Darragh O'Brien (Dublin Fingal, Fianna Fail) | Oireachtas source

I am joined this morning by the following officials from my Department: Marguerite Ryan, finance officer; Lorraine O’Donoghue, local government finance; David Kelly; and Mary Hurley.

In late April, I met the committee to discuss the 2021 Estimate for my Department at an overall level. I thank members for the engagement at that stage and also for facilitating this meeting at relatively short notice. I will keep my remarks brief. Obviously, I will be happy to take any questions members may have.

The subject matter we are discussing here is specifically the €198.9 million additional funding to be added to the overall provision for my Department. The Estimate, which I set before the committee in October, detailed my Department’s budget for 2020. This totalled €5.118 billion gross for the year with a further €214 million of deferred surrender. The Supplementary Estimate before the committee today includes the following changes: the Local Government Fund - an additional €197.3 million in current spend; on heritage - an additional €1.615 million, comprised of €1.473 million current spend and €142,000 capital spend. The total provision of €198.9 million will bring the gross expenditure ceiling for my Department to €5.531 billion and will be comprised of €2.555 billion in current spending and €2.976 billion on the capital side, excluding a further €91.5 million self-funding by local authorities under local property tax for housing.

I will start with the heritage element of this Supplementary Estimate. These are not additional costs to the Exchequer. They are the final elements of the transfer of functions and bring these existing provisions into Vote 34. They mainly relate to pay - €880,275 which deals with salaries and PSRI; and for administration - €735,000 for office equipment. This effectively follows the restructuring of the Department following the Taoiseach’s decision in 2020. It is a technical issue and arose from the transfer of certain heritage functions into my Department.

The local government element of this Supplementary Estimate is exclusively focused on issues relating to Covid-19. The amount to be provided under this Supplementary Estimate is €197.3 million and, when taken in conjunction with other measures taken by the Department, will bring the total Exchequer support to the local government sector for pandemic-related expenditure to an unprecedented €558.9 million. I have consistently said at committee meetings and in the Dáil and Seanad that we are firm believers in and supporters of local government. I take the opportunity to thank all workers in the local government sector for the incredible work they have done throughout the pandemic. They have led from the front and have been the tip of the spear in the Government's response in every community throughout the country. It was incumbent on me and my Department to support them through this Supplementary Estimate to ensure that with the additional works they had and the loss of income they have experienced through rates abatement, which I will turn to shortly, they were fully supported by way of 100% provision. That is being done in an unprecedented way.

This includes a provision for the commercial rates waiver scheme that applied from January to September. We now have a more targeted waiver scheme, focused on the hospitality sector and those still affected by certain Covid-related restrictions.

It also includes provision for the allocation of additional funds to local authorities to help limit the financial impact of the pandemic. I will take the example of Deputy Gould's city of Cork which he understandably loves so much. That city has undergone a very successful pedestrianisation programme and many those streets continue to be for pedestrians only. There has been a loss of parking charges as has happened in many local authorities. We have plugged that gap. I met the chief executive in Cork who was able to define exactly what the local authority lost due to this. Should the committee pass this Supplementary Estimate today, it will leave me in a position to allocate additional funds to those local authorities to support them in the changes they have made and in the work they have done.

In total, €497 million will be provided to fund the 2021 waiver scheme. There are two parts to this waiver. The main part covered the first nine months of the year. While originally expected to cost €480 million between quarter 1 and quarter 3, it is now €435 million. The scheme applied automatically to various types of businesses. As members know which businesses are covered, I will not go into that detail. The second part of the 2021 waiver is more targeted and we estimate it will cost €62.3 million. It is for those businesses in the hospitality sector along with gyms etc. which have been affected by the remaining restrictions.

I used the example of Cork city where local authorities lost income as well as the loss of funding from commercial rates. The total package of this funding is €61.6 million across those local authorities. Some of the changes are for the better. I encourage local authorities to retain as best as possible those areas they have given back to the public through pedestrianisation, allowing people to use streets that had been choked with cars for decades. What they have done has been very progressive. We will continue to support local government in those moves, giving back the public realms and streets to people.

Funding will be allocated in an equitable way. The proposed approach is to cover income losses of about €51 million as quantified by the local government sector and to allocate the remaining €10 million to help with the costs of Covid-related expenses that arose. The nature of these costs varies across the sector. They include the loss of parking charges along with the cost of personal protective equipment, PPE, signage, crowd management, haulier testing and additional staffing. There was also significant expenditure on ICT etc. to cover remote working. I am confident that this funding will provide sufficient support to local authorities. The support has been very well received by local authorities throughout the country.

I will now run through some of the measures my Department has taken. The substantive Supplementary Estimate I have outlined will result in an increase of €198.915 million. This will be complemented by the application of €38.4 million from savings arising from the local government rates waiver; an allocation of €13.2 from the Local Government Fund Reserve and €310 million from savings and underspend across the Vote primarily due to the significant impact of Covid-19 on construction during 2021.

As members will be aware construction and, consequently, expenditure have been significantly impacted by the Covid-19 pandemic. On 6 January 2021, the Government announced that additional public health restrictions would apply under level 5 of the plan for living with Covid-19. That shut down the sector and restrictions continued until 12 April 2021. Obviously, the lag-time in building capacity back up and supply chain issues have had an impact.

My Department continues to work intensively with all stakeholders to maximise delivery for 2021. However, expenditure will be lower than anticipated, particularly on programmes which are construction focused - in housing and water infrastructure.

I have applied for the maximum permissible carryover of funds into 2021 for capital programmes. I am conscious of likely additional underspends, but I have also signalled to the Department of Public Expenditure and Reform that I will be reducing the net income of the additional costs of the local government rates waiver and other Covid-19-related costs by transferring funds from those underspends into the local government fund. Instead of seeking additional funds from the Exchequer, we are using funds that were voted for other measures within our Department. That is the prudent, appropriate and responsible thing to do.

It is too early to quantify the exact out-turn for affected programmes. My Department continues to work closely with the Minister, Deputy McGrath, and his team in the Department of Public Expenditure and Reform. Programmes A on housing and D on planning are most affected. That will not come as a surprise to anyone. My Department will continue to work hard with all key stakeholders and delivery partners to ensure accelerated activity on areas that have been affected.

I have kept my remarks as brief as possible. I wanted to give members an overview. I have focused on the purpose of today's meeting, which is the Supplementary Estimate for local government and that small technical piece relating to heritage on the transfer of functions. I am more than happy to take any questions. I have certainly seen 2020 and 2021 as the two years of Covid. We expect, based on projections for next year and the evidence we have, that 2022 will be a year of delivery in these streams. The projections are positive, which I am sure the members will be glad to know.