Water tax: Minister Hogan rules out upfront charge
ENVIRONMENT Minister Phil Hogan has ruled out an upfront charge ahead of the installation of water meters in homes across the country.
He added that Bord Gais will operate Irish Water, the company established to implement standing charges expected to cost householders €40 annually.
Minister Hogan said that a newly appointed water regulator will decide how the model is funded and how water is managed in the future.
“The overarching objective of the Government’s water reform programme is to put in place structures and funding arrangements that will ensure we have a world class water and waste water infrastructure that meets all environmental and public health standards,” he said.
Operating water systems costs the State €1.2bn annually with the current system understood to be losing up to 40pc of water through leakage.
The Minister added that the creation of Irish water will create jobs and stop leakages.
“A good quality and plentiful supply of water is needed to attract foreign direct investment and support job creation and maintenance in key sectors such as pharma-chem, IT and food and drink,” he said.
“Today’s decision is a very positive step forward and will allow the water reforms progress with renewed momentum”.
Earlier Tanaiste Eamon Gilmore insisted that no pricing has been worked out for water despite the revelation that homeowners face an annual €40 standing charge for 20 years just to cover the cost of water meters.
That is before they hand over a cent for the water they use.
Mr Hogan intends the €40 annual bill to cover the cost of the water meter as well as installing and maintaining the new system.
However, after a weekend of controversy over contradictory government statements, Mr Gilmore stuck to the line that “proposals for pricing have not yet been worked out” as he entered Government Buildings for a Cabinet meeting.”
As the Opposition branded the contradictions, ‘a communications fiasco’, the spokesman said that the political hare was off and running since the weekend confirmation that householders would have to pay several hundred euro for water meters.
While Mr Gilmore has been insisting no decision has been made on charges, Taoiseach Enda Kenny was saying there would be a charge.
The prospect of paying a yearly charge for two decades will shock homeowners already forking out a range of fees.
The National Pensions Reserve Fund (NPRF) is providing a loan of €450m for the water metering programme.
Documents exchanged between the NPRF and the Department of the Environment say homeowners will have to stump up between €35 and €40 per year to pay the entire bill for installing water meters.
The NPRF loan is over 20 years, and the plans say the standing annual charge will have to be paid over the entire period.
Sources said the annual charge will be similar to the services costs levied by the ESB -- which can charge between €33 and €73 every two months -- and Bord Gais, which charges €85 annually.
A spokeswoman for Mr Hogan, who is overseeing water charges, said: "The NPRF is not a slush fund. The money has to be paid back."
However, 1.35 million households paying €40 per year would raise more than €1bn -- more than double the NPRF's €450m loan.
The details emerged after another day of confusion on the introduction of water meters as Taoiseach Enda Kenny said no decisions had been made on new levies. Mr Kenny's comments came less than 24 hours after he said homeowners would pay for their own meters.
Installing water meters will begin this year.
The Commission for Energy Regulation will set the cost, method and timescale for payments for water charges. All homes are to be given a free allowance of water before they are charged for usage.
The Government must start charging for water by 2014 under a deadline set under our bailout terms.
However, it is understood that about 300,000 homes will not have meters installed in time, and will be hit with a flat rate charge from 2014 instead.
The flat rate will be "assessed", according to sources. This means that an unmetered home with two adults and two children will be hit with a charge based on the usage of a similar metered home with two adults and two children.
It is understood that these houses will not have to pay the annual €35 to €40 charge until water meters are installed in their homes. It is planned that all 1.35 million homes will have meters by 2017.