herald

Monday 5 December 2016

Irish Water finances to be included on the state balance sheet

Alan Kelly
Alan Kelly

The Government’s financial management of the economy has been dealt a tough blow by a decision to include Irish Water’s finances on the national balance sheet.

The Cabinet had hoped the beleagured State company could be removed from the State’s offical budgetary figures but the independent Eurostat agency has decided otherwise.

The EU statistics service Eurostat is already treating the Irish Water figures as on-balance sheet and this is already reflected in the Spring Statement which was released earlier this year, sources confirmed today.

Passing a Eurostat Market Competition Test would have cleared Irish Water to borrow without increasing the national debt.

READ MORE: Growing fears in Government Irish Water will fail key EU test

The Government has factored in €600m per year for promised water and sewerage services investment – however the €1.2bn in spending and cuts planned for Budget 2016 will not be affected as it was fully classed as being under the State remit since April.

In line with EU currency membership rules, and in the wake of the 2008 economic collapse, Brussels is to closely police the Government’s Budget spending plans.

Refusal is considered a big political blow ahead of the general election, as hopes of rebuilding the image of the embattled public utility would receive another huge setback.

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.

Persist

Sources 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.

The source added that the result of Market Competition Test was not fixed permanently and a re-application could be made in the future, they stressed.

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 CSO 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 Irish Water.

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

More than 1.35 million households have now registered but less than half paid their first bills on time..

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