Alan Kelly (Tipperary North, Labour) | Oireachtas source

My answer to the question on BDOs is "no" because this is a public infrastructure and, therefore, they are all exempt. I will return to other questions.

This is a pretty simple process. It is about a pass-through cost that we are putting into the Bill. Prior to the establishment of Irish Water, the relevant local authorities were responsible for the operation of water services, as we all know. While some water assets were included on valuation lists provided by the Valuation Office for rating purposes, it was the position that these assets were, de facto, not revenue-raising for the local government system in terms of commercial rates. Any circular issued in regard to local authorities referred to repaying rates to themselves.

To be frank, this was a mixed bag. In some cases local authorities charged other local authorities for services. I understand Kildare charged Dublin a small amount. As rating water assets owned and operated by local authorities did not provide additional revenues to local authorities, it is likely that, in seeking revisions of valuations by the Valuation Office, the local authorities prioritised other commercial properties which would provide additional rates revenue. In other words, they looked at other commercial properties rather than water services.

It is important to point out that the Valuation Office resources for revision requests are limited and, therefore, the focus may have been on commercial premises that provided additionality in terms of local government funding. The revision practice varies from local authority to local authority. Some may not have sought valuation lists from the Valuation Office when the water infrastructure was commissioned in their administrative areas, for instance.

Another reason for the large variations in the water infrastructure valuation bases from county to county was brought about by the revaluation process undertaken by the valuation office. Water services infrastructure in a number of local authority areas, in particular the three Dublin local authority areas, Waterford and Limerick, would have modern valuations by virtue of having been revalued in recent years. The revaluation exercise will also pick up water services infrastructure in these areas which may not have been valued previously because of the changes which took place in Dublin, Waterford and Limerick. This process would, therefore, result in variations in valuations and larger valuations being placed on water services infrastructure in these areas.

Deputy Cowen referred to two separate processes. The valuation by the Valuation Office is for the purposes of levying commercial rates. However, I know the Deputy understands that the €11 billion valuation of assets is the book value of assets required by local authorities on all of their capital accounts, as my colleague said. That valuation needs to be significantly reassessed for many different reasons, such as depreciation. The Deputy asked about putting that information on the record. I will do my best to try to provide the information and place it in the Oireachtas Library as quickly as is humanly possible.

The payment last year was approximately €48.725 million and is expected to be €59 million next year. There is a circular movement of funds so that the cost base in regard to Irish Water no longer has the €59 million attributable to it. The cost base of Irish Water is lower, at €899 million, compared to expenditure, as a result of that. This is a technical matter and is progressive for Irish Water. It is something which should be welcomed by the House for Irish Water. From the point of view of the baseline of Irish Water, it is something which is necessary, and that is the reason we have introduced the change.

Deputy Liam Twomey asked about benchmarking comparisons with Northern Ireland Water or other water authorities. I have a document with me on Irish Water's establishment costs which the CER has examined and perhaps some Deputies have also, although I appreciate they may not have gone through the detail. The document makes comparisons between the set-up costs of Irish Water and Northern Ireland Water. Northern Ireland's transformation programme included similar sub-projects to those undertaken by Irish Water. Interestingly however, in 2009-2010 Northern Ireland Water reported that it was spending £127 million on investment projects. Irish Water's estimated comparable costs for items such as IT and networks were under Northern Ireland Water's set-up costs.

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