Phil Hogan (Carlow-Kilkenny, Fine Gael) | Oireachtas source

I welcome the opportunity to discuss with the sub-committee my Department’s Revised Estimate for 2014. I am accompanied by the Ministers of State, Deputy Jan O’Sullivan and Deputy Fergus O’Dowd. To assist members, we have prepared briefing material on the Department’s Vote for 2014, which sets out details on the overall Vote, as well as key financial and performance information about each strategic programme.

The key objective for Government in framing budget 2014 has been to do what is required to support our exit from the EU-IMF programme; this has now been achieved. Getting to this position has, of course, presented major challenges, including the need to maintain tight controls on public spending generally. Despite these constraints, considerable resources are being made available to my Department for 2014 and these will be used to make the maximum contribution to job creation and economic recovery and help the less well-off in our society. In these and other ways, we will work to the greatest extent possible to improve public well-being and support delivery of better services for our citizens. The budget of €817 million being provided to the Department for 2014 is firm evidence of the Government’s commitment to the sector. The provision is made up of €456 million in current spending and €361 million in capital investment. It includes an additional €50 million made available to the Department on budget day for investment in infrastructure stimulus measures in the housing and related areas. There will also be a further €72 million of carryover capital funding for use on the LEADER, rural development and housing programmes in 2014. In addition, there will be €240 million in Exchequer equity investment in the newly-established Irish Water to fund the water and waste water capital programme this year. Departmental programmes will also benefit in 2014 from resources available from both the local government and environment funds.

I will turn now to specific areas. As the committee is aware, 2014 will see major reform in the local government sector. The action programme for effective local government sets out a wide-ranging reform agenda across local government to address weaknesses, enhance effectiveness and accountability and improve performance across the entire system. Key features of the programme to come into effect following this summer’s local elections include the restructuring of local government at regional, county and sub-county levels and the strengthening and widening of the scope and role of local government. This represents the most far-reaching changes since the present system of local government began in the 1890s. As members will be aware, local authority financing will change radically in 2014. Irish Water assumed responsibility for the delivery and funding of water services from 1 January, the local property tax will operate on a full year basis, with an amount equivalent to the money collected in 2014 transferring into the local government fund, and 2013 will be the final year of operation of the non-principal private residence charge.

The establishment of Irish Water and its financial relationship with the local government sector will have a considerable impact on local authority financing. Irish Water will fund local authorities to deliver water services through service level agreements. In this regard, Irish Water will cover some €730 million in operational costs of providing water services in 2014, which formerly were funded by local authorities. Last month I announced general purpose grants to local authorities of €281 million for 2014. When taken with the water costs of some €730 million that are transferring from the local government sector to Irish Water in 2014, this represents a funding boost of some €100 million or 11% to the sector when compared to the corresponding funding and costs for 2013. This reaffirms the strong central government support for a reformed local government sector and the essential services which local authorities deliver to our people. I acknowledge again the efforts being made by local government to reduce demands on the commercial sector. It is vital that progress in this area is maintained, and indeed built upon, given the importance of local enterprises to employment and to the economy generally.

Of course, there is no room for complacency; efficiencies are needed now more than ever. The sector continues to make significant and welcome progress in implementing the efficiency changes recommended in the original local government efficiency review group report. For example, the sector has reported total efficiency savings of nearly €230 million in 2010-12, primarily in staffing reductions and procurement. However, it is vital that the rate of implementation of the efficiency agenda is accelerated by the sector to ensure that the overall targeted efficiency savings of €346 million, as set out in the report of the local government efficiency review group, are achieved in a timely manner.

The transfer of water services responsibilities from local authorities to Irish Water took place on 1 January and was a landmark event in the delivery of water services in Ireland. This major reform programme will drive improvements in water services and provide security of water supply for the public and economy in the coming years ahead. Security of supply will only exist if we increase investment in infrastructure and create a sustainable funding model for water services. These will happen as part of the reform process. In turn, security of supply will position Ireland's economy well to attract water-intensive industries such as ICT, pharma-chem and agri-food in the years ahead. With these reforms, we are also directly creating jobs, through the domestic metering programme and the establishment of Irish Water's customer contact call centre.

Some €240 million in equity-based funding will be invested in Irish Water this year. This will fund progress on projects set out in the Irish Water capital investment plan, including over 100 projects in progress under the water services investment programme at the end of 2013. The capital funding being provided to Irish Water in 2014 ensures that it is in a position to take on responsibility for delivery of water services capital infrastructure. In addition, some €486 million from the Local Government Fund will subvent the service level agreements between Irish Water and local authorities in respect of operation and maintenance of water and wastewater services. A particular focus will be placed during 2014 on all aspects of water conservation to ensure that we manage our water resources in a sustainable manner and customers are informed on ways in which they will be able to manage their water usage when meters are in place.

This year will also see continuation of the Department's rural water programme. Funding of almost €28 million is being provided under this programme and will include funding for the group water sector and septic tank grant assistance.

The environment and waste management programme provides for expenditure of €35 million, largely to meet the cost of the important work of the Environmental Protection Agency, EPA, and the Radiological Protection Institute of Ireland, RPII; work is now well-advanced towards the merging of these agencies in the course of this year. The Environment Fund, financed from the landfill and plastic bag levies, will provide a further estimated €48 million to be directed to key priority areas such as environmental enforcement, waste prevention and recycling.

On the community and rural development side, I have been particularly conscious of the need to support funding levels for the local and community development programme. Given the current economic crisis and the high level of unemployment, the programme is now more relevant than ever as it supports employment and gives those most distant from the labour market the skills to access training and jobs. The programme provides employment, training, personal capacity building and other supports for the harder to reach in the most disadvantaged areas in society.

Almost €48 million will be invested in 2014 to increase access to formal and informal educational activities and resources, and to increase people's work readiness and employment prospects. Some 14,000 people who are distanced from the labour market will receive direct one-to-one labour market training and supports through this programme in 2014. While the current programme was due to finish at the end of 2013, it is now extending into 2014 on a transitional basis, with the successor programme being launched in January 2015 under the new local community development committees, which will enhance the role of local government in local and community development matters.

The Leader elements of the rural development programme will receive substantial funding of some €50 million this year and, as in 2013, will support nearly 2000 enterprises to improve quality of life and promote growth and diversification of the rural economy. Leader is addressing many of the challenges facing rural communities, including through increasing economic activity and generating employment. It is a key multi-annual programme which will continue to be supported to deliver on its commitments to enhance the social and economic fabric of rural communities.

I have kept my remarks as brief as possible so that we can have a full discussion on the activities of the Department and how our programmes, and the significant resources we will deploy in support of them in 2014, will benefit communities and citizen throughout the country. I look forward to hearing your thoughts and contributions. The Minister of State, Deputies Jan O'Sullivan, will complement what I have said in regard to her areas of responsibility and we can then deal with matters of detail that members wish to raise.