Barry Cowen (Laois-Offaly, Fianna Fail)
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8. To ask the Minister for Environment, Community and Local Government the timeframe for the announcement of the EUROSTAT market corporation test of Irish Water result; if he will outline the impact an adverse ruling would have on Government deficit and general Government balance; and to outline if any contingency plans are being put in place to protect against the impact of an adverse ruling on the deficit and the general Government balance. [22330/15]

Barry Cowen (Laois-Offaly, Fianna Fail)
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Many issues surround the proposal that is the construct and funding model of Irish Water which is before EUROSTAT at present. Its approval, or otherwise, will generate Irish Water's direction, duty and obligation to the public and also determine the suitability of proposals by the Government on the possibility of it putting its hands into the pay packets of many throughout the country on foot of non-payment. Could the Minister provide an update and a timeline on the proposal before EUROSTAT and indicate when we can expect a response and seek resolutions thereafter?

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 respect of Government support, be included in the calculation of the general Government balance.

The Central Statistics Office, CSO, an independent body, is responsible for engagement with EUROSTAT on such matters, and my Department has engaged with that office and has provided the necessary information to facilitate its work. The CSO has confirmed that it has submitted a classification proposal on Irish Water to EUROSTAT and that the proposal envisages Irish Water being classified outside the general Government sector. The CSO has further stated that this is a closed process and that it is awaiting the final adjudication by EUROSTAT. I genuinely cannot give the Deputy a date, although I would expect an outcome in a couple of months. It is a closed process and it is a matter for the CSO to make the announcement.

Pending a decision by EUROSTAT, for prudent forecasting reasons, the spring economic statement and accompanying documents are based on Irish Water being in Government. In the draft of Ireland’s stability programme: April 2015 update, table nine outlines the impact of Irish Water being included in Government on debt and deficit forecast, in order to be prudent. By 2020, the Irish Water debt, based on its capital investment proposals, would amount to just under 1% of Government debt if it was classified in Government. However, we expect it to be off balance sheet.

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 decision is ultimately a matter for EUROSTAT.

Barry Cowen (Laois-Offaly, Fianna Fail)
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I thank the Minister for his response. I had thought the Taoiseach, if not the Minister, had informed the House some months ago that the delay in the CSO proposal to EUROSTAT meant any decision by EUROSTAT would not be forthcoming until June. Now the Minister is saying it will be June at the earliest and may be some months thereafter. Can he confirm to the House that for a €300 million loan Irish Water has taken out in the marketplace, it is paying 150% more than the NTMA is currently paying on behalf of the Government? I believe that, while the Government may be borrowing at 1%, Irish Water may be borrowing at 2.5%. That would seem to defeat the purpose of the mechanism by which the construct was put in place in the first instance, in terms of the cost to the taxpayer. Ultimately, the cost will be borne by those who avail of the water services.

Alan Kelly (Tipperary North, Labour)
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The dates and timing of this are really a matter for EUROSTAT. I do not have a date as it is not for me to decide, and I would not like to deflect from the independence of either the CSO or EUROSTAT. When they make their decision is a matter for them.

The interest rate would reflect the time at which the loan was taken out and the terms and conditions of that time. I will get that information for the Deputy and forward it on to him. A different rate would not be abnormal.

Barry Cowen (Laois-Offaly, Fianna Fail)
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I thank the Minister for his response and look forward to him providing that information. I again ask if he would find it strange, to say the least, if Irish Water is paying 150% more than the Government for funds on the open market? That would represent a contradiction in terms for the whole construct and purpose of Irish Water, and would work against the Government's purpose of taking it off balance sheet in order for it to be less of a burden on the taxpayer when it would be 150% more of a burden.

Alan Kelly (Tipperary North, Labour)
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Pending clarification, the one thing I will say is that when a loan is taken out, circumstances are obviously different. One could apply this to many different models, depending on when funding was taken out. The circumstances in every case are completely different. I would not find it strange that there are different percentages. The information will be provided to the Deputy in due course.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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The Deputy who tabled Question No. 9 is not present.