Irish Water Stress Test Deadline Missed What Is The Signifcance

 Sean Fleming

Sean Fleming

Irish Water Stress Test Postponed

At a meeting in March 2015 of the Select Sub-Committee on the Department of An Taoiseach Estimates for Public Services Deputy Sean Fleming (FF) commented on a letter from An Taoiseach Enda Kenny to the Chairman. He said “ We have received a very comprehensive reply from the Taoiseach on the matters raised. I wish to refer briefly to the issue of Irish Water and its classification in terms of the market corporation test. The assumption up to now was that we would know by March how that would work out, that is, whether Irish Water would pass that test. However, in the Taoiseach's letter, he says that the CSO is working to finalise its report in the next two to three weeks; hopefully it will be done by the end of March. He goes on to say that the assessment will then be provided to Eurostat and that the CSO has been advised that the final response from Eurostat is likely to take at least two months from the date of receipt of the assessment. At this stage it looks like it will be at least June, possibly later, before we get a final decision on the market corporation test for Irish Water. This is significantly at variance with what we understood and I am pleased to get that information on the record”

Questions Dail Ministers and MEPs Should be Asking

The significance in the Taoiseach's reply is even more compounded when he added “ the classification of publicly controlled entities for their market/non-market status is a relatively routine occurrence in the compilation of GFS (Government Finance Statistics)”. The under-reporting of the Taoiseach's reply to the Sub-Committee is surprising. If the stress test is ' a relatively routine occurrence' then how come the Irish CSO has not supplied Eurostat with their own domestic report expecially given the seriousness of the situation and the fact that they had months to prepare it.? And why have Eurostat let the Irish CSO miss the timescale for finalising the report by months? These are the questions all Dail ministers and Irish MEPs should be asking. Who benefits from the delay of the CSO's Irish Water stress test report?

Eurostat Not Asked For Advise From Irish Government

Buncrana Together asked The European Statictical Data Support (ESDS) for clarification on whether there is a delay in their market corporation test of Irish Water and if so how long will this delay be? Whether there is a delay what is the reason for it? The ESDS responded “there is no delay on the side of Eurostat. We have not yet received any request for advice on irish Water from the Irish Authorities.”

Who Benefits From Delay And Irish Water Future

 Taoiseach Enda Kenny

Taoiseach Enda Kenny

Last year the European Union Statistic Office, Eurostat, was obliged to do a market corporation test (stress test) on Irish Water. The European Commission has to decide whether Irish Water can be judged independent from the Irish government. To meet the test Irish Water have to cover more than half their operating costs from income earned from customers. If the company passes the test then much of the state funds paid over to support its investments and operations are not counted when the EU calculates the state's deficit each year. If Irish Water passes the test then the money the State is paying the company to support its operations would not count towards calculating the annual budget deficit. If it does not pass the test the whole structure of Irish Water is in doubt. This occurance would have far reaching consequences for the Government, the State and Irish Water

Eurostat's report on Irish Water was supposed to be published in March 2015. In an article in The Irish Times, Mr Fleming said the timescale to pass the Eurostat test was this month, after which, on the assumption that Irish Water would pass the test of being an independent, stand-alone commercial semi-state body, homeowners were to begin receiving bills in April. In the same article Mr Fleming said the Government should ensure “people do not receive water bills from an entity whose right to exist is not yet determined”. An Tánaiste Joan Burton responded saying “the fact that the timelines may be shorter or longer is entirely a matter for those independent bodies, not a matter for the Government”. However, Joan Burton's statement is a bit misleading. Should it not be the EU Commission and national Governments that agree timescales and not some statistic office like Eurostat especially when national budgets or financial security of the state are involved. For whatever reason both Enda Kenny and Joan Burton are downplaying the significance of the delayed timescale of Eurostat's stress test, 'significantly at variance', as Deputy Fleming put it.

  Tanaiste Joan Burton

 Tanaiste Joan Burton

The Central Statistics Office is answerable to The Taoiseach's under the Statistics Act 1993, and is delegated to the Minister of State Paul Kehoe TD. It is debatable how independent the CSO can be since it is within the the Dept of the Taoiseach and answerable to him. The delay of the stress test certainly suits the Government and Irish Water? It buys them extra time to try to fullfill the criteria required for Irish Water to be classified as an independent, commercilly viable semi-state company.

The Irish Examiner January 24 2015 reported that “a crisis general election would be on the cards if official fears in Brussels casting doubt on the viability of Irish Water are borne out by EU watchdogs. A senior Cabinet source told the Irish Examiner the Government would not be able to continue in office if the Eurostat agency rules in April that the utility is not financially independent”. A European Commission report back at the beginning of the year stated that there was uncertainty over Irish Water's financial position created by the major reduction in charges forced by mass protests.

Does the Stess Test Mean Anything?

  Christine Lagarde and Enda Kenny

Christine Lagarde and Enda Kenny

Enter the IMF.  On the 25th March  in an interview, see Gavin Reilly, Today FM says
"public opposition to water charges is beginning to weaken, as a result of the reduction in charges.
The comments are made in a new report on Ireland's economic progress - although a spokesman says the comments were written before the most recent demonstrations.
The Fund also says the government could need new austerity measures worth over half a billion euro if Irish Water fails the market corporation test.
It says the budget deficit would grow by 0.3% of GDP if the test is failed later this year. If this brings the overall deficit above the EU's 3% target, new measures would be needed to make up the lost ground.
This could mean the government would need nearly €550 million in new measures, depending on the state of other matters in the economy.
The IMF's Craig Beaumont says there will be no easy fixes if the new utility fails the test.

 

Pressure is On Irish Government

The pressure on the Irish Government over the outcome of the stress test must have been intense.  Final dates for registering with Irish Water have been changed several times.  The Government  have now moved the deadline for registering to June 30 2015.  A few weeks ago legislation was passed to allow County Councils and An Post (Irish post office) to pass residents details on to Irish Water.  This was in response to the lack of households registering with Irish Water.  On April 24 the Taoiseach said that legislation relating to those who do not pay the charge would come before Cabinet in the coming weeks and then it will go before the Dáil.  He said “ There is a need for compliance and people to understand there will be equality in regard to compliance and that everybody who can pay should and will pay.” Implied threats and misinformation have been what seems a constant ploy, used both by Government Ministers and Irish Water to break the anti water charge protests.  However, the protestors are not going away. The number of households not registering and not going to pay Irish Water charges is significant especially in relation to the viability of Irish Water. There is widespread scepticism among the public about the numbers of customers that the Govenment and Irish Water are quoting. Alan Kelly, Minister for the Environment has said 1.3 million have registered, Elizabeth Arnett, Irish Water spokeswoman gives 1.2 million whereas a month ago the figure quoted was approximately 900,000. Apparently this included households and farms that do not meet the criteria for a customer of Irish Water. Even the Government has admitted that there were mistakes made by them in the way Irish Water has been set up and handled. Alan Kelly Minister for the Environment announced that water bills will be starting to roll out starting April 2015. They will be posted to 1.8 million properties. Irish Water admitted that some of the details on the bills may be incorrect, 0.5% of meters will not have been read and that up to 150,000 properties with private wells and septic tanks will be mistakenly billed. As well as that Irish Water is far from completing their water meter installation programme and in fact it may never be completed due to the level of opposition.

Buncrana Together 27 March 2015