herald

Sunday 4 December 2016

Growing fears in Government Irish Water will fail key EU test

Alan Kelly
Alan Kelly

Fears are growing in Government that Irish Water is set to fail a crucial EU test, meaning the full cost will be dumped on the national balance sheet.

It is understood that EU statistics service Eurostat is poised to refuse the application to have Irish Water treated as a stand-alone company, capable of borrowing without increasing the national debt.

This decision would be a hammer blow to the Coalition, leaving it to find in excess of €600m per year for promised water and sewerage services investment.

It would also impact on plans to cut taxes and spend more in services in the run-in to the next election.

In line with EU currency membership rules, and in the wake of the 2008 economic collapse, Brussels will closely police Government spending over the coming years.

However, a refusal would also be a big political blow ahead of the General Election, as hopes of rebuilding the image of the embattled public utility would receive another massive setback.

Government officials last night refused to comment on increasing speculation that the Market Competition Test would not be passed.

Ireland had made an application to have Irish Water treated under EU State aid rules as operating at arm's length from the Environment Department, as a fully-fledged, semi-State company.

To qualify as a stand-alone entity, more than 50pc of Irish Water revenue has to come from commercial incomes. But Irish Water statistics recently revealed that the payment rate was below this.

One source insisted that rejection by Eurostat would not impact on the October Budget.

This is because Irish Water was already classified as fully under the State remit since the Spring Statement last April.

The source added that, irrespective of the outcome of any such test, the Government would persist with Irish Water as the single water services provider for the country.

"Nobody has proposed a feasible alternative to Irish Water," the source added.

In a further hint that a refusal is expected from Eurostat, the source added that the result of Market Competition Test was not fixed permanently. A re-application could be made in the future, they stressed.

 

Precaution

As a precaution, in the Spring Statement, Irish Water and its funding were counted on the State books.

Government officials said their case to take it "off the books" was boosted when the Central Statistics Office in Dublin recommended to Eurostat that Irish Water be treated as a stand-alone.

Sources have pointed out that Eurostat is based in Luxembourg and is entirely independent of both national governments and the Brussels-based EU executive.

But a refusal from Eurostat would be seized upon by opponents of water charges and the very existence of Irish Water.

It would also be a blow to the Taoiseach Enda Kenny and to Environment Minister Alan Kelly, who have fought an increasingly difficult political battle to rehabilitate Irish Water in the public's estimation.

More than 1.35 million households have now registered for Irish Water.

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