Shane Cassells (Meath West, Fianna Fail) | Oireachtas source

It is an extremely interesting note from the Valuation Office in the context of commercial ratepayers. It is hugely insightful in the context of our understanding of the system, particularly at a time when revaluations are happening across the country, including in my constituency. It helps us to understand the zoning method and how it is based on the principle that the most valuable part of the shop is that closest to the street or mall. Zoning occurs from the shop front backwards and there are reductions to it as one goes along. It is interesting that it states that zoning is a tool, an aid to valuation, which must at all times be overruled by common sense. I hope that is adhered to.

The revenue derived from rates accounts for €1.5 billion, or 33% of current local government income. In some cases, it provides as much as 53% of total funding for individual local authorities. The Comptroller and Auditor General tries to have a yearly analysis of the flow of income into local government. Last year, the Minister for Finance, touching on Exchequer contributions to the Local Government Fund, said:

Turning to Local Government, 2019 will see a contribution from the Department’s Vote to the Local Government Fund of €185 million – an increase of €60 million on 2018. This will provide significant additional support to the local government sector in providing a range of essential services at local level ... and resources for certain local government initiatives across the country.

Four weeks ago, suddenly the Local Government Fund was cut by nearly €30 million without a dickie bird of a mention. I tabled a parliamentary question to ascertain how something could be cut by €30 million in one year. The answer pertained, supposedly, to the fact that support for local government in 2020 had be realigned, largely as a result of the valuation of Irish Water as a global utility for commercial rates. From 2014 to 2019, compensation was paid to local authorities in lieu of commercial rates from Irish Water and Irish Water is liable for commercial rates from 2020. In the Department's reckoning, compensation in lieu of commercial rates ceases and the apportionment of the valuation of Irish Water among local authorities from 2020 will be based on population. This is similar to other global utility companies with national networks. It highlights the difficulty in analysing the flow of income into local government. In the reply to the parliamentary question, the Department went on to say that it expected the local authority sector to collect a broadly similar amount, and maybe even a greater amount in some cases, through commercial rates as was received in previous years through Exchequer funding for water rates compensation. It said it would monitor the financial impact of the transition for local authorities. Can the Comptroller and Auditor General highlight or analyse the real impact of this major realignment? Some €30 million has gone out with the stroke of a pen but the Department states that it will come back in another way, but it goes to the heart of the issues with the funding of the local government sector, which particularly worries me.