Millward Brown poll made for grim reading for Fine Gael and Labour. However, the government must resist the temptation to try and use populist measures to recover support. Aside from the economic damage, it simply wouldn't wash with voters at this point. There's been too much pain delivered to be offset by a few trinkets. The Coalition's message must be: "We'll do what has to be done to ensure the economic recovery continues." And then it has to hope that, by the time the general election comes around, voters across the country can actually see and feel the benefit of that recovery.

It mightn't be the greatest strategy ever but it's the only credible one for the Government. It has made its (water) bed, now it has to lie in it.

Shane Coleman is the presenter of the Sunday Show on Newstalk 
106-108FM

Irish Independent

Promoted articles

Read More

Promoted articles

Don't Miss

Editor's Choice