EU warns State on changing Irish Water structure

While thousands of protestors took to the streets of Dublin over the weekend calling for the abolition of water charges, the European Commission views the Government's decision earlier this year to suspend the levy as a step in the wrong direction.

The move, together with Government plans to cut personal income taxes “represent an erosion of reforms” introduced under Ireland’s international bailout programme, according to the commissions’s latest assessment of Ireland’s economy.

Fine Gael and Fianna Fáil agreed when negotiating the shape of the Government that water charges would be suspended for nine months to allow an independent commission to examine the best charging system and find a sustainable long-term sustainable way of financing Irish Water.

However, the commission has already warned that the State could face fines because of the move to suspend the charges, and insists that the levy cannot be abolished without breaking the water framework directive, to which Ireland has already signed up.

In its latest surveillance report on how the State has been sticking to its fiscal homework since the Troika packed their bags in 2013, the commission warned that changes to the structure of Irish Water could have a fiscal cost – and negatively affect the utility’s operations.

Irish Water is now classified within the general Government accounts after authorities failed last year to show Eurostat, the EU's statistics agency, how it could stand on its own two feet – even before the move to freeze charges.

Future plans by the utility on necessary infrastructure may also be delayed amid spending constraints under the fiscal spending rules EU members are bound by, according to the commission.

With it emerging last week that Fianna Fáil has now proposed to the expert group tasked with examining the charging regime that the water system be paid for through general taxation, it’s becoming increasingly clear that there’ll be no Dáil majority to support any reinstatement of the levy.

We’ll see what the European Union makes of that. But either way, it is now hard to see the Irish political system finding its way to reimpose water charges for the foreseeable future.