Irish Water must stay on State balance sheet—Eurostat

As someone who is completely in favour of Irish Water and the concept of water charges, this is the first time I have seriously doubted whether Irish Water will survive

http://www.irishtimes.com/news/politics/irish-water-must-stay-on-state-balance-sheet-eu-says-1.2299128

The State funds spent on Irish Water will have to stay on the exchequer balance sheet, under a decision by Eurostat, the EU statistics agency.
The ruling is a blow to the Government’s strategy on water investment, and will mean that a hoped-for boost to the 2016 budget figures will not now emerge.

The ruling on the so-called market corporation test – to decide whether Irish Water is sufficiently independent of the exchequer to remain off the State balance sheet – is expected to be detailed by the European agency today.

...The reasons for the Eurostat ruling are not clear, but are likely to centre, in part at least, on the €100 annual grant that the Government agreed to pay to households that signed up for Irish Water.

The one-hundred euro grant is (—was??) due to be paid to householders annually up to and including 2018.

This is not a good day for Irish Water, or for the State's debt and deficit figures. Getting Irish Water off the books would have been a real boon to taxpayers in Budget 2016, giving the Government greater fiscal space for tax cuts and capital investment.

Deary me.

zl1whqvjs75cdy

FG/Lab were absolute clowns to be promising budget give aways when the state of Irish Water was uncertain. Has anyone crunched the numbers yet for how much less wiggle room the coalition has now?

donkeyoaty0099

donkeyoaty0099 wrote: »

FG/Lab were absolute clowns to be promising budget give aways when the state of Irish Water was uncertain. Has anyone crunched the numbers yet for how much less wiggle room the coalition has now?

The government had very prudently factored in Irish Water remaining on the State's books as a baseline scenario, so the government debt and budget metrics do not change following Eurostat's ruling.

However, you can't help but feel that was a deliberately pessimistic view to take, which looked like it might deliver a nice windfall prior to Election 2016. A favourable Eurostat ruling would have facilitated a more expansionary budget.

Irish Water has now changed from being a relieving force on government debt to being an extremely unpopular, cumbersome deadweight, being dragged about like a dead horse. In normal times, a government might batten down the hatches and sit it out. But Ireland is entering election mode.

Uncle Ben

A Tyrant Named Miltiades! wrote: »

The government had very prudently factored in Irish Water remaining on the State's books as a baseline scenario, so the government debt and budget metrics do not change following Eurostat's ruling.

However, you can't help but feel that was a deliberately pessimistic view to take, which looked like it might deliver a nice windfall prior to Election 2016. A favourable Eurostat ruling would have facilitated a more expansionary budget.

Irish Water has now changed from being a relieving force on government debt to being an extremely unpopular, cumbersome deadweight, being dragged about like a dead horse. In normal times, a government might batten down the hatches and sit it out. But Ireland is entering election mode.

Those that have not paid will also be reassured whilst those that have already paid may now be less inclined to do so. The house of cards is falling.

NorthStars

Just heard on RTE radio that IW have gone to ground and are refusing to comment on this latest screw up.
It's a full blown joke now.

Tefral

NorthStars wrote: »

Just heard on RTE radio that IW have gone to ground and are refusing to comment on this latest screw up.
It's a full blown joke now.

Tis a bit early for the spin doctors I'd say yet. Expect a press release before lunch I'd say

Macha

Screw up? I think that's quite unfair.

This is exactly what the government was trying to avoid and the reason why it resisted reductions in water payments for so long.

NorthStars

NorthStars wrote: »

How FG and Labour ever thought that paying people a bribe, from the Social Welfare budget, of €100 to register for IW would be acceptable to Eurostat is beyond me.

Let's not go overboard, presumably there was an arguable case to be made on the State's behalf, and the CSO (which is independent of Government) has recommended to Eurostat that IW should be off the State's books.

I would be interested to see Eurostat's reasoning, because the water conservation grant is convincingly separate to Irish Water, since it is even paid to people who have no IW liability.

I am not familiar with Eurostat rules on this topic, but I should think the Government proposal was considerably more reasonable than you are suggesting. If it were so clear cut, Eurostat would have ruled much earlier; it was supposed to deliver a ruling last April.

Seth Brundle

The gas thing is that IW as an idea makes sense.
The process that the government followed in the management of the whole setup failed.
The government should never have changed their minds in the manner and frequency that they did.
The government should not have pandered to the opposition* but instead should have used the media to promote the reasoning and fiscal benefits behind charging for water and the consequences were we to somehow revert back to the old way.


* and I note that the opposition grew from a small amount to a large body especially when certain political parties changed direction when they saw the public mood. Had this been handled from the start, the opposition would not have grown to the extent it did.

