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Will water charges take a bath?
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Water charges for domestic users were abolished with effect from 1 January 1997, six months before a general election that swept the Rainbow Coalition aside and ushered in the Bertie era of boom and bust. Now, they’re back on the political agenda, courtesy of the Greens, the renewed Programme for Government, and a variety of others, state agencies and economists, that support their introduction.
Last October’s Commission on Taxation Report recommended the introduction of water charges for domestic users and for a while there was media speculation that the Minister for Finance would take up their advice in the December Budget. The Department of Finance strongly favours the move and suggested a flat charge of €175 per household in documents prepared for Mc Carthy’s Bord Snip II.
But the issue is about something more fundamental than a new form of raising tax or the promotion of conservation of a precious and expensive resource: water infrastructure was neglected even throughout the Celtic Tiger era when local authorities appeared flush with cash from developers’ levies. Indeed the pace of that development exacerbated problems in an already defective and creaking system. Now, impecunious authorities, locally and nationally, no longer have the resources to maintain or improve it, without turning to the citizens who don’t already have to pay for their water supplies, for financial support. The recent cold snap, and the water shortages that followed in its wake, has simply brought the issue to a head.
Water charges, like a property tax, are a hard sell. Early this week, the Minister for the Environment, John Gormley promised to press on with his plans to introduce metering to the one million plus households that don’t have water meters and to introduce a system of water charges for domestic users by next year.
Gormley proposes that each household will be entitled to a basic free allowance and will then pay for water usage over that limit. Income from the water tax will be ploughed back into improvements in the system – about €300m p.a. to replace defective pipes over the next three years. Estimates of the costs to households vary – from €300 to €900 per annum, depending on whose analysis you read.
The Minister can expect opposition on all sides to his proposals. For Joe Higgins and the Socialist Party, it promises a resurrection of the mid-1990s campaigns in Cork and Dublin, apart from a golden opportunity to resurrect Higgin’s electoral prospects in Dublin West in time for the next general election.
“Should the Government attempt to reintroduce the hated water charges which we worked so hard to abolish in the 1990s we promise them a major water war,” the Dublin MEP said in a recent statement. “Just as happened in the 1990s there will be a massive boycott with people power coming directly into play to defeat any plans to introduce a water tax. It was such a campaign in the 1990s that forced the Fine Gael/Labour Party Government to abolish water charges for the whole country in December, 1996.”
The Labour Party won’t be far behind.
“This latest proposal highlights the difference between Labour’s philosophy and that of this conservative government,” according to Dublin South-West Cllr. Dermot Looney.
“They look at water as a commodity to be rationed, while Labour views it within the rights framework,” he said.
“We believe that everybody has the right to free, clean and safe water provided, not through private companies, but accountable public utilities. Water should be paid for through general taxation, not in the form of a regressive stealth tax.”
Fine Gael’s Environment spokesman, Phil Hogan, has been somewhat more circumspect on his party’s position. Fine Gael wants a new quango, “ a single water semi state utility company” to take over responsibility for water investment and management on a national basis, according to the private members motion it placed before the Dail this week, with “future water funding from the exchequer to prioritise water conservation”.
There are advantages to water metering for domestic consumption. Not least that in other countries it has been shown that the introduction of metering in itself leads to greater conservation of water supplies by consumers Charging for use also carries advantages to the ordinary householder, who will not then be subsiding his more water profligate neighbour’s wastage of a costly resource. But in our situation there are problems with the large numbers of households who don’t have meters and both the cost and the time lag in installing meters before the charging system commences.
Back in 1996, the reasons for abolishing the water rates included a recognition by the then government that the flat rate charge to householders was inequitable, more a poll tax than a genuine charge for water use. The then Minister, Labour’s Brendan Howlin, was advised that it would take the best part of a decade and cost the equivalent of €1bn to install meters in every home. But there was also a strong political dynamic at work: the campaign whipped up by the Socialist Party and civic groups opposed to water charges threatened Labour seats in their urban strongholds in the run up to a general election.
The cost of installing meters to 1.2m households is now estimated at about €500m and if the tax is presented as either a flat charge per household or a metered one, with a free basic allowance, then it is likely that householders will be stimulated to install meters.
