The future of Irish Water has emerged as a potential stumbling block to any deal between Fine Gael and Fianna Fáil on how a new government can be put in place.
Taoiseach Enda Kenny has emphatically ruled out the abolition of Irish Water while Fianna Fáil is publicly insisting it should be dismantled.
In his first public comments since the election, Mr Kenny said water charges administered by a single national utility would be a fundamental issue for Fine Gael during negotiations on forming a new government.
He called on people to continue paying their water bills, saying it would be a historic mistake for the Government to reverse position on Irish Water.
However, there were indications from sources in both parties that a compromise might be possible if Fianna Fáil backs away from abolishing Irish Water and Fine Gael drops its proposal to abolish the universal social charge (USC).
Fianna Fáil sources said that while scrapping water charges for five years was a key negotiating position, there were no red lines for the party in talks about the formation of government.
Fianna Fáil front bencher Dara Calleary said water bills had to be legally paid because of decisions made by Fine Gael and Labour. He said his party would pursue the matter in negotiations for government.
USC abolition
Fianna Fáil’s other key negotiating position is for Fine Gael to change its position on the abolition of the USC.
Other Fianna Fáil sources said privately they expected a compromise on water – such as a possible pause on charging for a number of years, or reducing costs for families – to be possible in a situation where they agreed to support a minority Fine Gael government.
Fianna Fáil policy is that water charges should be paused for five years, with Irish Water replaced by a slimmed down national water directorate.
The Fine Gael parliamentary party will meet this afternoon to discuss the election fallout and how the party should approach forming a government.
Mr Kenny earlier this week said Fine Gael “will formulate a set of principles that will guide Fine Gael participation in a future government”.
One Fine Gael Minister said the party’s policy of abolishing the USC would have to be reviewed as part of the new principles.
There has been some anger within Fine Gael at the confusion over the party’s position on water charges, with one TD saying it gave the impression Fine Gael would ditch its policies for the sake of power.
A number of Independents have insisted they will not consider working with any political party unless some concessions are made on water charges.
Members of the Independent Alliance and the Social Democrats claim they have not been contacted by either Fianna Fáil or Fine Gael since the election count. Both say they will not support any government that does not make changes to the water charges regime.
