Oireachtas Joint and Select Committees
Tuesday, 9 July 2013
Committee on Environment, Culture and the Gaeltacht: Select Sub-Committee on the Environment, Community and Local Government
Estimates for Public Services 2013
Vote 25 - Environment, Community and Local Government (Revised)
This meeting has been convened to allow the Select Sub-Committee on the Environment, Community and Local Government to consider the Revised Estimate for Vote 25 - Environment, Community and Local Government. I have received apologies from the Minister for the Environment, Community and Local Government, Deputy Phil Hogan, who is unable to be present. I welcome the Ministers of State at his Department, Deputies Jan O'Sullivan and Fergus O'Dowd. I also welcome the officials from the Department, Ms Geraldine Tallon, Secretary General; Mr. Ger Deering, assistant secretary in the finance and central services division; Mr. Michael Layde, assistant secretary in the housing division; Ms Mary Moran, assistant secretary to the Secretary General; Mr. Maurice Coughlan, principal officer and finance officer; Ms Maria Graham, principal officer in the water services division; Mr. Colm Lavery, principal officer in the local government finance division, and Mr. Brendan Mahon, assistant principal officer in the departmental finance and accounts division. I invite the Minister of State, Deputy Jan O'Sullivan, to make her opening statement.
I also convey the apologies of the Minister, Deputy Phil Hogan, to the select sub-committee. Unfortunately, he is indisposed and cannot be present. In his absence he has asked me to make some general comments on the Department's vote for 2013 before turning to housing expenditure, which accounts for almost 50% of the Revised Estimate. My colleague, the Minister of State, Deputy Fergus O'Dowd, will then address the next largest programme - water services.
The Vote for the Department for 2013 amounts to €1.208 billion. This is divided into €726 million in capital spending and €482 million in current spending. There is, in addition, provision for a capital carryover of some €43 million. This will be invested as follows: housing, €22 million; landfill remediation, €10 million; fire services, €2 million; and the Leader programme, €9 million. Furthermore, an extra €10 million will be made available for energy efficiency measures in the social housing sector as part of the additional investment in infrastructure and jobs announced by the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, recently. The total funding of over €1.2 billion will be used to make maximum progress across the range of departmental programmes. While the Department met and exceeded specific savings targets for 2012 - more such savings are planned - it must be made clear that the story is not at all one of unremitting doom and gloom, which I am sure members will be pleased to hear. In overall terms, the provision in the 2013 Vote - when the capital carryover is included - is €1.25 billion which is a very substantial amount and close to the outturn in 2012. Within the 2013 provision there are a number of areas which show increased resourcing. They include housing current funding - primarily for leasing and the rental accommodation scheme; water services capital investment; landfill remediation; fire services capital; the JobStart initiative in local authorities for the long-term unemployed; and the Leader and PEACE programmes.
I will now deal with some specific matters. To assist in resourcing the local government sector, the local government fund will continue to receive the proceeds of motor taxation - amounting to an estimated €1.1 billion - in 2013. The general purpose grant payment from the fund to local authorities will amount to €640 million this year, an increase of some €3 million on the figure for 2012. The household charge contribution to the fund will end in 2013 and be replaced by the new local property tax. To date, the charge has raised in excess of €136 million for the local government sector. Compliance is now at the level of 80%. The charge has been a valuable pathfinder in the context of the local property tax.
On the community side of the Revised Estimate, the Leader programme - comprising axes 3 and 4 of the rural development programme - plays a significant role in addressing employment and quality of life issues in rural areas. The 2013 provision for the Leader programme is €105 million, comprising €96 million in this year's allocation and €9 million carried over from 2012. It is vital that best value is achieved from every last euro available under the current Leader programme in order that we might maximise sustainable employment opportunities in rural areas and support for business creation and development.
The environment and waste management programme provides for expenditure of €29 million, largely to finance the important work of the Environmental Protection Agency and the Radiological Protection Institute of Ireland. The environment fund, financed from the landfill and plastic bag levies, will provide a further €60 million to be directed towards key priority areas such as environmental enforcement, waste prevention, landfill remediation and recycling.
I will now deal with matters within my own area of responsibility. The necessity to reduce public expenditure to sustainable levels is impacting on all public services, including the housing programme. However, as outlined in the Government's housing policy statement, the focus will remain on meeting the most acute needs, that is, the housing support needs of those unable to provide for their accommodation from their own resources. Therefore, in 2013 I have continued to focus on areas where there is scope to maintain output through more flexible approaches and to continue to direct the available resources towards those who most require assistance from the State. In terms of the delivery of social housing, the current economic conditions and the constraints on the availability of public finances have accelerated the restructuring of the housing programme.
In 2013 the social housing capital allocation has been reduced to €65 million and this will have inevitable consequences for the delivery of permanent new social housing. Some 714 units of accommodation were delivered under the local authority programme in 2012 and, with the limited funding available, I expect that a further 300 new units will be delivered in 2013. However, the delivery of social housing this year will also be significantly facilitated through more flexible funding models such as the rental accommodation scheme, RAS, and leasing. In the context of rising need, the priority must be to maximise delivery of social housing to cater for the greatest level of need at good value. With the reduction in capital funding, current funding for leasing and the RAS is, therefore, central to maintaining levels of output in order to meet the increasing need for social housing. In that context, the amount of current investment set aside for both leasing and the RAS in 2013 is €180 million. Some 1,259 new leased units were delivered in 2012 and this brought the total number of leasing units in operation to over 3,700 at the end of 2012. The funding allocated to leasing in 2013 will, in addition to covering the cost of these existing units, also provide some 1,385 new leased units this year. The €150 million allocated to the RAS in 2013 is to cover the cost of all existing rent supplement households transferred to the scheme previous to this year - some 43,210 transfers by end 2012 - and the provision of 4,000 new rent supplement transfers in 2013.
