The rules for this are set down by the EU statistics agency Eurostat, in what is called a “market corporation test” – in other words, a test of what Irish Water’s finances need to look like to justify its existence as an independent entity.
Three tests need to be met, relating to the amounts that Irish Water raises in revenues from households, businesses and the Government and the relationship between these numbers.
Two of these restrict the Government’s wiggle room.
First, the amount of money raised from the public must “clearly exceed” payments from Government coffers. Previous figures show that revenue from households (just over €300 million in 2015) and businesses (€230 million) at €530 million exceeded total Government support by about €100 million.
Doesn’t add up
The second test is even tighter. It requires that the amount collected from households and businesses must be equal to 50 per cent of Irish Water’s production costs, and should “clearly exceed” this figure “as soon as possible”.
With production costs of just over €1 billion, this leaves very little room to play with. Even if there was some adjustment to Irish Water’s costs, it is hard to see the figures adding up if less than €250 million is collected from households, and more in future years.
Giving money back via tax relief and household benefit packages will help stay within the rules, while cutting the net costs to households.
The cash will still come in to Irish Water from the public and can thus be counted in its finances.
Widening the promised tax relief to households – so that all households benefit from €100 in tax relief, no matter what their bill comes to – together with a credit for those on welfare support is one key step in the Government’s plan to try to assuage public anger.