Independent senator Gerard Craughwell said he has requested that the European Commission investigate the issue. He was speaking during a Seanad debate on the Environment (Miscellaneous Provisions) Bill.

The bill would oblige landlords to provide information on tenants to Irish Water and introduce a database on who has paid their charges. It passed through the Seanad by 20 votes to 14 yesterday and is set to become law.

Opposition parties say the public does not want to see the bill introduced.

Mr Craughwell said he “cannot believe” the bill allows public money to be transferred to a private utility “by proxy” in order to pay for the conservation grant.

He said he knows of “no other grant anywhere in the world” which can be given without any evidence it is being spent as requested, claiming it is effectively an “inducement” to convince people to sign up to charges.

He said he has “referred the matter to the European Commission”, and cited his own first-hand example of the contradiction involved: “I’m looking forward to the €100. Myself and the wife will have a party on that, but I won’t be paying the charges.”

Concern over the grant was echoed by Sinn Féin senator David Cullinane, who asked why the cost of administering the fund is unknown.

Labour senator John Gilroy said he found it “remarkable the Opposition are not in favour of giving people money”.

Meanwhile, Opposition senators repeated concerns over the use of a water charges database, saying the information should only be available to the Government, not Irish Water. One senator claimed databases are a risk as they were used in “apartheid South Africa”.

Speaking for the Government, Rural Affairs Minister Ann Phelan said the matters are being addressed.