The capital assistance scheme, CAS, is the main source of new housing provision for the most vulnerable, disadvantaged households and those with specific needs. Funding of €58 million was provided for the CAS in 2012, with some 454 units of accommodation acquired or built. The 2013 allocation for the CAS is €40 million and it is anticipated that this funding will deliver 300 new units of accommodation. A further €15 million has been set aside for the capital advance leasing facility to provide a capital injection for projects involving approved housing bodies, AHBs, drawing down loan finance.
The voluntary and co-operative housing sector will play an increasingly prominent role in the delivery of social housing in the coming years. Key to that increased involvement, particularly in terms of the provision of permanent new social housing units through alternative funding models, is the need for more structured regulation of the sector. I will, therefore, be launching a voluntary regulatory code in the coming weeks as an interim measure. In the longer term statutory regulation supported by an autonomous and adequately resourced regulator will be needed to provide an environment within which AHBs can attract sizable external investment.
I take the opportunity to reiterate the Government's commitment to progressing regeneration projects at a number of locations throughout the country. The ongoing importance of the national regeneration programme cannot be underestimated, not just from a social policy perspective but also in terms of the job creation and economic renewal delivered as part of any regeneration programme. Notwithstanding the constraints on capital expenditure across the housing programme, the national regeneration programme will continue to be supported to the fullest extent possible. The Government remains resolutely committed to tackling the root causes of disadvantage in many of our large social housing estates and flat complexes.
I am determined that there will be no loss of momentum in 2013 in progressing regeneration projects in Dublin city and the other priority projects in Limerick and Cork cities and a number of regional towns around the country. Recently, I announced allocations of €80 million for regeneration projects nationally in 2013. In these challenging times, I am pleased to be in a position to provide funding for these important projects.
The suite of housing adaptation grants for older people and people with disabilities effectively delivers across a number of priority areas. Demand under the schemes continues to remain high, with more than 10,000 households benefiting in 2012 through funding of €53.4 million. The Exchequer funding available in 2013 is €35 million, which represents a cut of almost 35% on the 2012 outturn. In order to continue supporting independent living arrangements and to ensure that the maximum number of households continue to be supported by these grant schemes, I am reviewing the structure of the schemes. This review will seek to achieve more with the decreasing budget. The priority is to spread the benefits as widely as possible and to ensure fairness and value for money in the operation of the grant schemes. It is intended that the new grant structures will apply from 2014 onwards.
My Department's budget in 2013 for the operation of homeless accommodation and related services is €45 million, representing a small decrease on the 2012 outturn of €46.5 million. When taken together with the funding provided from housing authorities' own resources, this brings the total available funding to approximately €50 million. The maintenance of funding at approximately or in excess of €50 million annually in the past five years is especially significant in the context of the difficult budgetary situation within which the Department has been operating.
The homelessness policy statement was published last February and advocates a housing-led approach with a target of ending long-term homelessness by the end of 2016. A set of indicators will be used to demonstrate the dynamics of homelessness as it is addressed.
The allocation of resources within the overall housing Estimate for 2013 and the wider Vote reflects the difficult state of the public finances generally. However, I will conclude by confirming that the Government is committed to developing other funding mechanisms that will increase the supply of permanent new social housing. Such mechanisms will include options to purchase, build to lease, the sourcing of loan finance by approved housing bodies for construction and acquisition. I will also seek to ensure that there is maximum delivery of properties available from NAMA for social housing purposes.
The Minister of State, Deputy O'Dowd, will complement my remarks as regards the water services programme. We will then deal with the matters that members wish to raise.
I welcome the opportunity to discuss with the sub-committee the water services component of the 2013 Estimate. The Estimate demonstrates the high priority given to water services despite the financial constraints. A provision of nearly €326 million is being made available for this purpose. Of this, over €286 million is allocated to implementing the Water Services Investment Programme 2010-13. This investment is required to expand infrastructural capacity, upgrade the water supply distribution network, tackle uneconomic levels of leakage and improve operational efficiency.
Good progress is being made on implementation of the investment programme, with some 208 contracts completed and a further 77 currently under way. Funding in 2013 will allow for some 40 to 50 additional major public water services contracts to commence and the replacement or rehabilitation of some 200 km of water mains under the water conservation programme. The competitive tendering market assists in achieving this high level of activity.
In the case of the rural water programme, the 2013 allocation is nearly €40 million. The main objective is to address drinking water quality issues in the group water sector and on smaller public schemes.
Work continues apace on fundamental reform of the way water services operate. We need to generate economies of scale in the provision of services, create a greater link between usage and funding and ensure that necessary extra infrastructural investment is secured. The water services sector needs a new financial and operational model. Consequently, the Government has embarked on the ambitious reform programme. There are three essential components: the establishment of Irish Water as an independent State-owned company within Bord Gáis, based on a public utility model; the introduction of a sustainable funding model to support much needed investment in the sector, which will include the introduction of water charges for domestic users; and the establishment of an independent economic regulator for water services. This function is being assigned to the Commission for Energy Regulation, CER. Delivery of this programme is in line with our commitments under the EU-IMF programme of assistance and the programme for Government.
Water is becoming an increasingly precious and important resource. These reforms will guarantee security of quality supply for citizens and businesses, both now and in the future, and will increase our economic competitiveness by making Ireland an attractive location for water-intensive industries such as ICT, chemicals and agrifood. Economic regulation will drive cost efficiencies, while environmental regulation will protect our water quality.
