The Department of Public Expenditure and Reform has warned that Irish Water will have to compete with hospitals, transport and schools for money if it is to be funded through general taxation.
In a submission to the Oireachtas committee on water services ahead of a meeting on Tuesday, the department responded to the expert commission's report which proposed the State would pay for the delivery of water.
The department, which controls the spending of public money, says the utility will have to compete for whatever resources are available in a given year.
“In the event of there not being sufficient resources available in any given year, there might have to be reprioritising or rephasing of Irish Water infrastructural projects in line with the resources that could be made available to Irish Water in the budget.”
The Oireachtas committee is examining a report by an expert commission which looked at how water services can be funded. It said the main burden of funding water services should be paid for through taxation, though it left open the exact model as a question for the Government to answer.
The department says the consequences of such a decision are that water services will be viewed relative to other public investment priorities such as hospitals, schools and public transport.
Ringfencing
Irish Water says it needs €13 billion between now and 2021 to meet its infrastructural requirements.
While it says taxation is a matter for the Minister for Finance, the Department of Finance says ringfencing any income generated from one tax is troublesome and undesirable, because it constrains fiscal discretion to raise any other tax and meet the expenditure requirements.
In a separate submission, Revenue also advises against the creation of a new tax, insisting it is a significant and expensive undertaking.
New systems would have to be created, and processes would have to be developed to support assessment, collection, accounting, repayment and enforcement.
Revenue advises the committee a very intensive effort and commitment of manpower over several years is also required to ensure compliance.
The committee’s work is to intensify over the coming weeks with a final vote scheduled in the Dáil on March 13th.
It is due to hear from Irish Water and from the protest group Right2Water this week, with the European Commission invited to give evidence on February 15th.
The Department of Public Expenditure says it believes the expert commission’s recommendations would comply with the requirements of EU law but said fresh legal advice is warranted.
It insists failure to comply would lead to financial penalties being imposed in addition to meeting the cost of bringing the facilities up to the prescribed standards.
