Friday 17 November 2017

Utility will rely on the State's finances for long time to come

Controversy still surrounds Irish Water and how it will operate
Controversy still surrounds Irish Water and how it will operate
Paul Melia

Paul Melia

Irish Water's transition to a self-funding utility appears to be a far more complicated process than perhaps we first believed.

It relies on Government funding to manage the network, and it will be some time before it becomes a standalone company generating its own revenues and capable of borrowing large sums from commercial lenders.

Establishing such a major undertaking was always going to be challenging, and financial details provided to the Public Accounts Committee (PAC) show just how much it costs to operate the network and get a new utility established.

Between 2013 and the end of next year, some €2.5bn will have been spent running the network, upgrades and providing loans.

It's worth noting that this figure is broadly similar to what was being spent running and upgrading the water network under the old system managed by local authorities.

Irish Water's income streams are certainly diverse and include money from motor taxation, channelled through the Local Government Fund - information which left TDs and senators at the PAC agog, as many believed this money was ring-fenced for roads.

However, this is not a revelation. It was always the case that motor tax was used to fund local authority services, including water.

The most pressing question is how much more public money is needed? What is abundantly clear is that the Government simply doesn't know.

Secretary General at the Department of the Environment, John McCarthy, said the amount will decline over time and that most public money will be used to fund capital projects.

This funding is only supposed to be provided until the company is up and running. The plan is that customers - domestic and commercial - will pay for their water, which will yield €500m a year and reduce the Government's outgoings.

But this assumes people will pay. Unless Irish Water gets more customers on board, and addresses the appalling payment rate from commercial customers, it will remain reliant on State funding for far longer than first believed.

Irish Independent

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