Barry Cowen (Laois-Offaly, Fianna Fail)
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6. To ask the Minister for Environment, Community and Local Government if his Department has had any discussions with the Central Statistics Office in relation to the EUROSTAT market corporation test; when a decision will issue; and if he will make a statement on the matter. [3441/15]

Barry Cowen (Laois-Offaly, Fianna Fail)
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The Minister has, in previous answers, briefly mentioned this issue. I wish to examine some of the specifics of it. Prior to the announcement of a new charging mechanism for Irish Water's income stream and the costs associated with it, the Tánaiste confirmed that 44% was the figure for Government subvention. Is the Minister aware of, or can he inform the House, what the percentage subvention is now, subsequent to the establishment of the new regime? Has this followed communications with the CSO, which has confirmed those figures to be actual, or is it that such an adjudication can only take place in April, by EUROSTAT, when actual figures rather than estimated figures on revenue are agreed?

Alan Kelly (Tipperary North, Labour)
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A key component of the strategy to establish Irish Water is that Irish Water will be classified as a market corporation under EUROSTAT rules and, as a result, will not, other than in relation to Government operating subvention, be included in the calculation of the general Government balance. The market corporation test is a requirement that income from customers be greater than 50% of production costs. The Central Statistics Office is responsible, as the Deputy is aware, for engagement with EUROSTAT on such matters. My Department has met with that office, which is independent, and is providing the necessary information to facilitate this work. Early engagement with that office by my Department centred around understanding the rules by which a utility such as Irish Water would be considered a market corporation. Based on this understanding, the Government is confident that the underlying funding model for Irish Water supports increased investment in the water sector through an off-balance-sheet classification of the utility while, at the same time, providing for water charges which are affordable, clear and certain. The Government remains confident that Irish Water will pass the market corporation test, MCT. However, the decision, based on the information we are providing through the CSO and onto EUROSTAT, is a matter for EUROSTAT. It is my understanding, as outlined earlier, that a decision will be made in or about April.

Barry Cowen (Laois-Offaly, Fianna Fail)
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From what the Minister has said, it appears to me that his discussions with the CSO centred around its informing the Minister of the rules and his obligations under those rules. Based on that information, EUROSTAT will make an adjudication. However, the CSO, as an independent authority, cannot confirm whether the Minister is within the rules or meets the guidelines. Is the Minister aware that a journalist was informed recently by a senior official in the Department of Finance that it is frantically looking at ways and means of dealing with this issue should the Government's proposals fail the EUROSTAT market test, and that the same official is of the opinion that the Government would meet the requirement that the deficit be less than 3% of GDP given the forthcoming increase in taxation revenues? However, this does not get around the situation in which the Government may find itself, as the costs associated with that subvention will be back on the balance sheet and there will be no prospect of Irish Water borrowing off-balance-sheet from the markets. This being the case, it will be back on the Government's agenda to fund the forthcoming proposals from Irish Water mentioned by the Minister. Are we then back to a default position, which the Taoiseach mentioned some months ago when he was asked about this issue, with the public being faced with a 4% increase in taxation in order to fund the works that Irish Water believes the programme needs?

Alan Kelly (Tipperary North, Labour)
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I will not engage in speculation on communications between a journalist and Department of Finance officials. I cannot confirm it one way or the other, although I find it very hard to believe. We are engaging with the CSO in terms of providing all the necessary information. We are very confident that it will pass the test. The figure the Deputy quoted is accurate; I think it is 44.38%. We are very confident in the model that has been put in place and, once this has been outlined through the CSO and the information provided to EUROSTAT, that EUROSTAT's determination will be fair and we will pass the MCT. As a result, Irish Water will be in a very strong position. This is what was always intended by the Government. We are very confident that Irish Water, as currently modelled, will pass the MCT.

Barry Cowen (Laois-Offaly, Fianna Fail)
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I understood that 44% was the figure prior to the introduction of the new regime and the associated new costs. Apart from this, it is worrying that the Minister can neither confirm nor deny that a high-ranking Department of Finance official has stated that frantic efforts are being made to devise a mechanism to deal with this issue in the event that we fail that EUROSTAT test. I ask the Minister to speak with his colleague, Deputy Noonan, and confirm or deny that this is the case. If it is the case - I asked this question several months ago - what is plan B in the event that we fail the test? I do not think there is anything wrong with having a plan B in place. Suffice to say that in the absence of such a plan B, and given what we are hearing, they will be able to absolve the costs by virtue of increased revenue and still meet the 3% of GDP deficit target, as was envisaged initially. This paints a whole new picture as to the total and utter mismanagement of the process and this debacle since it began two years ago. As I have stated in recent weeks, the Government's credibility, let alone that of Irish Water, would be shot by the idea that so much effort, cost and funding from the taxpayers had gone into creating a model that could not do what it was supposed to do and what it said on the tin. I ask the Minister to confirm to the House as soon as possible that no efforts are being made to subvert the whole process, which he has stood steadfastly behind, as has his Government up to this point.

Alan Kelly (Tipperary North, Labour)
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What I said was that I could not confirm what journalists are saying. I do not think any one of us in this House ever can. However, I am not aware of any such process - I would be so aware given my Department's role in this - or of any officials going down the route referred to by the Deputy. Journalists speculate. However, I can state categorically that my Department and the Government are not examining any other options aside from passing the MCT.