Tuesday 27 September 2016

Looks like embattled utility will be 'on the books'

Published 28/07/2015 | 02:30

Ervia chief executive Michael McNicholas
Ervia chief executive Michael McNicholas

This one looks like the makings of another political mess - with Irish Water again in the middle. Politically, the Taoiseach Enda Kenny and Environment Minister Alan Kelly will be in the firing line. But let's not forget that it was Michael Noonan's Finance Department which did all the statistical modelling and advised on the structure of Irish Water.

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A central part of the thinking behind setting up a stand-alone national water utility was that it could raise badly needed investment money without driving up the national debt.

Time and again, when it looked like it might be better to at least shelve Irish Water and water charges, the Government clung to the idea of resolving the nation's water and sewerage deficiencies by raising revenue from citizens and borrowing investment money off the books.

The amounts required are huge. Just this Sunday, Michael McNicholas, the boss of Ervia which is Irish Water's parent company, put the requirement at €600m per year, every year for the foreseeable future.

But the EU's strict state aid rules govern such things and it falls to its statistics service, Eurostat, to judge. And the major part of a commercial entity's funding has to come from the market, making Ireland's case look somewhat shaky.

In April, the Government published its so-called "Spring Statement" which gave a foretaste of the 2016 Budget due in October. But it notably put Irish Water "on the books".

"Until Eurostat makes a decision, Irish Water is on the balance sheet," Mr Howlin said at the time. Fianna Fáil public expenditure spokesman Seán Fleming rather presciently said this was the Government preparing people for the worst-case scenario.

The decision in April does help mitigate a difficult story now.

We will also hear the Finance Minister say it will not affect plans for the October Budget - otherwise known as the election budget. But this expected outcome is a reverse, both economically and politically, for the Government. It will be manna from heaven to water charges opponents, just as their campaign appeared to be flagging.

Once more, many Coalition backbenchers will curse the day that they first heard the words "Irish Water".

Irish Independent

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