The Department of the Environment, Community and Local Government is working with project partners - Irish Water-Uisce Éireann, local authorities, the CER, the Environmental Protection Agency, EPA, and others - to implement these reforms, which were outlined in the water sector reform implementation strategy, published last October. Progress has been steady. In March, the President signed into law the Water Services Act 2013, which provides for the establishment of Irish Water-Uisce Éireann as a subsidiary of Bord Gáis, the installation of meters in domestic properties and the conferring of certain powers on the CER in respect of the economic regulation of water. Local authorities and Irish Water are conducting preparatory work ahead of Uisce Éireann's metering programme. Commencing later this month, this ambitious undertaking will see some 27,000 meters installed per month. Local authority staff are currently conducting a survey of all connections to the public water supply. The procurement processes for the metering programme are well advanced.
Within Irish Water, key appointments have been made. Dr. John Tierney has been appointed as managing director. He has a long history in local government management and will play a key role in ensuring a smooth transition of responsibility for services from local authorities to Uisce Éireann. The reform programme partners are working on a range of reform programme work streams and progressing major projects, such as a transfer of capital projects, the development of billing capability and the introduction of a financial model for the utility.
Following further comprehensive legislation planned for later this year, Uisce Éireann will become the water services authority from 1 January 2014, responsible for providing water and wastewater services to households and businesses on the public network and for billing and collecting revenue from households when domestic water charges are introduced. Last week, the Government approved the general scheme for the water services (No. 2) Bill, which will provide in the main for the transfer of water services functions, assets and liabilities to Uisce Éireann; powers to allow Uisce Éireann to levy domestic and non-domestic charges; corporate governance arrangements for Uisce Éireann; the preparation of strategic investment plans by Uisce Éireann; assignment of economic regulation of water services to the CER; and clarification of the role of the EPA as regards Irish Water. The legislation will reaffirm the Government's commitment to maintaining water services assets in public ownership. The Department will be working with the Office of the Attorney General on the preparation of the Bill, which will be published in the autumn. This will mark a new departure for water services, creating sustainable organisational and funding models for the future and building on the skills and commitment of local authorities combined with the utility experience of Bord Gáis. Legislation will provide for local authorities to act as agents of Uisce Éireann, providing services by way of service level agreements.
Some of the next milestones in the reform programme include the commencement of the water metering programme, the publication of a second Bill in the autumn, with expected enactment by the end of the year, and consultation by the CER on various aspects of economic regulation, including the regulatory framework and the domestic tariff. The regulator's remit will be based on protecting the customer. The EPA will environmentally regulate the new utility. From 1 January of next year, the newly established Irish Water Uisce Éireann will be fully operational.
I thank the committee for the opportunity to outline the key elements of the considerable activity that is under way in the water sector to ensure delivery of the capital investment programme, provide for its smooth transition to Irish Water and implement the major programme of reform. The water services sector must meet the needs of our citizens and deliver the critical infrastructure required to support economic recovery. When the reform programme is completed, we will have put in place the necessary funding and organisational arrangements to realise those key objectives.
I intend to structure the meeting based on individual programmes and as programme A, the housing programme, comprises approximately 40% of the Vote, I propose the sub-committee should discuss the housing Vote for approximately 45 minutes. I invite Deputy Stanley to begin and again remind members to turn off their telephones.
First, I welcome the presentation by the Minister of State, Deputy O'Dowd, as well as by the staff of his Department and that of the Minister of State, Deputy Jan O'Sullivan. On the housing budget, while the Minister of State signalled that 300 new units would be brought on this year, there are small counties in which 300 units would only make a small dent in their housing waiting lists. Obviously, many eggs are being put into baskets of the rental accommodation scheme, RAS, the social leasing scheme and the buy-out. Has the Department of the Environment, Community and Local Government undertaken long-term projections on the cost thereof? The Department has bought into leasing for up to ten years from developers and private landlords. While this may be fair enough as a short-term measure, the Department is doing it as a long-term measure at a cost of €7,000 to €9,000 per unit per annum. This adds up to a substantial cost over a ten-year period when figures of between €70,000 and €90,000 are incurred. Moreover, as the aforementioned house must be released back to its owner in pristine condition after the lease has expired, a substantial financial time bomb has been written into the contracts in the form of the bill incurred to so do. In addition, the State and local government will miss out on ten years of rent that otherwise would be going to a local authority. Furthermore, in the case of a house built by a local authority with funding from the Department, the State and the local authority will possess an asset at the end of the five-year tenure period. One also should take into account the fact that the family involved has a home whereas in the case of long-term leasing or the RAS, the owner sometimes decides to sell within a couple of years and the local authority must then find another house for the tenant.
I refer to when the Department draws up the balance sheet in this regard, in particular if one considers the price of purchasing or building at present. I acknowledge the main part of the Minister of State's response will be the Government cannot do this because it does not have the cash and the capital is not available. While this is accepted, there are ways of leveraging the capital, particularly for projects like this when an asset is involved and when rental income will be forthcoming. Incidentally, when the sub-committee moves on to the next subject for discussion, namely, water, the Minister of State will be in a position to state how this is being done because the Minister of State, Deputy O'Dowd, will suggest that once a meter has been installed in a house, an income will be forthcoming. Similarly, once one builds a house one will have an income therefrom.
I will conclude by making the point that not unusually, one local authority is bringing in €3.5 million in rent. The good news is the cost to the local authority of maintenance of the houses concerned is between €600,000 and €650,000 and consequently, this activity nets almost €3 million for the local authority. What if that €3 million was used to pay off a capital sum? My question is whether the departmental officials, many of whom are present today, have undertaken a long or even a medium-term value for money audit on this measure? It is of huge concern and the dogs on the street are barking about it. While people are discussing this issue, I note that when members have tried to raise this issue, they do not appear to get anywhere with it. I acknowledge the Minister of State is anxious to provide social housing and is anxious to try to squeeze what she can out of the resources available to her. However, I believe that when the present Administration took office, this measure already had been put in place by the previous Government. While the senior civil servants obviously will go along with it, Deputy O'Dowd and Deputy Jan O'Sullivan are the two Ministers of State with the latter having responsibility for housing. My point is that members today have been provided with Revised Estimates that show precisely what will happen and the medium to long-term consequences must be worked through.
