Underspend of €300m to be used to pay for water charge refunds
WATER charge refunds could come from underspending on capital projects in Government departments, the Finance Minister has said.
Paschal Donohoe also warned we “can’t have our cake and eat it” over the decision to scrap charges, saying the Oireachtas backed it, but now the money has to be found to make that possible.
Mr Donohoe said the full cost of refunding water charges will be €178m, including an administration charge of €5m.
He said underspends across Government departments of between €280m and €300m will be used to pay the cost, with capital underspending potentially in the mix.
“It is possible that capital underspends could deliver it, but I can’t confirm that now. What could drive the capital underspends being used for it, is projects that we are committed to not happening at the time that we expected because of changes to procurement, the granting of planning permission and so on,” the minister told TDs and senators.
Mr Donohoe told the Oireachtas Budgetary Oversight Committee that as the decision has been made that the cost of delivering water means it is paid out of Government spending, then choices will have to be made in the coming years.
“We can’t have our cake and eat it here,” Mr Donohoe said. “We can’t be in this situation where the Oireachtas decides it wants to pay for this out of Government expenditure, or it wants to pay for this out of taxation, and when I look to try to do it, then be in a position where people say, ‘hang on, the choices you’re making are wrong’. We can’t do both.”
Mr Donohoe was later asked if refunding water charges could come from infrastructural projects such as hospitals. He said he couldn’t answer that at this stage.
“My expectation is that the overwhelming majority of how we would deal with that refund would come from what’s happened with current expenditure because that’s where the majority of the underspend is,” he said.
Fianna Fáil’s housing spokesman Barry Cowen has written to Housing Minister Eoghan Murphy to express “genuine concern” about the way refunds were promised. In his letter, seen by the Irish Independent, Mr Cowen complained about the “lack of detail on where the money is to be found”.
He said it is “quite surprising to read that this funding is going to be found from un- spent monies this year or indeed excess income from tax receipts”.
“It is also surprising to learn that unspent monies to that extent will be found in 2017 given the extensive pressure on services,” he said.
Mr Cowen said it “beggars belief” there seems to be no mechanism available to prevent people from keeping the €100 conservation grant, even though they may never have paid any water charges.
“It is disappointing that this announcement was made without much thought or any discussion at Cabinet or political level,” he said.
Ibec economist Fergal O’Brien said he believes capital investment is being squeezed at present, and any further underspend is worrying.
Mr Donohoe also said he does not see signs of overheating in the economy at this stage, but that it will have to be monitored. He also said reversing the 9pc VAT rate for tourism and the hospitality industry would yield between €550m and €600m, but no decision has been made in this regard yet.
‘It is surprising unspent monies will be found given the pressure on services’