Stephen Collins: Refund of water charges vital for FG and FF

Solving public sector pay issue for short-term political gain would be a mistake

A water meter: “Whatever happens, those who paid deserve to get their money back.” Photograph: Alan Betson

A water meter: “Whatever happens, those who paid deserve to get their money back.” Photograph: Alan Betson

 

The big test facing the Government in the coming months is whether it can run the country rationally, in the common interest, or whether it will be intimidated by a range of powerful pressure groups into making unaffordable long-term concessions for short-term political gain.

If the minority Government buckles under the strain, the country will be back on track to repeat the very same mistakes that led to economic disaster less than a decade ago.

Public sector pay is the biggest challenge, but there are a host of others ranging from water charges to welfare reform and the housing shortage.

On public sector pay the money to provide for the full reversal of the pay and pension cuts introduced during the financial emergency can only be found by cutting essential services or raising taxation.

Minister for Public Expenditure and Reform Paschal Donohoe had played a steady game in sticking to the Lansdowne Road agreement until the Labour Court offered the gardaí a package of increased allowances that threatened to spark relativity claims across the public sector.

The Minister has tried to remove the implications of the Garda pay issue from the wider demand from the public service unions for the full reversal of pay and pensions back to their 2007 levels.

Whatever about coming up with an acceptable solution to the anomalies raised by the Garda recommendation, achieving a deal with the unions on the wider issue is going to prove difficult.

Donohoe is clearly hoping that the Public Service Pay Commission, which is due to report by the middle of next year, will come up with some formula that will enable him to deal with the issue without putting too much strain on the exchequer.

Job security

The terms of reference of the commission allow for benefits such as job security and safe pensions to be included in its analysis of the relativities between the public and private sector pay.

The issue of pensions is crucial. It would be one thing for the Government to agree to a return to the pay scales prevailing in the public sector in 2007 on a phased basis over the coming years.

However, acceptance of a complete return to the generous pension provisions that applied before the crisis hit would not only cost more than the State can afford but would be extremely unfair to the majority of pensioners who have nothing like the same benefits.

Another reason why Donohoe and Minister for Finance Michael Noonan need some time to elapse before talks begin on the full range of pay issues is that the economy could be in a very different place by the middle of next year.

The fallout from Brexit has barely begun, and there is still no knowing what the impact of Donald Trump’s election as US president will be on the world economy and Ireland in particular.

The Irish Fiscal Advisory Council, which was established in the wake of the financial crisis to ensure that such an event never happen again, issued a worrying report at the beginning of the week.

It suggested that there was already evidence of a potential slowdown in the economy and warned that public sector pay increases would have to be funded by cuts elsewhere.

A crucial point made by the council was that the extra €1 billion in corporation tax revenue this year, which may or may not recur in the coming years, has already been tied into additional Government spending in the future.

Political expediency

The future of water charges does not pose as serious an issue in overall money terms as public pay but in terms of good governance it certainly does.

Already we have seen how the interests of the majority of good citizens who paid their water charges have been sacrificed to political expediency. Not only have the non-payers got away with it, but they have done serious damage to the prospects of getting a proper national system of water and sewage treatment being put in place.

The water commission report effectively kicked the issue back into the political system where it belongs, and it will now be up to Fine Gael and Fianna Fáil to demonstrate that their experiment in “new politics” does not involve a disastrous abdication of responsibility for governing.

Backbench Fine Gael TDs have rightly reacted with anger to the apparent acceptance by some of their Ministers that those who paid the charges would get nothing back.

If there is one sure way to bring mainstream politicians and parties into disrepute, it is to disregard the feelings of law-abiding citizens while pandering to the lawless minority who don’t want to pay for anything.

The alternative to giving back the money to those who paid is to pursue the non-payers for what they owe but such a course has no chance of succeeding. The potential for political grandstanding by the anti-water charges campaigners would be immense, never mind the cost of pursuing the matter through the courts.

A workable solution could probably be found through the adoption of the Fianna Fáil suggestion that water charges should be combined with the property tax. If that was to happen, those who have paid could offset their payments against their property tax bills.

Whether that would be acceptable to the European authorities is another matter, as the principle of water conservation would be sacrificed unless the “excessive use” formula mentioned by the commission is used as the basis of a new charging system based on a free generous household allowance.

Whatever happens, those who paid deserve to get their money back. If they don’t, retribution will be fierce and the victims will be Fine Gael and Fianna Fáil.

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