This probably is one of those areas on which one probably could spend the afternoon, particularly in respect of the housing element. There is an uneven geographical spread nationally in respect of the 100,000 people on the waiting list. From responses to parliamentary questions from a range of sources, albeit mainly from the Department of the Environment, Community and Local Government, I have put together my own table with regard to what are the worst and least worst local authority areas. Anyone who is waiting for a house and who has been accepted onto a waiting list will have a need and six local authorities account for 43% of all the people on the waiting list, namely, Dublin and Cork city councils and South Dublin, Cork, Kildare and Fingal county councils. How does the Minister of State treat the spread of the housing allocation? While it is all very well to have a national figure of 5,000 units, is that targeted in any way or is this the intention? At the bottom end of the housing waiting list, there are six counties that account for 3%, which tend to be local authority areas such as Leitrim, Roscommon and Donegal county councils. There is a vastly different experience, depending on where one is located in the country, and I wish to hear what the Minister of State has to say with regard to a targeted approach.
This spills over into the rental market because one will tend to find the areas that are most under pressure in respect of housing waiting lists also will be those areas in which there will be a profile of high rents. Moreover, even with the welcome increase in rent caps that recently has been made by the Department of Social Protection, it still is well below market rents in some areas. However, the Department is finding it almost impossible in some of these locations to get landlords to engage with the RAS scheme or with lending leasing schemes. Consequently, is there a profile within the Department of the variety of situations and of the situations that are under most pressure? Is there targeting in this regard or is it simply due to one local authority being better than another at putting in the pitch for the new builds or purchases or whatever? Moreover, while one would like to see the construction sector back at work, has an evaluation been carried out on the value for money in purchasing as opposed to building? There is some very good value to be had and this is certainly a buyers' market.
On the subject of grants, the Minister of State referred to independent living and I am aware the Department undertook a reconfiguration last year in which some areas gained and others lost out. While I am sure the Minister of State went through it in a methodical way on the basis of need, some local authorities simply do not provide some elements of the grants. For example, the adaptation grants for people with disabilities are offered in my local authority area but grants are not provided for repairing homes. For example, I recently encountered a person aged 90-something who required a few thousand euro worth of work for the roof on that person's house. The likelihood is that a saving to the State will be made on one side because clearly, money will not be provided. However, a cost will be incurred on the other side, in that the person in question is highly likely to end up out of that house and for someone in his or her 90s, that means one is highly likely to be in a more dependent and a more cost-inefficient environment and certainly not what that person needs. In the review, is the Department examining inequity by insisting there is a certain element of provision, even if it is at the emergency end? It is not good enough that it depends on a postcode lottery as to whether one receives such grants.
As for the RAS and the leasing schemes, it appears to me that in some places, the local authorities have shut up shop. It would be useful to hear back from the Minister of State as to where RAS or the leasing scheme are or are not working.
I would be very surprised if the non-working end did not sit more or less beside the profile suggestive of a higher number of people on the waiting list.
Homelessness was mentioned. Is there a small reduction in the number of homeless or is the number growing? I would have expected the budget to tackle homelessness to have been protected absolutely because it pertains to an area where people are most under stress.
On the value for money of the leasing scheme, somebody who was speaking to me recently and who was leaving the country on a long-term basis leased his apartment, which is worth €150,000, to the local authority. He was very grateful that the local authority took it off his hands. Over the course of 15 years, he will end up with €150,000 because of the sum accruing every year over 15 years. The property is worth €150,000 now and will be returned to him in pristine condition. The man said it was great that the local authority is taking the apartment but said it did not seem to stack up for him. While I acknowledge that the general Government debt has to be kept at a certain level, I believe some of the measures that apply over the longer term do not seem to stack up economically. I would welcome the delegates' comments on that.
I wish to address the effectiveness of expenditure on homelessness. A hotel not 500 m from here was purchased several years ago by Dublin City Council with a view to tackling the problem of homelessness but it still lies vacant. How effective is expenditure and is it monitored on an ongoing basis? The Department gave money to the local authority but we did not see the building purchased becoming available for homeless people. There have been several excuses but the point is that the hotel purchased for the homeless is still empty.
Earlier in the year, Traveller community representatives expressed their concern to the joint committee over the outcomes for Travellers and argued that the provision made does not result in the desired accommodation. Has the Minister of State a view on that?
Leaving out the community facilities of the voluntary housing units, what is the average cost per unit?
I thank the Ministers of State for their most informed and interesting presentation. There is a departmental policy, with which I do not agree, that one cap fits all. There are areas of the country where one can purchase houses quite cheaply. In the midlands, in particular, one can buy a house for one fifth of what one would pay in the larger towns and cities. This option should be examined. After all, local authorities have invested a lot in estate management and the reinstatement of what used to be called unfinished or ghost estates. I do not like the term “ghost estates”. Since the local authorities have already invested, they should examine the possibility of buying five or six units in a small parish rather than renting them. It would be a lot cheaper in the long run.
There is considerable competition between the local authorities and voluntary agencies, such as Respond! and Clúid. People are allowed to move house willy-nilly and this needs to be addressed by the Department. A person can run down a property and then be moved to another area. They may be a public nuisance in one estate and be moved on to another. This needs to be addressed in the Department.
With regard to grants and housing adaption grants for older people, I understand most local authorities throughout the country operate a claw-back system whereby they can redeem some of the cost if expenditure exceeds a certain figure, if the person moves on or if the house is sold. Perhaps this should be examined. In Longford and Westmeath, if over €10,000 is spent, funding can be recouped if the house is sold or transferred to a third party. Perhaps the Minister of State will elaborate on those issues.
