THE Government is on a collision course with the European Commission over water charges and plans to reduce the extent of Budget cutbacks.
Intense discussions are expected at the next meeting with the troika later this month about the contents of the final Budget in October before the Government exits the bailout programme.
Already, major differences have emerged in regard to the timing of the introduction of water charges.
The latest confidential report from the European Commission said that water charges for domestic users were due in "early 2014". This would see householders hit with a "double whammy" of property tax and water charges before the local and European elections in June 2014.
But the Irish Independent has learned that the Government is still intent on delaying water charges until after the elections.
One informed source said that it would be technically possible for charging to begin in October 2014 but that householders would not get their three-month water bill until January 2015.
Environment Minister Phil Hogan (pictured) has spoken of his desire to "de-couple" the introduction of water charges and property taxes next year.
A spokesman for Mr Hogan confirmed that water charges would be brought in during 2014 but said no precise date had yet been decided upon.
The Government is also aware of the political difficulties in introducing water charges when only some householders have meters installed.
The new semi-state body Irish Water is due to being installing meters at a rate of 27,000 per month in July of this year.
The process will take three years to complete, meaning that some households will get estimated water bills.
A spokesman for Irish Water said it would begin the installation of meters in July and be ready to start billing customers in January next year.
However, the spokesman added that it was up to the Government to decide on the start date.
The troika has also said that there remains "significant uncertainty" about the level of the water charges.
The Government is set to face resistance from the troika to any move to using the €1bn in savings on the Anglo debt deal to reduce Budget cutbacks.
Labour TDs have already been calling for such a move and Labour MEP Nessa Childers said the money had to be used to deliver a social dividend for the Irish people.
"Reinstating home help, disability allowances and child benefit would be a start," she said.
But the European Commission's report said budgetary benefits from the Anglo deal "should be used to accelerate debt reduction" – meaning that the funds should be used to bring down our €192bn national debt.
It warned against any "policy slippages", saying that a sense of complacency could prematurely settle in on the back of recent successes.
A spokesman for Finance Minister Michael Noonan revealed that no decision on how to use the €1bn in savings from the Anglo debt deal had yet been made.