NorthStars

A Tyrant Named Miltiades! wrote: »

Let's not go overboard, presumably there was an arguable case to be made on the State's behalf, and the CSO (which is independent of Government) has recommended to Eurostat that IW should be off the State's books.

I would be interested to see Eurostat's reasoning, because the water conservation grant is convincingly separate to Irish Water, since it is even paid to people who have no IW liability.

I am not familiar with Eurostat rules on this topic, but I should think the Government proposal was considerably more reasonable than you are suggesting. If it were so clear cut, Eurostat would have ruled much earlier; it was supposed to deliver a ruling last April.

I'm not going overboard at all.
The bribe was thought up so the government, or their regulator, could charge the minimum required to enable IW pass the MCT, (billed amount being what was required, not what was actually collected by IW) and then bribe people into paying up.
It was a scam from the start, form a government renowned for spinning figures.

Seth Brundle

A Tyrant Named Miltiades! wrote: »

I would be interested to see Eurostat's reasoning, because the water conservation grant is convincingly separate to Irish Water, since it is even paid to people who have no IW liability.

I am not familiar with Eurostat rules on this topic, but I should think the Government proposal was considerably more reasonable than you are suggesting. If it were so clear cut, Eurostat would have ruled much earlier; it was supposed to deliver a ruling last April.

Don't they follow something as simple as the need for over 50% of funding from the customer. We have only reached 46%.

NorthStars

kbannon wrote: »

* and I note that the opposition grew from a small amount to a large body especially when certain political parties changed direction when they saw the public mood. Had this been handled from the start, the opposition would not have grown to the extent it did.

Trying to spin this onto Sinn Fein now?
The opposition to IW was well in place before they got on board.
What people need to accept is that the opposition to IW is from all walks of life here, not just the ones people like to castigate, i.e the unemployed, people from certain backgrounds etc etc.
I'm a businessman with employees and a decent enough performing company and I'm totally against water charges/taxes.

BoJack Horseman

This leaves IW exactly where SF want it....

A vindication of sorts.

NorthStars

Macha wrote: »

You can blame the water protesters for that.

Hardly.
I blame Phil Hogan and the rest of his cronies.
Protesters protest, governments govern..........they failed miserably.......again.

Seth Brundle

NorthStars wrote: »

Trying to spin this onto Sinn Fein now?
The opposition to IW was well in place before they got on board.
What people need to accept is that the opposition to IW is from all walks of life here, not just the ones people like to castigate, i.e the unemployed, people from certain backgrounds etc etc.
I'm a businessman with employees and a decent enough performing company and I'm totally against water charges/taxes.

eh, no. I was quite clear in saying that it was the government's fault for using a poor approach to the IW project (which was knee jerk from the outset).

However, I was not singling out SF there (SF did change their mind in terms of charging for water). FF also changed their minds along the way.

NorthStars

BoJack Horseman wrote: »

This leaves IW exactly where SF want it....

A vindication of sorts.

The movement against IW has very little to do with Sinn Fein.
People need a bogeyman, and in this case it's SF/Paul Murphy/AAA.

Fact is this is a ground up protest, most people I know who are against IW have never been on a protest march or support any of the above mentioned.

NorthStars

NorthStars wrote: »

I'm not going overboard at all.
The bribe was thought up so the government, or their regulator, could charge the minimum required to enable IW pass the MCT[...]

Now you're moving onto a different point, calling the WCG a "bribe" and a "scam". That's not what I challenged you on. I said Eurostat's decision was not as clear-cut and obvious as you are suggesting it was.

kbannon wrote: »

Don't they follow something as simple as the need for over 50% of funding from the customer. We have only reached 46%.

46% refers only to the proportion of billpayers who have paid to date; whereas Eurostat's 50% rule refers to the value of the bills issued to customers, which must represent at least 50% of IW's total production costs.

LuckyLloyd

Macha wrote: »

You can blame the water protesters for that.

Protest is designed to put pressure on a government. FG / Labour had the option to stick to their guns or make better decisions. Pressure forces mistakes, and it's why protest works and is important.

NorthStars

A Tyrant Named Miltiades! wrote: »

Now you're moving onto a different point, calling the WCG a "bribe" and a "scam". That's not what I challenged you on. I said Eurostat's decision was not as clear-cut and obvious as you are suggesting it was.

We'll see their reasoning later in the day when I'm sure when they release their official judgment on IW's financial position.

BoJack Horseman

NorthStars wrote: »

Fact is this is a ground up protest,

Yeah, no one buys that.
This has been nothing but political from day 1.

And as for the Shinners, retaining IW as a state entity is their (current) policy, so IW will be exactly where they want it, on the states books.

NorthStars

BoJack Horseman wrote: »

Yeah, no one buys that.
This has been nothing but political from day 1.

And as for the Shinners, retaining IW as a state entity is their (current) policy, so IW will be exactly where they want it, on the states books.