Before I go to the Minister of State, I have a few points I wish to make myself. I have written to the Minister about a street in the town of Dunmanway on which a number of houses are owned by the local authority. One was purchased in 1999 and was never fitted out or allocated; it was knocked approximately two months ago. Other houses became vacant as tenants moved on. In some cases, the houses were in exceptional condition and one could literally hand the key to another tenant. The houses have not been visited, save to survey them, since they were vacated. This gives rise to a number of issues. The condition of a vacant house deteriorates all the time. Most critically, the needs of those on the housing list are not being met. The local authority is losing out on rent that would accrue from that.
Circumstances are horrific. One house is vacant since 1998. Other houses are vacant for periods running well into double figures. The local authority will do a survey but there is no need to do so; the houses now need to be renovated and allocated. The practice of local authorities impinges on the efforts of tidy towns committees in various towns and urban centres through the country. The Department needs to issue a directive to local authorities. Trying to solve the problem locally on the ground is extremely frustrating. The only way we will see action to prevent local authority houses from being left idle is if the action is from the top down. The Department needs to take the lead on this. Other members in the room could probably share similar stories, but the case I describe is particularly galling. People need to be housed although the local authority is doing very little to renovate or make ready for allocation houses that are falling down.
I support the statements of the Chairman. I raised before the length of time it takes to refurbish houses for reletting. It is causing a serious problem. The allocation for the housing improvement grant in the Estimate is down 23%, which is quite substantial. That is possibly why the local authorities are not renovating the houses. The figure for the grants is down substantially also, by 36%. Adaptation grants for people with disabilities and the elderly are urgently needed but, unfortunately, there is a shortage in funding due to the economic realities we are experiencing. Does Minister of State or his officials look outside the box to determine whether there are initiatives or schemes that could help to try to take people off the live register? Only yesterday, we heard about the JobsPlus scheme, which allows private employers to take people off the live register. I urge the Minister of State to consider having local authorities engage with skilled craftsmen and apprentices who are unemployed to link them with existing housing staff with a view to refurbishing housing stock. The Minister of State said there is a budget for ensuring sustainability and improvements with regard to energy efficiency. That is another area. When considering upgrading houses to sustainable specifications and the provision of adaptation grants for the disabled, we should consider some initiative to employ unemployed craftsmen so as to make the best use of our funds. Rather than simply shutting down the schemes, we should be more inventive.
I ask the Minister of State to look at that area.
I understand some moves are being made to integrate the rental accommodation scheme into the local authorities to make it more efficient. Will the Minister of State comment on this? How does she see it developing and how it will benefit housing offices within local authorities in managing housing lists?
I thank members for their questions which I will go through one at a time. As there were a few common themes, I can refer to them as I go along.
Deputy Brian Stanley's main query concerned the cost-effectiveness of leasing. He referred to a figure of 300. That is the number of units delivered through the CAS. The Deputy knows the kind of strictures on us in terms of the public finances. For approximately €7,500 a year, we can house somebody on a housing list under the leasing scheme. I know that in the longer term there is a recurrent cost every year, but given the crisis we face as a country because we are going through very difficult times, a value for money audit was carried out by the Comptroller and Auditor General of the cost-effectiveness of leasing and it was considered to be cost-effective. We need to look at this again, however, because there are issues around leasing that have recurrent costs-----
I have been monitoring the amount of leasing units local authorities are acquiring and we will keep monitoring it. I have indicated publicly on a number of occasions that I would like to return to more construction when the economy allows it. We will certainly be looking for opportunities in that regard, particularly in stimulus programmes considered by the Government. We are already in a stimulus programme in respect of insulation and will take every opportunity. In the meantime a considerable number of people are on housing waiting lists and we must use whatever ways we can to accommodate them, be it through the RAS, leasing or, increasingly, the voluntary sector. There is a limited amount of construction under the CAS programme. The CAS is effective because only one quarter of the money must come from the State. We will be using all of these methods. I accept the Deputy's point that we need to keep leasing under consideration to ensure it does not become too much of an ongoing revenue burden on the State.
Landlords and developers will have their houses back in five or ten years time. The point I am making, particularly in respect of leasing and the RAS, is that the State, in the form of local government, must then find another house. One has a situation where a family is in a hotel for weeks because a landlord had to take back a house to sell it. The point is that one loses the rent, but one also loses the asset.
They will facilitate us to house families for 20 years over the lifetime of a lease. That is a significant length of time. I take the Deputy's point that we need to keep the matter under review and that we cannot keep on leasing more and more properties without examining the ongoing cost to the State and we will do this. For the moment, it is considered to be a cost-effective way of housing families and we must respond to those who need housing. Even if we were to begin a large construction programme today, we would not have houses available for a number of years. I managed to secure €10 million for this year and with the money we are going to purchase units for people with disabilities. We are looking at different ways of acquiring units. Leasing will continue to be a part of our programme. Obviously, leasing from NAMA is one element and we want to ensure we take the best advantage of the available NAMA units. This can be done either through using the voluntary sector or directly with local authorities. I recently contacted the local authorities to ask them to specifically look for NAMA units that might be available in their areas to provide housing because we want to get the best possible social dividend from NAMA.
That brings me to the point made by Deputy Catherine Murphy because many NAMA units are in the areas about which she spoke - Kildare, Dublin and Cork - in which there is very large waiting lists. If NAMA units are available, they should be acquired for social housing. The Deputy gave me the statistic of 43% before. I am very conscious of it and think we need to ensure we address the difficulties in local authority areas with the largest waiting lists. We engage with local authorities a couple of times a year at least to ensure we discuss with them how we can target their waiting lists. I have written to them in respect of NAMA units.
Deputy Catherine Murphy raised a number of other issues. My colleague, the Minister for Social Protection, has altered the rental caps and made them more favourable in certain areas.
