Ireland has been seeing a rapid surge in both its population and economy, calling for uninterrupted infusion of funds into its infrastructure. This critical financial input, especially towards the sectors like transport, water, and energy, is often catered to by the State either directly or through State-owned commercial or non-commercial entities. Occasionally, private corporations also contribute monetarily as seen in the case of toll roads. Taxation serves as the primary medium for the State’s investment funding. Nevertheless, most State agencies finance their investments using charges incurred by users.
Being in operation for nearly a century, the ESB operates as one of the oldest commercial entities owned by the State. It has devoted its services towards electricity production and managing the power lines that distribute electricity to various homes and businesses. Currently, EirGrid, another State-owned corporation has taken over the national grid’s reins, leading to ESB losing its monopoly over electricity generation.
Despite being owned by the State, ESB’s investment decisions are managed by its board and management without governmental intervention. The investment costs are then transferred to consumers, which means that the expenses are covered solely by customer charges. Because of this, the ESB’s investment is not considered government expenditure by the EU, and its loans do not contribute to the national debt.
This level of independence offered to the ESB in its commercial operations means that its investment in electrical infrastructure is unaffected by any government spending constraints. This continuity was evident during the 2008 financial meltdown, when many kinds of public investments were slashed due to the need to manage the increasing national debt and regulate public finances. Despite these circumstances, the ESB continued its investment with the backing of troika, and even secured loans from the financial industry, whereas the government was considerably restricted in securing its finances.
Uisce Éireann, now known as Irish Water, was initially established to function on comparable terms i.e., to generate the majority of its revenue from customer charges. However, due to the advent of the anti-water charges campaign and the resultant decision by the government to revoke domestic water charges, it was concluded that its revenue was not beyond the purview of the government, considering its loans as part of the national debt. This implies that the funds to be allocated for improving public water and wastewater systems are restricted by the constraints of the national budget.
Dublin’s water infrastructure is teetering on the brink of crisis with undrinkable water sources and untreated sewage leaks being common incidences. A substantial injection of corporate tax over recent years has slightly ameliorated the situation, however, the government’s borrowing limitations has led to a chronic underinvestment in water and sewage systems.
Northern Ireland Water, a public utility organisation, is experiencing comparable problems. Major financial input is urgently needed. Yet, just like in the Republic, political leaders are hesitant to implement water charges that could provide necessary funding. Although water charges are commonly imposed across much of the UK, in Northern Ireland, the resource of running the water system needs to be covered by financial allocations from the London government.
These payments from London are based on the notion that Northern Ireland has water charges in place similar to the other regions of the UK. As a result, the non-existent water charges in Northern Ireland has meaningful financial implications on its budget.
Mainland Britain’s private water companies have the ability to independently take out loans for new investment. Conversely, any financial outlay by Northern Ireland Water is deducted from the limited funds provided by London. The decision not to charge for water translates into a significant reduction in funding for other public services in Northern Ireland.
Many EU nations offer social housing through bodies that independently set rents to service their loans, thereby avoiding being constrained by EU fiscal rules. Contrary to this, in Ireland, majority of the social housing provided by local governments or not-for-profit approved housing associations is considered part of the State sector due to rental income not meeting the level needed for covering costs. This gives rise to borrowing restrictions which considerably hampers the required scale of public housing provision.
The Commission on Taxation and Welfare has highlighted that Ireland’s future will have to incorporate a higher tax ratio to fund the necessary infrastructural investment for a growing population, to combat climate change, and to deal with the financial implications of an increasing ageing population.