The precarious task of setting the price for water

Few political debates in Ireland have continued for much longer than those on domestic water charges. For four decades paying for water has been a subject of public controversy, much disputed, but not finally settled – until now. Thirty years ago, local elections in 1984 were keenly fought on the water charges issue. And this year – although the issue has surfaced in the local elections campaign – the debate is no longer on the principle of taxing water, but on who pays for it, and how much they should pay. Belatedly, Ireland has followed most other countries in taxing water, a scare resource now in short supply in Dublin.

The Government struggled for some weeks to agree the range of charges and exemptions for household water usage. Political posturing in negotiations between Fine Gael and Labour, perhaps reflecting nervousness before local and European elections, largely explains the delay. Nevertheless, the political difficulty evident in reaching agreement on water charges also has worrying implications for coalition stability, should Fine Gael and Labour henceforth prove equally determined to leave a distinct party imprint on major Government decisions.

The pricing structure the Government has adopted strikes a reasonable balance by making fairness and affordability a major feature, although the Commission on Energy Regulation (CER) has yet to set the price to be charged per litre of water, which remains the key unknown.

Irish Water, however, has been left with an administrative challenge in implementing a complex price tariff. Concerns about the affordability of water charges for some – where household incomes are low, or where householders have a serious medical condition – have greatly eased. The vulnerable, it seems, have been protected. And Minister for the Environment, Phil Hogan has described as "generous" the annual free water allowance per household – one fifth of the estimated annual average usage.

But what happens after 2016, when the annual average charge of €240 per household no longer applies, is still unclear. In the UK and Germany water charges are far higher than those proposed here.

The Government has rejected payment of a standing charge, intended to pay for the cost of connection and maintenance of the service, and for some of the free water allowance for households. Almost certainly the various waivers allowed on hardship and other grounds and the range of free water allowances will result in better-off households paying more than expected, and require extra spending on social welfare.

Irish Water has since January been responsible for the national water service, taking over from 34 local authorities. Its job is to help fix a broken water system, one where 40 per cent of national water supply is lost through leakage, where Dublin finds itself with virtually no spare supply capacity, and where in parts of the country the water is undrinkable. No new State agency could be given a greater national challenge.