On the point made by Deputies Paudie Coffey and Catherine Murphy, we are progressing in moving people in receipt of long-term rent supplement to the local authorities. We will have another memorandum to the Cabinet soon and hope to be in a position, subject to the legislation going through, where we will be able to pilot the programme early next year and then move to a general roll-out. It will integrate the very large cohort on rent supplement into the general social housing waiting lists. That will be an improvement for all kinds of reasons.
In respect of obtaining value for money on purchases, the extra €10 million for people with disabilities will involve the direct purchase of houses. It was suggested buying houses might be a good way to achieve value for money. Realistically, because we are asking local authorities to come back with proposals on how they can spend the €10 million this year, we expect that there will be purchases, but they will specifically be for people with disabilities.
A few members raised the issue of private grants. We are carrying out a review and want to ensure we get the best possible value for money with the amount available. Again, there will be a small extra amount of money available this year. I know some people felt their particular local authority was short of money. We will have a small extra allocation that we have managed to find this year and will be able to allocate fairly soon. We ask local authorities to keep schemes open. Deputy Catherine Murphy referred to a particularly difficult case. We ask them to keep schemes open where there might be emergencies. We do not want them to close them at a particular time. While people may have been disappointed with last year's allocation, it was allocated in a very fair and transparent way and one could see exactly why certain local authorities had received the amount of money they did.
We have introduced what we call a housing-led approach to homelessness. It is based on all of the information and research we can obtain, whereby it is much more cost-effective and better for the individual if one can get him or her into a home as quickly as possible, with the support he or she needs rather than having him or her stay long term in what is meant to be short-term urgent crisis accommodation. We are gradually moving towards that scheme, while at the same time ensuring we have hostel accommodation available for persons who are on the streets. There has been a small increase in the number presenting as emergency homeless, that is, people on the streets. We are working with the various homeless fora. There is a devolved system under which, for example, in Dublin there is a homeless forum which caters for the vast majority of homeless persons in the country. We meet them regularly. I have set up an oversight group consisting of three individuals whose job it is to monitor what we all do to make sure we are being effective in terms of achieving results for people who are homeless because I must ensure value for money is obtained. I have brought up the issue of the unit referred to by Deputy Humphreys with the Dublin forum, in particular, because we want to ensure any money available spent is spent appropriately. That does present a difficulty in the sense that where people might have been living in a hostel for two years, our aim is to get them out of that hostel as quickly as possible and in a much shorter period of time than two years and support them in their homes.
We have schemes that offer supports, mainly through voluntary sector organisations such as Simon and Focus Ireland, and research shows that these are effective.
Deputy Kevin Humphreys also raised the issues of homelessness and Traveller accommodation. Again, I recently met a consultative committee on the latter issue. One of the problems with moneys allocated for the provision of Traveller accommodation is that they are not always spent in the year in which they are allocated. Unfortunately, if the moneys are not spent in the year in which they are allocated, they cannot be rolled over, except in certain situations. We must ensure they are spent effectively. That is why having Travellers on these consultative committees is important to ensure we respond to their accommodation needs.
I do not have details for the average cost per unit of voluntary housing. We get good value for money in working with the voluntary sector. We will have a voluntary regulatory system for the organisations working in the area soon and we will move to a statutory regulatory system. They have the potential to raise significant funding outside of the State’s funding. Some of the larger organisations are exploring various ways in which they might do this, which would help us to increase the number of units. This will be important in addressing the needs of those on housing waiting lists.
Deputy James Bannon has asked if we could purchase houses in ghost estates for people with disabilities who are on local authority housing lists. If any of them is suitable, local authority housing moneys can be used to purchase them. On ghost estates in general, we have a national committee which has representatives of all the various interests. It is quite complex because there are owners, receivers, bankers and so forth. There can be a whole sector of people involved in any one ghost estate. We are making progress in this area and want to ensure we can make improvements on individual estates.
Deputy James Bannon also raised the issue of clawing back housing adaptation grants. In the review we are undertaking we are examining whether there should be a claw-back of money in cases in which a house was sold shortly after the grant money was spent on it.
They do in the case of mortgages. We are looking it as an option and, again, it is to do with value for money. I want to ensure we target these grants as well as we can. They are of great assistance, particularly for those who otherwise might be forced to go into a nursing home and would not be able to go back to their own home. Socially and economically, it makes complete sense to have the moneys spent as well as possible.
Deputy Paudie Coffey asked about the housing assistance payment, HAP, and rent supplement and about thinking outside the box. We are open to any proposal as to how we might better provide housing. The Department has refurbishment schemes, for example. Recently, I announced under a stimulus package as part of which the Department would be providing €50 million over three years for the retrofitting of the least energy-efficient local authority houses. The Chairman also raised that issue and referred to the reallocation of local authority housing, citing cases in Dunmanway, west Cork, in particular. Recently, I received a table indicating the length of time it took to reallocate in local authorities. There are significant variations between them. That is an issue about which we want to talk to them in more detail. We want to know why houses in some local authorities can be left for a year before they are reallocated when the average waiting time is ten weeks in others. We need to ensure they reallocate as quickly as possible.
The ones I pointed to have been vacant for several years, some of them into double figures. All that had to be done was to hand over the key as they were in good condition. This is utterly indefensible, given the economic climate and that someone on the housing list would readily accept these houses. At a policy level, it should be uniform across all local authorities. It might be understandable in some cases, but when it runs into years, it is indefensible.
On the same issue, my understanding is that in this case there is a certain amount of moving the deckchairs. It seems the local authorities were allowing houses to remain empty for a longer period to access additional funds from the Department. Will that issue be looked at more closely? Perhaps there should be a reduction in what the Department grants them in these cases.
