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on the books

Eurostat's released its finding ... but the government's sticking to its guns on Irish Water

The European statistics agency says Irish Water has to remain part of the Exchequer’s accounts.

Updated 5.30pm

THERE HAVE BEEN calls for the Dáil and Seanad to be recalled to discuss the Eurostat ruling on Irish Water, which has finally been published this afternoon following a day of speculation.

As expected, Europe’s statistics agency has said the troubled utility can’t be kept off the government’s balance sheet.

stat EC EC

To pass the ‘Eurostat test’ the government had to prove to the agency that half of Irish Water’s revenue came from customers.

Failing to meet that mark means that money spent on the utility – more than €500 million –  must now be included in national debt.

Speaking about the impending ruling earlier, Finance Minister Michael Noonan insisted there was “no crisis” in government as a result of the news.

“It’s pretty marginal in the general scheme of things,” Noonan insisted to reporters, saying plans for the October Budget had already been factored into the coalition’s plans.

He admitted that “politically it would be better going into the summer break if there was an announcement from Europe that it was off-balance sheet but we had it on balance sheet in our own figures anyway”.

05/06/2015. North South Ministerial Council Meetin Michael Noonan /Photocall Ireland /Photocall Ireland

Confirming the Eurostat decision this afternoon, a statement from the European Commission said it must remain part of the government accounts for a number of reasons.

The capping of bills – announced last November as part of the government’s relaunch of the semi-state – and the fact that many households hadn’t been paying their bills were cited as areas of concern.

Here are the main points, as laid out by Eurostat:

  • Considerable government control over Irish Water, in particular over board appointments and operations, including broad pricing parameters such as price caps for non-domestic users.
  • The fact that Irish Water merely re-organises previously non-market activity carried out by local government, with local government assets being transferred to Irish Water and a large majority of Irish Water staff remaining local government employees.
  • Significant and continuous government funding and support to Irish Water, mainly in the form of operational grants and capital funding.
  • The lack of economically significant prices, concerning in particular the capping of fees for households, with 70% of households expected to be protected by the price cap.
  • The fact that the quantitative criterion is not met (the “50% test”, stipulating that sales must cover at least 50% of the production costs over a sustained multi-year period). This is further amplified by the high number of households not paying their bills.

Figures published earlier this month revealed a 46% compliance rate from customers, relating to charges collected during the first three months of this year.

What it means

Following an Irish Times report first thing this morning, it became clear throughout the day that the Eurostat finding would not make for positive reading for the coalition.

Noonan indirectly confirmed the ruling at that media event later – giving the first official indication that it would be a ‘no’ from the body.

Today’s ruling means future budgets might not be as expansionary as hoped – but as the Minister explained, the the extra debt was already written into predictions for this year, outlined in the Spring Statement.

If it had gone the opposite way, however, the Department of Finance’s position would have been improved – giving Noonan more room for manoeuvre in October.

The next move

There’s no question that today’s ruling is a major blow for the government. As a quick glance at the Dáil record shows, ministers have been making regular public pronouncements of their confidence that Irish Water would pass the Eurostat test.

kenny Kildare Street Kildare Street

Opponents of the water charging regime have been insisting throughout the day that the finding throws the very existence of the utility into serious doubt.

Speaking to RTÉ earlier, Fianna Fáil’s environment spokesman Barry Cowen described Irish Water as the “single greater incompetence on behalf of this government”.

Sinn Féin’s Pearse Doherty said the government had been left with “egg on its face” and that it was money down the drain.

Meanwhile a number of opposition TDs – including his former Labour colleague Tommy Broughan – have insisted it’s time for Environment Minister Alan Kelly to resign.

Kelly had “proved himself to be a complete failure on this (and other) issues and I’m calling on him to do the right thing and hand in his resignation,” Broughan said, in a strongly-worded statement.

“Neither I, nor my constituents, have any confidence in his ability as Minister.”

Another ex-Labour TD, Michael McNamara, has called for the Dáil to be recalled to discuss the issue.

“To date, the government has successively chosen to ram this through the Dáil and to ignore constructive proposals from the opposition and its own backbenchers,” the Clare TD, who was expelled for voting against the Aer Lingus deal, said.

Independent senator Gerard Craughwell has also called for the upper chamber to return from its break.

“I believe that the Seanad should be immediately  recalled  to have an urgent debate on the serious implications of this for state finances,” he said.

Sticking to its guns

In a statement this evening, the government insisted the Eurostat ruling would have no impact on policy.

“It is also important to reassure Irish Water customers that today’s adjudication will have no affect on the level of the charges,” it said.

“There will be no change to the Investment plans announced by Irish Water designed to fix these problems.”

The logic of delivering waters services through a single utility remains. Nobody has proposed a feasible or costed alternative.

With reporting from Nicky Ryan.

Read: Contentious law allowing water charges to be taken from dole passed by Seanad >

More: Save a thought for those answering the phones at Irish Water >

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