Irish Water – ‘Do Not Pass Eurostat, Do Not Collect 6.5 Billion Euro’
By Matt Ellison
It is now estimated that a grand total of €6.5 billion has been set aside for Irish Water. The full report outlining how this figure was arrived at can be viewed here.
It does not take a mathematical genius to arrive at the realisation that, as an investment, Irish Water is nothing short of a toxic deal. Reports indicate that 1.23 million households have registered for the charges; of those, a significant fraction seem increasingly unlikely to pay, despite having registered. Until 2018 the charges are, furthermore, capped at €160 for households with one adult and €260 for households with two or more. Even being generous and supposing, for a moment, that all 1,230,000 registered households pay up front and on time, and every single one of these is a two-adult household who will therefore be charged the greater of the two capped amounts, Irish Water will take until at least 2018 to pay back the money that has already been spent to date on simply setting it up.
Far be it from being a utility to modernise Ireland’s water infrastructure; Irish Water will simply be charging customers for the first three years of its existence to pay for Irish Water’s very existence itself.
And what of the damage such an exorbitant figure will do to Ireland’s all-important budget deficit, a key target in the IMF’s reforms fostered onto the government in the wake of austerity? To meet the Eurostat’s test on whether or not Irish Water is a state-owned company separate from the government of the Republic of Ireland itself, Irish Water must meet more than half of its operating costs with revenue it raises alone. If it fails to do so, all future borrowing from the utility will be thrown on top of the national debt, and jeopardise the EU policy demanding that budget deficits remain below 3% annually.
The government previously expressed confidence that Irish Water would meet this test, pointing to figures that showed only 45% of projected funding for Irish Water was coming from the taxpayer. Following reported “uncertainty” by EU officials regarding Irish Water’s independence from state books, the test was pushed back in March to some time after June, with Fianna Fáil TD Sean Fleming indicating “it is just as likely to slip into the autumn.”
The following month, the Central Statistics Office formally put Irish Water on the government’s balance sheets, pending the review by Eurostat.
The delay from Europe coincides remarkably with the confused messages in regards to the registration deadline. The original deadline was set for October 30th of last year. When this was summarily ignored by the vast majority of homeowners, a subsequent deadline was set for the following month. Following revisions to how water was to be charged for, a new deadline was then set for February 2nd of this year. Following this date, it was announced by Minister for the Environment Alan Kelly that a new deadline, June 30th, had been set, beyond which customers could not avail of the €100 conservation grant being offered by the government.
Opponents of Irish Water have been quick to beat their chests in triumph. They have taken the scrambled deadline dates as proof that registration is far below optimal levels, and Irish Water – and the government – is panicking. The delay of the Eurostat test would appear, at least on face value, to bear this theory out.
And so they should panic. If the mooted €6.5 billion figure is indeed accurate, and Irish Water’s espoused 1.23 million registered households figure is likewise accurate, then the government has a problem on their hands. Assuming every registered household is paying, and will pay, the €260 charge for households with two or more adults, Irish Water will generate a revenue of a shade under just €3.2 billion in its first operating year. Not even half of what the government has poured into it since its inception.
When Eurostat finally rears its ugly head, it may bear ill news for the Coalition the year before an election. The expected pre-election budget goodies may well have to be scrapped just to keep up with Ireland’s commitment to a less than 3% budget deficit. The failure of Irish Water, in conjunction with the now all but undeniable culture of corruption that has surrounded the SiteServ fiasco, could haunt this government come ballot day. Labour will face extinction just like their Green predecessors; Fine Gael will face relegation to Fianna Fáil levels of shoulder-shrugging mediocrity.
The cabinet will make do. Seats at the table at Irish Water, Teneo Holdings, SiteServ (wouldn’t that be rich?) and indeed the European Union itself beckon for the ministers of this government. The backbenchers will not be so lucky – but then, TDs are the best paid politicians in the world. Maybe that’s compensation enough.
And none of that is even to broach the issue of privatisation. This government blocked, it is now known, multiple bidders on SiteServ to ensure its sale to one Denis O’Brien (the very same Denis O’Brien who appointed former Taoiseach, from across the aisle no less, Brian Cowen to the board of Topaz Energy Group. At least it can be said he doesn’t get sidetracked by partisanship), a sale that they made at a loss to the Irish taxpayer. The precedent has therefore been set; having poured €6.5 billion into the black hole of Irish Water, potentially jeopardising Ireland’s budget deficit figures in the process, it is no longer inconceivable that the government – who have refused to answer questions in the Dáil relating to the future sale of Irish Water, even expelling TDs who demanded a clear answer – have it in mind to simply sell Irish Water on as soon as the water charges cap expires in a few years’ time. All the costs of maintenance have already been duly paid by the Irish taxpayer; all a private owner would have to do is collect their check in the mail.
Irish Water may in time reveal itself to be the single greatest scam ever played on the Irish people in our storied history.