Mr. Patrick Davitt:

I wish the Acting Chair, Deputies and Senators a good evening. First, I thank the Chairperson, Deputy Mary Butler, and all members for this opportunity. The Institute of Professional Auctioneers and Valuers, IPAV, is delighted to take up the invitation to appear before the committee this evening to discuss the issues raised in our submission to the Joint Committee on Business, Enterprise and Innovation. I am the CEO of IPAV.

IPAV's areas of concern are outlined in our submission, which I expect committee members have, and I wish to highlight some of the key concerns in the short time available to me.

The majority of IPAV members operate in the SME sector. We have had an ongoing concern that, despite much rhetoric emanating from official circles about the importance of the SME sector to the Irish economy, little real progress has been achieved. In terms of doing business in small and medium-sized rural towns today, we need to consider the broader economic impact that the recession has had on rural towns and the economic realities arising from neglect of those towns, a lack of investment, the large numbers of empty retail units, infrastructural deficits - water and sewage services, broadband, schools and roads - and the exit of banks, Garda stations and post offices.

While the economy went through a sharp correction during the recession, resulting in some businesses being devastated and most struggling to survive, there was no such correlation across a significant number of overheads, for instance, taxes, employment tax and employers' PRSI. The latter is a large cost at 10.75% on all earnings over a low threshold. Other overheads include building insurance, public and employers' liability and professional indemnity insurance; motor insurance and motor tax, which have been increasing per annum by anything from 18% to 20%; telephone, broadband and electricity; auctioneers' licences for employers and employees and regulation and compliance costs; increasing bank charges and the cost of finance for business development; and one of the old favourites, namely, commercial rates, which are a cost that awaits a business even before it opens its door. A range of services were once provided for such charges, like bins, water and street cleaning.

In the countrywide rates revaluation, the rate purse of €1.5 billion has remained the same, notwithstanding the fact of a devastating recession in the 2007 to 2012 period, during which time many IPAV members experienced a fall of 50% in their fee incomes as the price of property halved, and is still 40% behind where it was in 2006 except in some parts of Dublin. All that the revaluation is doing is merely taking from Peter to give to Paul.

In the Valuation (Amendment) Act 2015, IPAV placed significant importance on what we believed was the intended outcome, namely, the linking of commercial rates to the actual rents being paid for commercial buildings. The rental income from some commercial buildings in rural Ireland is so low that very little in commercial rates should be payable at all, but the intended outcome has not happened. The issue with these properties is that the Valuation Office will either not accept the reality of the low rents or it will analyse the passing rents incorrectly and then link the valuations on these properties to the tone of the valuation list that the Valuation Office has itself created.

The 2015 Act has made two important changes among others. Section 30 of the Valuation Act 2001, which allowed a second appeal to the Valuation Office, has been abolished, and section 19 of the 2001 Act has been amended by a subsection (5) inserted by section 7(b) of the 2015 Act, which means that the grounds of appeal that ordinary ratepayers can make in the valuation tribunals are now limited to appealing against the tone of the valuation list. Appealing against the tone means that, when the valuation certificates are issued by the Valuation Office, one can only appeal on the basis that a valuation is incorrect relative to other comparable valuations on the list and one cannot contest the rental values that make up those valuations regardless of whether those rental values are excessive, hence completely undermining one of the most important intentions of the Act, that being, treating all ratepayers in a fair way. Indeed, in many of the revaluations, the proposed valuation certificates were appealed by property owners or tenants, but many of the appeals were not listened to by the Valuation Office during the revaluation process. My belief is that the reason for this change in the Act was that the Valuation Office's viewpoint had been overturned by the tribunal much of the time.

IPAV recently contacted the Minister of State with responsibility for housing, Deputy Phelan, seeking clarification on his remarks made at an IPAV conference that indicated an intention to take away the temporary abatement for vacant premises, which is an allowance that property owners can claim if a commercial building is unoccupied. This is at a time when none of the 31 rating authorities are able to collect their full current rates. Looking at the audited figures, the percentage rates collected range from 63% in Donegal to 96% in Fingal. I am not aware how much money is involved in this regard or in the Minister of State's new proposals but, from IPAV's point of view, this would be a damaging course of action and serve as another nail in the rural Ireland coffin.

For property owners who cannot secure a tenant, and there are many, the Minister of State suggests that property owners should change the use of their buildings. Where can they obtain the finance to do this? In addition to financial constraints, planning laws, development plans and processes are also prohibitive in changing the use of commercial buildings. The big question is how and when are ratepayers going to get a fair crack of the whip? On top of this, many businesses are continuing to struggle with high debt levels, much of which has still not been resolved in a realistic way by lenders.

These are some of the issues that we wish to put before the committee. I thank the committee for allowing me the time to address them and bringing them to members' attention. I am happy to take whatever questions they may have.