The 'shinners' are right so and AK47 is wrong.....;)

BTW, it wasn't 'political from day one'.
That's just handy for some people to console themselves with.

Riverireland

46% refers only to the proportion of billpayers who have paid to date; whereas Eurostat's 50% rule refers to the value of the bills issued to customers, which must represent at least 50% of IW's total production costs.

You reckon? Seriously?

zl1whqvjs75cdy

A Tyrant Named Miltiades! wrote: »

The government had very prudently factored in Irish Water remaining on the State's books as a baseline scenario, so the government debt and budget metrics do not change following Eurostat's ruling.

However, you can't help but feel that was a deliberately pessimistic view to take, which looked like it might deliver a nice windfall prior to Election 2016. A favourable Eurostat ruling would have facilitated a more expansionary budget.

Irish Water has now changed from being a relieving force on government debt to being an extremely unpopular, cumbersome deadweight, being dragged about like a dead horse. In normal times, a government might batten down the hatches and sit it out. But Ireland is entering election mode.

Ah didn't realise that, thanks.

Kermit.de.frog

Irish people refusing to pay for their own water have effectively damaged their own country now. Government should respond by pulling back on any expansion in the budget which they may have to.

You can see how irresponsible such figures would be if anywhere near government. Free for alls and magic money trees don't exist.

F34

IW has been a shambles from the start and nothing but a political quango that has managed to waste a lot of money that could have been used to fix a lot of issues and then bought in charges further down the line. IW is typical of FG arrogance and particularly of Phil Hogans arrogance that will cost the Irish people far more in the long run. It also proved to me a long time supporter of Fine Gael that they were no better and I may even say worse than Fianna F il.

Macha

Macha wrote: »

You can blame the water protesters for that.

I am one of those despicable people : a water protestor .

I have a right to protest about something this Government want to implement that I don't agree with. Something that will affect me now and my children in the future.

I am not unemployed. I pay my property tax, TV licence,motor tax, ESB, Bord Gais, bin charges, all my insurances etc etc. All on the basic minimum wage .

Even if I could afford this latest charge and even though I agree with water conservation I do not agree in principle with a disfunctional , enormous, greedy , poorly set up company like IW. The biggest joke was that this Government thought they could BRIBE its people into paying . How stupid do they think we are ?

Now look what's happened!

Riverireland

Riverireland wrote: »

You reckon? Seriously?

Yes, seriously.

http://www.environ.ie/en/Publications/Environment/Water/FileDownLoad,38716,en.pdf

A significant component of the strategy to establish Irish Water is that Irish Water will be classified, from inception, as a Market Corporation under Eurostat rules (ESA 95/ESA 2010).
The Market Corporation Test (“MCT”) for the purposes of the classification of Irish Water is a requirement that amounts billed (ex VAT where applicable) to domestic and non-domestic customers and amounts billed to Government for purchases by Government as set out in 2.6 (a) and (b) must regularly and clearly exceed 50% of Irish Water’s production costs (including
consumption of fixed capital and including interest).

ESA 2010
http://ec.europa.eu/eurostat/documents/3859598/5925693/KS-02-13-269-EN.PDF/44cd9d01-bc64-40e5-bd40-d17df0c69334

ESA 2010 refers to a multi-annual billing period, it would obviously be faulty to impose a 50% test on compliance rates during a short term, introductory phase.

BoJack Horseman

Kermit.de.frog wrote: »

Irish people refusing to pay for their own water have effectively damaged their own country now. Government should respond by pulling back on any expansion in the budget which they may have to.

In retrospect, it was wrong for the government to lower income taxes at the last budget.

Even though most workers are better off even including IW charges, it bought them no favours.

It would be irresponsible to cut income taxes further in lieu of having the IW millstone round its neck.

The government needs to take heed if they want to be reelected, that Ireland doesn't want socialist taxation.

Captain Flaps

I'm in favour of water charges in general, but I'd prefer to see them brought through general taxation rather than a bloated, unoptimised utility with the potential to be sold off as a monopoly player with lawful access to my pay packet. Eager to see how this pans out... they've made some mess of this whole thing.

BoJack Horseman

Captain Flaps wrote: »

I'm in favour of water charges in general, but I'd prefer to see them brought through general taxation

So, actually you aren't in favour of water charges.

'Individual payees' vs 'some paying for all' are mutually exclusive.

listermint

BoJack Horseman wrote: »

In retrospect, it was wrong for the government to lower income taxes at the last budget.

Even though most workers are better off even including IW charges, it bought them no favours.

It would be irresponsible to cut income taxes further in lieu of having the IW millstone round its neck.

The government needs to take heed if they want to be reelected, that Ireland doesn't want socialist taxation.

Yes it was wrong to allow people to put money back into the real economy than direct taxes. That was so very wrong to increase consumer confidence.

So very wrong. :rolleyes: