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Blank cheque until Government finally makes up its mind

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The lowest leakage rates are in South Dublin County Council at just 16.32pc. Photo: Aidan Stewart

The lowest leakage rates are in South Dublin County Council at just 16.32pc. Photo: Aidan Stewart

The lowest leakage rates are in South Dublin County Council at just 16.32pc. Photo: Aidan Stewart

For five weeks we've been running up a bill for water charges - and we still don't know how much it will cost. It may be the last bitter pill of austerity, but no amount of candy coating can make it palatable for the general public to swallow.

The Government didn't do its homework; if it did, water charges would be on the way, but not for a long time. They need revenue, but there are easier ways to collect it. And, if last year is anything to go by, they'll collect more in tax than they expected and that will cover anything they lose if they turn off the tap for water charges until the system is ready. 

They won't back down now, because they've wasted too much setting it up. In spite of how badly we've been treated by the EU they are still pandering to the powers that be in the hopes they'll earn more gold stars.

They told us it would cost about €240 a year. By the time water charges kicked in, it seemed closer to €300 for a couple, and €500 for a typical family whose children are over 18. But callers to Joe Duffy's Liveline said they were monitoring their meters and some calculated it would cost closer to €1,000 - and even more.

If you pay tax at the lower rate, it will take nearly €1,500 of gross income to cover that; about €2,100 if you pay at the higher rate and over €2,200 for some who are self-employed. But who knows? We still don't know what they are going to charge - and they don't either. The only sure thing is they won't step down, even though it would be the right thing to do. They've admitted they made a mistake, but they've spent so much on it they can't stop now.

They neglected the system for years and they lose half of the supply through leaks. They should have fixed that first; instead they focused on putting in meters to raise higher taxes when they promised that wouldn't happen. We may have a God-given right to water and, unlike other utilities, we can't live without it; but given the world we live in, we can't use it without treating it first, so there is a cost and someone has to pay. We all do, but we are not ready for that yet. We shouldn't be asked to pay until they fix the leaks and provide a system that works.

This Government was to create a better system than the last one, but all they have done is make it worse, and even though things are getting better they just can't cope. Recent polls in this newspaper have shown that the Government is losing public confidence with every decision it makes. It would be out on its ear if there was a viable alternative. Others have stirred things up, but none have come up with a plan that works.

Even Lucinda Creighton and her band of rebels haven't come up with anything new and they won't. Politicians, even those with lofty ideals, have failed to show any real grasp of what is going on and what the people need - and it certainly isn't water charges, at least not yet. None of them are adequately qualified or experienced to do the job we gave them. Not even their highly-paid consultants and advisers made any real difference. What a waste of resources it has been. And they still want more.

The letters between former ECB chief Jean-Claude Trichet and former Irish Finance Minister Brian Lenihan suggest we were forced into the bailout. Current ECB president Mario Draghi said the problem was of our own making, but the EU is not innocent either.

We had one of the biggest domestic banking problems in Europe, but it was funded by European banks that have not been asked to pay. They set us up and, in the end, they made us take the fall. Our Government let us down and it still does.

Brian Lenihan, God rest his soul, should have known better and he should have been given better counsel too. We are paying water charges not to help conserve water, but to bail out the bondholders in Europe that the ECB protects. Ireland was used like a wedge to stop other European banks from being dragged down. The banking debt in Ireland was massive and, small and all as we are, it was enough to bring the whole system down.

The ECB blames Irish policy makers for our economic problems but, even if we are to blame, it couldn't have been done without funds from the big European banks. Irish policy makers could have stopped it, but the EU facilitated what transpired. What's worse is that our own Government condones it and needs no encouragement to take ownership of the European banking problem, when it should be shared out across Europe. The economy may be recovering, but the benefits are being sent to Europe when we pay outrageous interest charges on a national debt that we don't deserve.

The Trichet letters make it clear that we have cause to take a break from austerity. They kicked us when we were down, but we took it and now that the economy is bouncing back, others are reaping the rewards. If the rest of Europe tightened their belts, as we did, they could be bouncing back too, but they are not, and their failure to achieve the economic growth they need to survive is dragging the rest of us down now. If our Government wasn't so blind they would see this too and they would know it's time to draw a line and let the others catch up.

It's not too late to shelve water charges until Irish Water, or the next quango, are better prepared for the job. What we've spent to date is sunk cost and there's no going back. But just because we spent it doesn't mean it's right. It's a fundamental principle of management accounting that you don't make financial decisions for the future based on what you spent in the past. If you've made a mistake, you'll compound the problem by trying to justify the cost by sticking to a plan that has been proven to be flawed.

Let's use the water meters to evaluate the cost before we start to pay. If they help find the leaks that's a bonus and that should cut our needs in half if the leaks are fixed. Capping the charges to get them through proves they are not ready to be rolled out yet. Charges that are not linked to use are counter-productive and just another tax that they promised we wouldn't have. As things stand a family with two children over 18 can expect to pay nearly €400 after tax. If Joe Duffy's guys are correct it will be more. Maybe Joan Burton's guess is closer. She thinks a family should pay less than €200. Then those who live alone should pay less too.

James Fitzsimons is an independent financial adviser specialising in tax and financial planning

Sunday Independent