We are all aware of this happening. There was a departmental retrofitting scheme under which up to €35,000 could be provided for a void house to bring it up to a BER rating of C1. It was said units might have been left for that reason. This year we changed the scheme to allow the money to be used in occupied houses too. It was considered that it was not fair that a local authority tenant who had maintained his or her house during the years was not eligible for the grant when a new tenant walked straight into a repaired house. There is no longer a requirement for the house to be empty for a period. There is a new scheme which is worth €2,000 per house which is for the insulation of walls and attics, as well as other small draught-proofing type jobs in the least energy-efficient houses. We are encouraging local authorities to take up this scheme. We expect to cover 5,000 houses this year.
The Minister asks local authorities to keep these schemes open, yet Kildare County Council certainly has not. The Department should have some means of insisting they are kept open.
The Minister hopes to pilot the HAP scheme this year. Where will it be piloted? Will it be piloted in more than one area? Will the caps on rent assistance be taken into account, as they could result in serious income shortfalls in some areas where rents are high?
The overall housing budget was reduced by 14.3%. Is this in the context of the overall budgetary requirement for a €3.5 billion reduction this year? How was the figure arrived at? Was it negotiated between the Department and the Department of Finance?
We will pilot the HAP in seven local authorities.
It is a mixture of different types of local authority. Obviously, when the HAP scheme is introduced, people will be paying differential rent. That will address the issue of rent caps. The pilot scheme areas are being chosen in conjunction with the local authorities - the ones that are ready and where there would not be a huge difference between the notional rent a single person household would pay under the HAP scheme and what they are currently paying under the differential rent scheme. There are a number of considerations as to why particular local authorities will be included in the pilot scheme.
In respect of the overall budget, the housing budget looks somewhat skewed because a large element of it is the capital budget and capital budgets have been cut more significantly than revenue budgets. While there is an increase in revenue for housing, the capital budget is the one element that brings it down in terms of the percentage.
We will move to programme B - water services, which comprises about 28% of the overall Vote. I will allow 30 minutes for this section and ask members to restrict their contributions to questions to make more efficient use of time. I will begin with questions from members and go to the Minister of State, Deputy Fergus O'Dowd. I call Deputy Catherine Murphy.
It has been announced on radio that the three major contracts were awarded for water metering projects throughout the State. I hear most of these things on radio; one does not tend to hear them in the Dáil or at the committee. In his statement the Minister of State, Deputy Fergus O'Dowd, said it would be at the rate of 27,000 households per month. I have asked him and the Minister the following question many times and I hope we can get an answer to it today. How much will water metering cost and from where will the money come? I know the Department has capital of €326 million, but that is for fixing leaks. That is a separate fund. I have tried many times to get an answer from the Minister of State and the Minister about what the full cost per household will be. There are reports in a newspaper today on the full cost. Sometimes, however, reports in newspapers do not have any basis and are false. I do not know whether this report is false. As it is in a newspaper of record, there may be some basis for it. What will be the full cost to the householder? In response the Minister of State will tell me that the regulator has not yet been appointed. If the works are so far advanced that 27,000 meters are being installed, surely he can tell me whether it is the full cost of the provision of water, which would be about €1.2 billion or €1.3 billion. That would not be adding in the cost of meters per household. Alternatively, will it be a lesser sum, possibly €400 million or €500 million divided among the 1.3 million householders? Is it a total figure composed of the capital and the operational cost, which is about €1.2 billion or €1.3 billion, according to the Department's figures, divided by number of households? Obviously, commercial water rates would be part of this, which, unfortunately, a huge section of the population do not pay, although they should. Alternatively, will the State subsidise this new commercial semi-State entity called Uisce Éireann?
My question possibly relates to the same issue and has been prompted by the news this morning that somebody had seen the draft legislation. There was talk of reduced water pressure and looking at sanctions. One thing about which we have consistently asked is the extent of the free allowance, whether it will be sufficient to cover the normal functioning of a household and whether it is only waste that is being targeted in terms of charging. The Minister of State spoke about the introduction of a sustainable funding model. How much of the capital budget will be retained or is it expected that it will be reinforced by charging people towards the capital costs of developing further infrastructure? If that is the case, to what extent?
In respect of the loss of water, 42% of piped treated water is lost. Is it intended to get that figure down before the Government starts to charge? I know that there is a targeted approach and that the Minister of State has said in his statement that there is money available for the renewal of pipes. People will be driven nuts if they think they are paying for the fixing of holes in leaky pipes and their water pressure is being reduced.
What were known as group water schemes were a godsend in the 1950s and 1960s when they were put in place by many local volunteers. Many of the trustees have passed on and we are now left with a situation where there is no ownership of these schemes. Many of them need serious upgrading and local authorities will not touch them until they are upgraded. There are insufficient funds to upgrade them. Furthermore, local authorities are fearful about touching them where there is evidence that the supply might be provided from a deep well bore. By today's standards, they are in very poor condition and in the case of many of them, a handyman might come and fix a leak. They would not comply with present day regulations in respect of water quality. What plans does the Department have to upgrade them? They will be a problem encountered by Irish Water.
I will not repeat what others have said, but I support what Deputy James Bannon said about rural water schemes. I appreciate that there is a large investment in the larger capital projects and that this needs to continue to upgrade the standard of water quality. It is welcome that the investment is increasing in that respect, with over 40 contracts granted. How many of these contracts are entirely new or is there an overlap with last year's contracts? I think 55 were announced in 2012 and over 40 in 2013.
It is important to note that the Minister of State has said in his statement that the legislation will reaffirm the Government's commitment to maintaining water service assets in public ownership. I welcome this statement which will reassure many who have been expressing concerns in that regard. The local authorities are well placed to work in the new framework as agents to deliver a quality water service programme. I am conscious that local authorities have operated their own networks on an individual basis and that the work will now be co-ordinated in the overall Irish Water network. Is there provision for an overall co-ordinated asset management system for water networks? One notes that approximately €1 billion per annum is being invested in water networks when the level of leakage into the ground is over 50%. This is significant waste that is totally unsustainable and cannot continue. It is welcome that the Government is now addressing this annual problem through the establishment of Irish Water.