But water charges are never going to be popular, no matter what rationale is offered by the government for their introduction. Especially not, when property taxes are also in the pipeline. Sounds like the perfect issue to precipitate a backbenchers’ revolt.
what the labour party wouldn’t implement a domestic water charge of any kind??
Steve,
Honest answer is : I don’t know! I couldn’t find any statement on Gormley’s announcement from Ms Tuffy, their environment spokesperson. But at a guess, I don’t think they’ll leave the path clear to Joe Higgins.
I look at bread “within a rights framework”, yet I still recognise that there are difficulties in providing unlimited, unmonitored supplies of it, with no charges for excessive consumption.
And no dedicated revenue flow to operate and maintain the bakeries.
A couple of points. The notion that meters lead directly to a decrease in water usage is a fallacy. A direct comparison can be done between Dublin and Britain becasue each has a similar network leakage rate. In Dublin the current average usage is 145l per person per day. In Britain where there are meters and charges the range of usage is uncannily 145 to 150l pppd. The experience in Britain is that the initial installation of meters led to a drop in usage before it resumed the same levels as before. The pro water chargeds lobby are entirely dependent on the initial drop to back their argument.
The notion that householders are the cause of the water shortage is a fallacy. Domestic water usage only accounts for a minority of the consumption in Irish society. The problem lies in network leakages not profligate use of water in the homes. The estimated figure for meter installation is €650m, more than twice the figure of €300m announced by the government to plug leaks in the system.
People who have gone through the experience of the bin charges, especially in Dublin will be mindful of the promise back in 2002 that you would be rewarded for buying into the system with declining bills whereas the opposite has been the case.
I’m not too sure if politically they could introduce a water charge as well as the proposed Property Tax. Introducing two new bills into already hard pressed householders whilst at the same time
reducing public sector wages, Welfare benefits and encouraging pay reductions in the Private Sector too.
The danger too is were the charge established the temptation for a cash strapped Government would be to sell the Water system to Private Enterprise.
More likely a public/private partnership arrangement.
Irish Election Lit.,
Great site! Love the Democratic Left campaigning poster from 1995 which shows the DL Dublin Councillors, led by Eamon Gimore, voting against the introduction of water charges the previous year whilst the Labour Councillors voted en masse in favour of them. Given that recent history, the reticence of Labour’s environment spokesperson to set out a clear position for the party on the current water charges proposal is understandable, I suppose!
I’ve heard an argument that the property tax and the water charges should be lumped in together into one ‘household tax’, as opposed to being charged separately. To me this appears even less attractive than what is being proposed. It seems to be accepted on all sides that we need to reform our taxation system in the longer term, getting away from a reliance on labour taxation or ‘fair weather’ taxes like stamp duty that are gone and aren’t coming back any time soon, by embracing a more stable model of ‘green’ and asset taxes instead.
In the short term, the government has the problem of the 22bn euro hole in the public finances to fix, which means they need to find new sources of revenue quickly while trying not to increase the burden of employment taxes at the same time. But it’s disturbing that there’s so little political and public debate about what the options may be, as the crucial decisions will have to be made in time for the next budget.
As you point out, none of these new taxes are going to be popular, and we all know enough about what happened with bin charges to make householders even more nervous about any new raft of taxes on services. But avoiding a debate about them until decisions become imminent won’t make them any more popular or acceptable. Yet another instance of our political class looking to their party interests first.
Veronica,
Thanks re Site (I just added a Water Rates Category).
What hasn’t been mentioned here is the Urban/Rural nature of this. It is Urban centres that have water mains , where in a lot of rural areas it groups schemes or peoples own wells. So its an urban tax.
The group schemes already have a charge and when giving out about Water charges I’ve got the ‘Sure we’re paying for our water already’ line.
If theres 300,000 empty houses in the country , how many are connected to the mains? Will this be another unpaid bill by developers?
For rented properties will it be the tenant or landlord who pays?
How practical are Water Meters for appartments?
If its a flat fee, is that fair on a person living alone using a small amount of water compared to a family using a lot?
Who will be entitled to a waiver?
Back to the group schemes, in Galway where people are on the mains they would pay water rates. If a group scheme gets polluted, by rights should the council not then charge for any water they provide (Tankers etc).
If the mains water is undrinkable (Galway again) will you be entitled to a refund?
o its an urban tax.
The group schemes already have a charge and when giving out about