Water charges unjust stealth tax caused by Govt under-funding - Naughten

Speech by Denis Naughten TD at IFA Meeting on Water Charges, Monday December 4th 2006.

Fine Gael Agriculture & Food Spokesman, Denis Naughten TD has branded water charges as a 'stealth tax' on food production and farm business, which will put huge financial pressure on many farm families.

Denis Naughten who was addressing an IFA meeting in Roscommon Town on behalf of the Fine Gael Party said this evening:

"Business, including many of our local food businesses and farmers are struggling to survive due to the high cost of energy and other input costs which have risen dramatically over the term of this Government and the proposed increase in water charges will threaten the viability of some operations.

"These increases come at a time when farm incomes have dropped significantly in recent years and the average farm family is operating at a loss of €75 each week. Water charges are even more discriminatory when it comes to farmers, many of whom would have a low usage of water but, due to farm fragmentation, will have to pay for a number of water meters.

"On average, in the West of Ireland, most farmers will require at least three meters, with 20% of farmers requiring five or more meters, given the number of farm parcels they own. It is unjust for Government on the one hand not to facilitate the reduction in farm fragmentation by failing to address the taxation system which taxes farmers at a rate of up to 29% and then impose a water charging structure which penalises farmers who have fragmented holdings.

"Government must get its act together and ensure that farmers are not discriminated against and are treated in a similar manner to all other businesses. The dramatic increase in water charges and the new pricing structure being proposed by local authorities is as a direct result of reduced funding from the Government, which has forced them to make up more of their budget from local taxes and charges.

"For 2007 alone the Minister for the Environment is only increasing the Local Government Budget by a measly 2% which will result in more stealth taxes being levied on households, business and farm families. Such an increase does not take into account the rate of inflation, implementation of the partnership agreement and its impact on salaries nor does it address the dramatic rise in input costs.

"Specifically in the water services area the funding which local authorities will receive in 2007 does not take into account rising wage costs, chemical costs or energy costs. On top of this the rate of payment from the Department of the Environment for domestic water supplies has not increased in order to cover the cost of providing this element of the public water supply. These deficits must be made up by local government and this will be achieved by significant increases in water charges to farmers and business.

"This is despite the fact that, according to the Government's own report, there will be a €1.5 billion shortfall by 2010 in local government funding. It is absolutely clear that the Government intends to continue their policy of taxing householders, businesses & farm families by stealth in order to make up the massive shortfall that this year's Budget will not come close to address.

"These new water charges will add to the burden on already hard pressed farmers and business people. It is inexcusable that a time of unprecedented national wealth- and such astonishing waste of public money on everything from PPARS to E-Voting- that Local Authorities are forced to pass on such charges.

"To make the situation even worse the Water Management and Rehabilitation Programme, including water conservation programme, under the National Development Plan, which should have funded the reduction in the scale of leakage on the water supply network hugely underperformed, with only 35% of expenditure actually allocated and drawn down. This is despite the cost-benefit analysis of such water conservation projects which found that these projects were almost invariably highly worthwhile.

"If this funding had been utilised then the scale of leakage from the water distribution network would have been significantly reduced and this would have avoided the situation whereby both farmers and business will have to not only pay for the water they use but the water that leaks from the distribution pipes before it comes near them at all.

"It is wrong for Government to force this stealth tax on business and farm families when this is solely due to Government incompetence. But again we have to pay for the gross mismanagement by this particular Government.

"Rural Water Investment in the NDP was also under funded with only 54% of the original target spent on the programme; part of this funding will have to come from farmers in the future.

"Fine Gael has consistently called on the Minister for the Environment, Heritage and Local Government to increase the funding available to councils so that farmers and local businesses are not forced to bear the burden of these charges.

"We also believe that rather than introducing and increasing stealth taxes the Government should collect the money which is owed to them in motor tax. Conservatively the Government estimates that over €40m in motor tax is unpaid every year. This funding would go a significant part of the way to address the under funding of councils throughout the country.

"It is equally unfair on farmers that the current Farm Waste Management Grants do not provide supports to help farmers deal with surplus waste water. It is a huge flaw of this grant scheme that it does not include funding for clean water storage tanks.

"Not only must farmers, in order to comply with the Nitrates Directive, foot the bill for such tanks, but the Department has failed to even provide farmers with a specification guidance document as to the required size of such tanks. But of course that would reduce the Government's overall take in stealth taxes. Once again this Government has created a problem and left farmers to clean up the mess.

"Furthermore, through the Government's water pricing policy, all new water schemes must come up with a significant amount of the funding from commercial water rates. In the past local authorities received 100% grant aid for capital works such as the upgrading of waters schemes and laying of water mains. However this has been reduced back to as little as 30% in some circumstance. This is hugely frustrating for farmers who, in many cases, do not benefit from such enhancements. The fact is that these costs will be passed directly on to the public through increased costs on services and food products.

"These new increased charges are caused by Government under-funding of local authorities and will lead to the privatisation of water supplies throughout the country. For many people in rural areas, who established and paid for water schemes, the fact that their investment will now be handed over to private companies is totally unacceptable".

"Fine Gael opposed the privatisation of water services when this law came before the Dáil but sadly, our local Government TD's supported such privatisation at that time.

"Fine Gael wants to ensure that farmers are not discriminated against due to farm fragmentation. We are also want water storage facilities included as part of the farm waste management grant which would help farmers reduce there overall liability for water charges.

"And we want proper funding for local authorities to cover the cost of running services, upgrading water schemes and detecting leaks."