Watering it down?
A little later this afternoon the Minister for the Environment Phil Hogan will give a briefing on the status of the Government’s plans to introduce water charges. It’s expected he’ll give a timetable for rolling out the project (yep the predictable phrase); an indication of how the new utility company Irish Water will shape up, and reconfirm that there won’t be any upfront charges for punters.
(*UPDATE 16.50: Phil Hogan held a press conference this afternoon in which he confirmed that Bord Gais Eireann were the successful tenderer to rund the new water utility company. He also confirmed that there will be no upfront charge for water metering but that it will be paid by way of a standing charge of approximately €39 over a period of 20 years. He also said that the vast majority of meters will be installed by the end of 2014 and that the first bills will begin to be paid at that time, or possibly in early 2015. Also strenuously denied that there had been any confusion last weekend, even though obviously there was!)
The water charge will be the second new charge the Government has introduced and – following the less-than-glorious introduction of the household charge – it’s really going to have to get it right.
Bringing in the two new taxes wasn’t really the Government’s own call. They formed part of the bailout deal agreed by the previous government with the troika. As a point of face, each of the Coalition parties opposed one each of these new charges but both have had to accept them.
The two taxes should have been there for a long long time. The tax base needed to be broadened beyond income and VAT and unpredictable transactional taxes to include assets and utilities (water is a utility just as gas and electricity are).
When you include waiver and exclusion clauses into the system, both can tend towards fairness (though with property it’s always very difficult to get the balance right). For example, those with trophy homes pay more than those with humble terraced cottages. And those who insist on plonking a swimming pool in their backyards should pay more than those who are thrifty with their water usage.
Given the preciousness of water as a resource, there are also sound environmental reasons for introducing a water charge. Those who oppose it say that we should fix the leaks. Yes, we should. But at the same time that does not address the issue of wasteful individual usage. The introduction of pay as you use waste services have though people the value of recycling and reduced the amounts of waste being sent to landfills. Similarly, as we have seen with metered group water schemes around the country, charging for water actually contributes to a decrease in usage.
Sure, there is the other argument that people are already swamped with taxes and can’t really take any more. And that they already pay for water through central taxes (which they do).
Part of the Government strategy will have to be telling people that this is not merely another revenue-gathering exercise but that the money will be pumped back (literally?) into water services.
It’s going to be a tough argument to make.
I myself suspect that people won’t oppose water metering as long as it’s not a flat charge (which would be unfair). The Government is aware by now that any upfront charges will not be tolerated so they will ensure that the costs of installing and maintaining meters will be spread over a long period of time.
It’s main difficulty will be getting the whole project finished by the end of next year. That’s 1 million water meters. As RTE’s Feargal Keane pointed out yesterday that will involve installing 4,000 meters on every working day. That’s not going to happen.
Yet, the Troika has insisted that charges begin from early 2014. What’s going to have to happen is that a fair amount of houses will not have meters and will be billed on an ‘assessed’ charge. If there are too many households being charged on this basis, or if they even suspect that they are being charged ‘over the odds’, it’s going to spell big political trouble for the Coalition.
Already, it’s become an issue. And Phil Hogan will have to give a great deal of clarity on the issue later today, if it’s not going to do the kind of political damage to him that was inflicted by the household charge.
I will update later.