Tuesday 25 June 2019

Former finance chief warns tax hikes on cards if water fees go

CONCERNED: John Moran. Photo: Collins Dublin, Gareth Chaney
CONCERNED: John Moran. Photo: Collins Dublin, Gareth Chaney
Ronald Quinlan

Ronald Quinlan

Higher income taxes and cuts to vital public services such as health - that's the price the public will have to pay should the incoming government decide to do away with water charges, according to the former secretary general of the Department of Finance, John Moran.

Mr Moran, who served as finance minister Michael Noonan's most-senior official throughout the period in which Ireland's economic management was directly overseen by the EU/IMF/ECB troika, said while it was "open to Fianna Fail or anyone else to do away with water charges", the State's books would still have to be balanced.

The former Department of Finance chief told the Sunday Independent that he found the ongoing public debate between Fine Gael and Fianna Fail in relation to water charges and the future of Irish Water "disappointing" given all the other more important issues the country faced.

In a withering observation, Mr Moran noted the obligation on government to stay within the expenditure ceilings required by Europe had received little or no attention to date in the discussions over Irish Water's future.

He said: "The other thing that seems not be getting debated is the idea that government expenditure is actually controlled by the expenditure ceilings. So there's a cap on how much we can spend every year on what we do."

Mr Moran added that the original plan to charge people directly for their use of water allowed the Government to keep Irish Water off the State's balance sheet, thereby increasing the monies available to it within the expenditure ceiling to be used for other important infrastructure and for public services such as health.

On this, he said: "Now maybe somebody cleverer than us has found a way to do that in the new structure that they're talking about. But if they haven't, what it will mean is that within the envelope of expenditure, if we want to spend a billion euro on Irish Water or on the provision of water infrastructure, we will have to stop spending a billion euro somewhere else.

"By having it as a separate entity, funded in a way that allows the Europeans to say this is self-funding and should be able to invest and borrow money, we would free up headroom to spend on health and other places," Mr Moran added.

Should the incoming government decide to refund people who have already paid their water charges, it would need to take some €140m from the Exchequer as the money collected by Irish Water has already been spent.

Asked how the European Commission might react to efforts to row back on the establishment of Irish Water, the former finance chief said: "I think they'll understand there's a strength of feeling around this [water] that is disproportionate to the amount of money involved in terms of the actual cost of the charge to people's pockets, relative to the rest of the money they are paying anyway.

"They will probably hope that we can continue looking at the bigger-picture issues, and that this doesn't end up crowding out a structural reform that the commission insist on around Irish Water.

"In many ways what we're doing now is similar to what we were doing in the troika process. Hopefully, a proper third-party review will take place which won't go directly to government but will go instead to the Oireachtas to be debated," he added.

Mr Moran said the proposed establishment of an independent commission on Irish Water might now allow "the real facts" to emerge in the absence of what he termed "massive political debate".

"In some respects, what happened in the troika period when the meters could not be put in fast enough and the revenues needed to be raised, there was the temporary measure of the flat rate. In hindsight, it wasn't easy for people to understand in terms of where we needed to go.

"Now if there's a little bit of thinking about it, we would accept as we do with electricity and gas, that if water is properly metered, people should pay for it. Ultimately, that frees up money for other things. I really hope people are looking at the bigger picture in terms of the distribution of population and how do we fix the health system. We have to find ways to fairly allocate the cost of that across the population," he added.

Sunday Independent

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