Catherine Murphy (Kildare North, Independent)
Link to this: Individually | In context | Oireachtas source

3. To ask the Minister for Environment, Community and Local Government the details of the funding model of Irish Water; the net income from the model annually broken down by category; the estimation of households in the State that Irish Water is relying on to determine the full cost of the €100 allowance and the cost in each year up to 2019; the plans of Irish Water to engage any supplementary measures such as borrowing to augment income; and if he will make a statement on the matter. [3675/15]

Catherine Murphy (Kildare North, Independent)
Link to this: Individually | In context | Oireachtas source

The Department has made the assumption that 35,000 households - customers of Irish Water - will not apply for the water conservation grant. This goes to the heart of the viability of Irish Water as it raises questions over the costs of the quango itself and the billing system. The grant itself, in turn, will use up moneys intended for investment. These are the issues I have raised in this question.

Alan Kelly (Tipperary North, Labour)
Link to this: Individually | In context | Oireachtas source

The establishment of Irish Water is an integral component of the Government’s water sector reform strategy and will lead to lower costs and improved services in the future, providing much better outcomes for customers and the environment. Irish Water is being funded by a combination of domestic and non-domestic water charges, Government subvention and the raising of debt on capital markets.

In 2015, Irish Water expects billed income from domestic customers to total €271 million and from non-domestic customers to total some €229 million, giving a total billed income from customers of €500 million. In addition, the Government will provide €399 million in operating subvention to Irish Water in 2015. Irish Water has been progressing funding initiatives with a view to putting in place several debt facilities with commercial lenders during 2015.

The Government is proposing to provide for the payment of a water conservation grant of €100 per annum which will be available to all eligible households in respect of their primary residence. The water conservation grant will commence this year and an allocation of €130 million has been provided in my Department’s Estimates for 2015. The allocation of €130 million represents an increase of some €64 million on the previous alleviation measures included in budget 2015.

The budget allocation for the water conservation grant is based on an estimate of up to 1.3 million households applying for the grant. This estimated level of demand for 2015 takes account of the number of primary residences recorded in the 2011 census, as well as experiences with other demand-led schemes. The provisions required in future years will be determined as part of the annual budgetary process, having regard to the take-up of the scheme and forecast growth in household numbers.

Catherine Murphy (Kildare North, Independent)
Link to this: Individually | In context | Oireachtas source

The Minister claimed it will lead to lower costs in the future. For whom? Essentially, the whole idea of establishing Irish Water was to ensure corresponding funding could be raised off balance sheet. There will be difficulties if it does not pass the EUROSTAT market corporation test.

Essentially, much of what has been estimated as the income for Irish Water with the new regime is going to leave nothing available to invest in remediating the system. All it is going to do is add to household costs. The €100 conservation grant, which has nothing to do with conservation, is really an exercise in creative accounting to find political acceptance, so that increased charges can be introduced in the future. There is no requirement to provide any evidence that water is being conserved or that anything is being done to achieve that. That is what people see. The economics of this are going to sink Irish Water - I cannot see how they can do anything else. It is extraordinary that a whole income stream in the form of development contributions for water and waste water systems has been dispensed with for the whole of 2014. That was a viable income stream and it has been dispensed with. I do not understand the rationale for where this investment is going to come from.

Alan Kelly (Tipperary North, Labour)
Link to this: Individually | In context | Oireachtas source

Irish Water is set up in order to ensure that it can invest into the future - that it can have capital to invest on a scale that was not there before. It is a model that is necessary so that we do not have to argue about whether we are going to invest in schools, health care, or water. We need a separate mechanism to be able to fund this. Deputy Murphy is well aware of issues around water in her own area. EPA reports over the last months show the necessity for us to invest at a sufficient level to encourage inward investment, for domestic reasons, for tourism and for many other reasons, as the Deputy well knows.

The water conservation grant is far from an exercise in creative accounting. I have met with the group schemes and many people who have their own wells, and they have invested huge amounts of money in protecting their own water infrastructure. They are very happy with the scheme that has been put in place. If the Deputy feels that giving €100 as a water conservation grant is a case of creative accounting, does she feel the same about the fuel allowance, which is given out in a very similar way?

Catherine Murphy (Kildare North, Independent)
Link to this: Individually | In context | Oireachtas source

The point is that there will be no money to invest. The Minister is talking about the need to invest, but there will be no money. He has not made a convincing argument about where this money is going to come from. He talks about people in group water schemes investing - and yes, they did - but equally, people in public schemes and commercial enterprise made an investment in water and waste water systems through development contributions. Investment has not been exclusive to one sector of the community. There are some €11 billion worth of assets, so it is not all about liabilities. On the development contribution side, local authorities are no longer allowed to apply water and wastewater development contributions, which would be the biggest portion of development contributions. However, Irish Water has not been given that competence. A whole year has gone by in which a viable income stream has not been exploited. That money would formerly have been invested in water and wastewater schemes. Where is the money going to come from for the investment?

Alan Kelly (Tipperary North, Labour)
Link to this: Individually | In context | Oireachtas source

There has been an awful lot of analysis of Irish Water, but the way in which it has been set up as a utility means that it now has huge capacity to borrow and invest into the future. Deputy Murphy knows there will be economies and deferred costs in the future as a result of the investments that have been made. It will be possible to prioritise projects. Irish Water is currently in the process of undergoing various techniques as regards borrowing for the future. We would not be able to intercept these projects and put in place the capital plan that I am going to receive from Irish Water in the next couple of months. The Government simply would not have the capacity to put in that investment. Given the way Irish Water has been set up, and its borrowing capacity and income streams, we will be able to do that. It will be able to deal with the multitude of issues coming down the track, particularly, dare I say, in the conurbation around Dublin where we sit, which will have serious water problems in the very near future if the investment is not fast forwarded. I am not convinced that governments in the future would be in any position to invest at the necessary level if Irish Water had not been set up in this way. That is the reason we went down this road.