Opinion: Eurostat decision on Irish Water fuels political storm

The latest twist in the Irish Water saga is a huge political embarrassment for the Coalition. To make matters worse there is nothing the parties in government can do about it with a general election in the offing.

The Government's handling of the issue has been shambolic right from the start but the decision of the EU statistics agency, Eurostat, that Irish Water has to stay on the exchequer balance sheet has made matters even worse.

The Coalition's reputation for competence, which will form a vital element in the appeal of Fine Gael and Labour during the election campaign, has taken a big hit. Just a month ago the Coalition had high hopes that after almost two years of controversy the political embarrassment had finally begun to abate but the Eurostat decision has opened up a dam of criticism and public resentment is pouring out all over again.

The issue will inevitably feature in the forthcoming general election campaign although the latest embarrassment has probably ensured that it will take place next spring, as the Taoiseach has consistently said, rather than in November as some of his advisers have been urging.

Right from the start of its term of office in 2011 the Coalition's handling of the water issue has been an example of how not to do things. The first major error was not to proceed with the plan to introduce water charges in 2012 as set out in the EU/IMF bailout programme. At that stage public resentment at Fianna Fáil's handling of the economy was still running high and the decision to introduce water charges could fairly have been attributed to the previous government. However, instead of proceeding with the plan as agreed by Fianna Fáil and the troika the Coalition postponed it for two years. From then on it was downhill all the way.

The argument made at the time by Coalition Ministers, particularly those on the Labour side, was that proceeding with water charges at the same time as the household charge/property tax was being introduced could have precipitated a nationwide revolt that would have undermined the recovery programme.

There may well be truth to this but it never made any sense to postpone water charges to 2014 with the local and European elections already scheduled for May of that year. It was simply stoking up trouble. In hindsight it would have been better for the Coalition to pick a fight with the Troika over water charges and refuse to implement them in the lifetime of the current administration. It was going to be hard enough to get acceptance of a property tax without adding water in on top.

In the event, while the household charge, the precursor of the property tax had a rocky start, the property tax itself proved far less troublesome than expected, mainly because the Revenue Commissioners were given the responsibility for administering the scheme. The paradox is that the water charge, which was always going to be substantially less than the property tax, has proved a much bigger headache. The core of the problem is that it is not a tax but a charge designed to promote water conservation.

Former Minister for the Environment Phil Hogan, now the EU Commissioner for Agriculture, gets much of the blame from his colleagues for the way Irish Water was established and the water charges designed. The structure of Irish Water and the salaries paid to its top executives triggered a political storm from which the organisation has never recovered.

The very good conservation arguments in favour of water metering and a national water authority to oversee the upgrading of the infrastructure were obscured in the resulting controversy. If, in spite of the controversy the Government had persisted with Hogan’s plan to introduce metered charges as early as possible the Eurostat debacle would have been avoided, even though the anti-water charges campaign would undoubtedly have been a political headache.

What really undermined the credibility of the project was the attempt by Hogan's successor Alan Kelly to try to neutralise the controversy by bringing in a low flat rate charge that was unconnected to usage and on top of that a €100 social welfare payment for everybody who registered for water regardless of whether they paid the charge or not. The measure appeared to take some of the political sting out of the issue for a while but its absurdity undermined the credibility of the entire project.

Even though the maximum any household would have to pay in the first year was €160 (taking the grant into account) the level of compliance was very poor. When the compliance figures were released some weeks ago it was clear that less than 50 per cent of households had paid their first bills on time. That left everybody feeling unhappy. Those who paid wonder why they bothered if more than half of households are flouting the law; and those who haven’t paid are emboldened in their protest.

After the Eurostat debacle it is difficult to see how the compliance rates will rise but it is equally hard to see how the Government can back down given how far along the road Irish Water has gone in establishing a much needed national water authority.

The only silver lining for the Coalition was Michael Noonan’s reassuring noises yesterday that the Eurostat findings will not cut across his budget plans. It is not just the Coalition, though, which faces a quandary over Irish Water. Those Opposition parties who aspire to be in government after the next election need to be careful about promises to abolish Irish Water and the charges along with it. Irresponsible Opposition promises have a history of coming back to haunt those who make them.

Stephen Collins is Political Editor