Buncrana Together received word from the European Statistical Data support (ESDS), Eurostat, that they have just received a request from Ireland re market test on Irish Water. They informed us that " Eurostat is going to examine it in accordance with the procedure. No further comment will be made during this procedure."
For those who are technically minded Eurostat went on to say "The criteria describing the classification of the unit either inside or outside of government sector is described in Manual on Government Deficit and Debt (MGDD) in the chapter I.2 Criteria for classifying units to the general government sector. The MGDD can be found in the website of Eurostat ( see MGDD ) . The criteria contains several steps and the quantitative market/non-market test is described in detail at part I.2.4.3 of the previously mentioned chapter. The main thing in this particular part of the process is to determine whether a producer is market, it must sell its products at an economically significant price which, in practice, would be assessed if the sales of the producer cover a majority of the production costs."
For the less technically minded what this means is that Eurostat is going to do a market test on Irish Water. The Government has to prove that more than 50% of Irish Water's running costs are form customers, both private and business, in order for it to be taken off the State balance sheet. If Irish Water fails the test this could have dire consequences for future budgets. It could mean €600 million will be added to the deficit this year. It would affect Irish Water's long term investment programmes which are planned on the basis that it will be off the State balance sheet. Any State investment in Irish Water would come on to the State balance sheet. One of the key issues here is the €100 conservation grant which the Government hopes will be separate form Irish Water.
There still remains controversy in the Irish public and opposition politicians surrounding the Central Statistics Office's (CSO) delay in supplying Eurostat with data and requesting a market test (see Buncrana Together)
It was widely known that the CSO was to request this since last year and that the results of the Eurostat test would be out mid March 2015. This deadline was missed by a long shot. Now Eurostat's decision could take a couple of months yet, however, there is no definite date.
Some suggest that the delay was intentional because Irish Water is behind schedule with their metering programme and developing their customer base. Any lay person would think that showing a large customer base would be one of the most important elements in proving that a company is viable. Irish Water and the Government insist that all users of the public water supply are customers of Irish Water even though households have not signed a contract with them. Irish Water say that the Water Services Acts 2007 and 2013 gives it this right.
It remains to be seen what way Eurostat will look at it whether it will accept Irish Water's customer claim or whether it will take into consideration the sizeable opposition to Irish Water in Ireland, including politicians. A layperson would find it hard to understand how a company could be viable if a sizeable number of it's potential customers are not going to pay. Unless Eurostat accepts that the Government will recoup the money out of the public one way or another.
There was an interesting line in an Irish Times article on the subject ( see Irish Times CSO provisionally puts Irish Water on State books) where it states "It appears likely the CSO has indicated to Eurostat its support for Irish Water to remain off balance sheet. "
So the controversy continues. Previous questions on CSO's delay by Sean Fleming FF in a Public Affairs Sub Committee meeting, got stern reactions from both Taoiseach Enda Kenny and Tanaiste Joan Burton when they defended the impartiality of the CSO. See Buncrana Together
If you have any requests to Eurostat you can go to ( Eurostat ).