BLAMING THE last government for a future “interim household utility charge” may make good political sense to Minister for the Environment Phil Hogan. But it is unlikely to impress the public when the bills eventually fall due. Commitments given in connection with the EU-IMF bailout do indeed require the establishment of property and water charges by next year. But those issues are now the responsibility of this Government and while they may be deeply unpopular, they should be explained and defended.
Taking the popular political road has led this State into misery. The abolition of water and property charges in the past helped to narrow the tax base and made local authorities dependent on central government financing. It transferred an excessive burden to local businesses and it weakened the link between the electorate and local councils. The Irish Competitiveness Council, the ESRI and the OECD have been urging the reinstatement of these taxes for years. In the present circumstances they represent necessary sources of income for investment and for the repair of public finances.
Nobody likes paying tax. But when this recession hit, there was general agreement that those in positions to pay most should contribute most to economic recovery and the creation of employment. In broad terms, that will involve property owners with, of course, provision for the issuing of waivers in hardship cases.
Ireland is one of the few developed countries where water is provided free. But with climate change on the way, growing urbanisation and rising water treatment and distribution costs, the cost is unsustainable. Under pressure from the European Commission, a water metering system was proposed by the last government. A three-year installation programme was to be funded by local authorities costing almost €2 billion and generating about 4,000 jobs. That money is no longer available and must be found elsewhere.
Confusion and disagreement appears to exist in Government. Fine Gael is undecided and the Labour Party, in opposition, had promised to oppose water charges. In that context, engaging in a “blame game” with Fianna Fáil helps to divert attention from Cabinet difficulties. Some weeks ago, when Minister of State Fergus O’Dowd announced that water charges would be delayed until metering had been completed, Mr Hogan quickly indicated that a flat-rate water charge would pay for these costs. Within days, he changed tack on the grounds that a decision had yet to be taken by Cabinet. Now he is suggesting a wider utility tax, to embrace both water and property, but subject to Cabinet discussion and approval.
Political solo runs of this kind damage cohesion within Cabinet and create unnecessary tensions. The exchequer’s finances are in such bad shape that the postponement of water and site valuation charges until meters have been installed and site valuations completed are not realistic options. In facing up to that harsh reality, Fine Gael and the Labour Party should bring clarity and certainty to the matter.