Wednesday, 4 March 2015
Ceisteanna - Questions - Priority Questions
Irish Water Remit
4. To ask the Minister for Environment, Community and Local Government if all outstanding assets and liabilities relating to water infrastructure have been transferred from the local authority balance sheets to Irish Water, to date; if he will provide details on the way the reported central Government grant, paid to local authorities to cover outstanding liabilities relating to water infrastructure, has been allocated; and if he will make a statement on the matter. [9321/15]
My question relates to transfer of assets and liabilities from local authorities to Irish Water. The legislation that governs the transfer was passed in December 2013 for the transfer as of 1 January 2014. Could the Minister confirm to the House that all assets and liabilities were transferred on that date? If not, why not, and what liability has since incurred to the State as a result of non-compliance with its own legislation?
On 14 January 2015, I signed an order under section 12 of the Water Services (No. 2) Act 2013. This order provided for the transfer to Irish Water of all underground water services assets previously vested in any local authority across the country. Further orders for the transfer of assets are currently being drawn up and I expect shortly to sign an order for the transfer of approximately 250 treatment plants from local authorities to Irish Water.
Considerable work is involved in preparing supporting material for the transfer of over-ground assets from local authorities to ensure that the order reflects the precise nature and, in particular, the boundaries of such assets. The remaining orders required will be completed as soon as possible, subject to taking the time necessary to ensure that the assets are accurately defined. In that regard, I expect the process on the transfer of over-ground assets to be largely concluded by the end of June 2015.
Work is under way between Irish Water and the local authorities on the identification and quantification of water-related financial liabilities. Final agreement on the liability to transfer to Irish Water, including financial assets, liabilities and debtors, will be by way of balancing statements agreed between Irish Water and local authorities. Again, this is a very significant exercise which it is important is completed accurately. The work involved is now at an advanced stage and I anticipate that it will be completed in the near future.
In 2014, some €47 million was provided to local authorities for the purpose of servicing water-related loans, pending the agreement of an enduring set of arrangements for dealing with such loans. Discussions in this regard are ongoing between my Department, the Department of Finance and other stakeholders, including the local authorities. These discussions will be finalised as soon as possible.
This again proves the point we have made from the outset, namely, this entire concept and its delivery was rushed, and needlessly rushed when one considers that no extra funding has been spent on the provision of water services during the four years of the lifetime of this Government. We were told that all assets and liabilities would be transferred. They have not been transferred because there was not adequate time or preparation put into that process. How many assets remain outstanding, and what value are those assets? What liabilities are associated with them? Are they specific assets that were constructed under public private partnerships? The Minister said that €47 million was provided last year to local authorities, and that is on top of the €500 million paid to the Housing Finance Agency. In what form was that €47 million provided? Was it part of the local government fund because local authorities were given to believe that they would have no liabilities or accruals in regard to their bills associated with Irish Water and with the assets? Is the Central Statistics Office aware of this? Our party spokesperson on public service, Deputy Fleming, has asked the CSO if it has been informed, for example, that all assets and liabilities have been transferred. Has it been informed or is it aware that outstanding liabilities remain which local authorities are being forced to pay?
It was never intended that the assets would transfer on 1 January 2014. It was planned that transfers would take place on a phased basis. As work progressed on the identification and the various assets and liabilities became clear, there was a need to ensure that loans did not automatically transfer with the assets. As the Deputy is aware, because we discussed it in this House, legislation to underpin this was passed at the end of 2014 to ensure that assets could transfer this year. The transfer of outstanding assets will take place over the coming months and the process is expected to be largely concluded by June of this year. A licence arrangement applies under the service level agreements between Irish Water and the local authorities and thus the fact that assets have not fully legally transferred has not acted as an impediment to Irish Water from an operational or capital investment plan.
The Deputy asked whether the local authorities incurred additional expenditure as a result of this issue of timing. The straight answer is "No", they did not.
Was it from the Central Government Fund? How much will be provided this year, and will it be from the Central Government Fund because that is on balance sheet? There is great talk about moving the expenses associated with water services off-balance sheet. I might add that the €300 million Irish Water has borrowed so far off-balance sheet is two and a half times the rate it would cost to borrow it on-balance sheet. The public need to know that it will not be the Government that will be paying it. Ultimately, it will be the taxpayers. They are already paying more, despite the fact that they have got less with regard to the provision and maintenance of services. The records for the past four years will show, and the Minister can check them, that less has been spent in the area of water services in terms of what is under the ground by comparison to what went before. In total, €1.5 billion has been spent on the preparation for a mechanism that is being postponed for two years in order for the costs associated with off-balance sheet to be hidden. When the rates are so high the only way it will be compensated is when the charges increase.
On the point I made-----
I will confine it to this. Last year the Minister said €47 million was provided to local authorities, and he said it again in his initial response, to meet the liabilities associated with the assets still on-balance sheet.
The local government fund is set aside, and I am happy that the fund will service the demands of the local authorities as set out in the Estimates we dealt with yesterday. Local authorities will not incur any expenditure on water service assets.
In regard to the €47 million from last year, we will provide the funding for what is required in 2015 but as the Deputy is aware, assets are in the process of being transferred so loans will transfer as well. There are no hidden costs to the taxpayer.
Regarding the Deputy's commentary on EUROSTAT and the CSO, they are both independent bodies. They have to do their own analysis based on the figures presented to them following auditing. I expect results from a EUROSTAT perspective in regard to its work some time next month.