Mr. Seamus McCarthy:

The 2011 Appropriation Account for Vote 25 reflects the transfer in May 2011 to the Department of the Environment, Community and Local Government of responsibility for supporting communities and rural development. Responsibility for heritage matters also transferred from the Department to the Department of Arts, Heritage and the Gaeltacht in May 2011.

The Department had gross expenditure of €1.6 billion in 2011. The most significant reductions year-on-year related to spending on social housing provision and support which fell by €291 million, or 37%, and spending on the water services investment programme which fell by €66 million or 13%. The payment from the Vote to the local government fund fell by €66 million or 28%, relative to 2010.

The local government fund has been in operation since 1999 and it had income of €1.19 billion in 2011. The most significant sources of income in the year for the fund was motor taxation income of €1 billion and Exchequer funding from Vote 25 of €175 million. Expenditure in the year was €1.15 billion.

Payments from the fund included just under €400 million to assist local authorities in meeting costs associated with a programme of works on regional and local roads. The other main area of expenditure on the fund in 2011 was payments of general subventions to local authorities amounting to €700 million, as a contribution toward funding of other activities.

The environment fund accounts for 2011 are also before the committee today. The fund was established in 2001. The resources of the fund are mainly used to finance waste management initiatives, environmental enforcement measures and research in the environmental area. Income of the fund in 2011 amounted to €62.6 million. The main sources of income were receipts of €46 million from the environmental levy on the landfill of waste and €16 million from the plastic bag levy.

Chapter 27 presents the results of a review of the arrangements for collecting the landfill and plastic bag levies. It also considers the processes in place to detect and deter non-compliance.

The plastic bag levy was introduced in 2002. Up to the end of 2011, €182 million had been collected. The Department has overall responsibility for the levy. The Revenue Commissioners were assigned responsibility for collection and enforcement. Local authorities also have an enforcement role.

The levy is collected from individual consumers by retailers when they supply certain plastic bags. A key aspect of maximising compliance is ensuring that all those who supply plastic bags are registered. A 2008 random review by Revenue of 215 retail stores found that one in five of the retailers surveyed should have been registered but were not. Further such reviews have not been carried out.

Revenue completed 70 audits of registered retailers in the five years to 2011, resulting in an additional €2 million being collected from just over two thirds of those cases. A court appeal by a large multiple retailer against a Revenue assessment of a plastic bag levy liability of €36 million has been ongoing for a number of years.

The results of inspections undertaken by local authorities are not collated centrally. This makes it difficult to assess the adequacy of the inspection programme and the overall level of compliance.

The examination also found that Revenue and the local authorities do not share the results of the compliance work that each undertake. Sharing of information would facilitate a more focused national inspection strategy. This should help maximise compliance but there may be data protection issues to be resolved.

The landfill levy was also introduced in 2002. By end 2011, around €321 million had been collected. The Department is responsible for the administration of the levy with the local authorities having responsibility for its collection. The levy is payable in respect of waste disposed of at landfill sites whether the site is operated privately or by a local authority.

The landfill levy regulations require that levy collection in each private landfill be audited at least twice each year but this requirement is not being met. At the time of my report, periodic audits had been carried out in the period 2006 to 2011 in respect of only two of four private landfill sites. Even in those two cases, the number of audits carried out was just over half of the number specified in the regulations. In contrast, the regulations set no target or requirement for the frequency of audit for local authority landfills. So far as we could establish, no local authority landfill had been audited in that respect.

The chapter recommends that the Department ensure the statutory audit requirements are met. The Accounting Officer accepted this recommendation and stated that a number of audits of private landfills would be carried out annually. Audits of local authority landfills are to be undertaken by the Department with the assistance of the Environmental Protection Agency, EPA.

The financial statements of the Environmental Protection Agency for 2011 are also before the Committee today. In 2011, the agency received €46 million of its funding from the State, comprising grants from the Department of €19 million and grants from the environment fund of €27 million. The agency generates further income from enforcement and licence fees, the sale of allowances under the EU emissions trading scheme and services provided by its regional laboratories. Income from such sources amounted to €13 million in 2011.

The financial statements disclose that the agency incurred costs amounting to €4 million in 2011 on remediation works at a private landfill site in Kerdiffstown, County Kildare, which had been abandoned by its operators. Costs incurred in 2012 amounted to €2 million and the agency has budgeted for further expenditure in that regard in 2013. The agency is seeking to recover the costs incurred through the courts.