I seek reassurance from the Minister of State that there will be a co-ordinated asset management system with electronic mapping of the entire network, including mains, trunks, distribution networks into individual houses, maintenance records and a planned maintenance and replacement schedule because, without that, we will find it difficult to get the public on board. If we have a properly planned and co-ordinated system, it will gain the confidence of the people and we will have a more sustainable, quality water network to help domestic and industrial users.
I heard the reports. I asked departmental officials and they have no knowledge of that. I have been advised that the contracts are a matter for Uisce Éireann to announce following due process. The names and numbers of contractors are a matter for Uisce Éireann, not the Department.
Absolutely none. I put in an e-mail request on the issue because I was surprised by the radio reports. In anticipation of the Deputy's query, I had an e-mail earlier today from the Department on the issue, which states:
This is an advanced stage but the Deputy asked how much the metering would cost and how we would know we were getting value for money. The procurement process is part of that and I assume different companies will make proposals regarding the meters, which will have to be examined. At the end of the process, there will be total transparency and all the costs will be in the public domain along with a value for money analysis on the potential, costs and so on. There will be full knowledge after the event but if we were to comment before that is finalised, it could significantly adversely affect the amount the ordinary household will pay.
The regional metering contracts will be awarded this month. No information is publicly available on the numbers of contracts or contractors. That is a matter for Irish Water.
The Deputy asked about newspaper reports today about the cost per household. That is purely speculation. No decision has been made on what the cost will be but it is a fair question, which was asked by a number of members. The existing water services cost €1.2 billion in capital and non-capital expenditure. If only €200 million is generated by commercial water rates, that will have to be addressed by Irish Water to generate a greater income. The capital allocation for water services is €326 million this year compared to €308 million in 2012. We need to spend €600 million to meet the current requirement. The Government must decide what the subsidy will be via the free allowance. There is no way the ordinary householder will be asked to bear the total cost and, therefore, the State subsidy will have to continue by way of free allowance or whatever and Irish Water will have to secure borrowings to make up these figures.
Those decisions have to be made. The cost per household will be announced by the regulator. He or she will announce his or her intended decision and then people will have the opportunity to make submissions. There will be a consultative process before a final decision is made. People will be aware, therefore, of what the cost may be and they will have an opportunity to make submissions. That is the way it should be. When the decision is announced, the figure will not have been plucked from the air. It will have to reflect water wastage. As Deputy Murphy said, 42% of water is unaccounted for. There will have to be a plan. Irish Water will not be able to decide the charge will be X, Y or Z. The organisation will have to take into account its costs and plans and the regulator will engage in consultation. There will have to be total transparency about how the decision is made. It will not happen without proper discussion and transparency.
Future funding is a budgetary matter. Clearly, the economic position annually will be a serious issue.
If capital investment is €600 million, a sum of €1.5 billion will be needed annually based on the Minister of State's reply. With €200 million being collected in commercial rates, that leaves €1.3 billion. If it is assumed the water charge will be €300 per household, the subsidy from the State will be €800 million when Uisce Éireann is established.
To be fair to the Deputy, the full facts will be transparently made available. I cannot give him the detail now but the consultants who analysed the water system said it is costing twice as much as in the UK to provide the service. That is why we expect that when Uisce Éireann takes over from 1 January next, there will be new efficiencies and synergies. We will not work on a county by county basis anymore, notwithstanding the service level agreements in each local authority. All of the current costs will not continue to arise. There will be significant changes and new synergies.
With regard to Deputy Murphy's comments on the unaccounted for water, there will have to be significant reductions in that regard and, therefore, costs will reduce. If we are wasting 42% of all water that is treated, stored or pumped, that must reduce and, therefore, all the costs will have to reduce. It will not happen overnight given that when one section of pipe is repaired, pressure will increase on a different section but the intention is that there will be new synergies and demand will reduce by at least 10%. In Denmark, demand reduced by 12.5%. Some group water schemes have experienced significant reductions and I acknowledge they supply farms and so on as well as households. There was a reduction of between 70% and 80% in the consumption of water in Cavan-Monaghan once meters were installed. It will not be the case that all the costs will increase. I expect significant reductions over time and the capital allocation will reduce from €600 million because there will be new efficiencies.
Deputy Murphy raised the water pressure issue and I do not know if I have dealt with that adequately. The costing will have to be included in the work programmes submitted to the regulator by Uisce Éireann. They will be decided in conjunction with the regional water committees.
The plan will start, local government will state what it wants, it will move up the line and then it will be decided regionally. It will have to be a really clearly thought-out plan. It will have to be transparent and available for scrutiny in the context of making submissions to the regulator, etc.
The question of the free allowance will be decided by the Government. That has not yet been decided. I do not know whether that answers Deputy Catherine Murphy's questions.
One of the consumer associations was forthright with the committee when it contributed to the hearings, stating that the proposed system basically punishes consumers and certainly does not reward good behaviour. The free allowance, as has been stated often enough, really should be sufficient to meet basic needs, and if it does not do that it will run into a serious opposition.
The committee made its own separate report as well.
On the point about whether one is metered or unmetered, it is not the case that if one is not metered by the end of 2016 the charge one will be paying is unreasonable. It is a question of its being based on a number of different criteria, which will include the number of persons in the house and other variables. If there is a significant difference when one is metered between what one is paying and what one has paid in the past, there is the question of a refund, which is also being discussed. Personally, I feel that if one is in an apartment or whatever, there should be a way of being able to measure as accurately as possible - through a meter, if at all possible - the volume of water that one uses. There are difficulties in other jurisdictions where there is one group meter and it is divided up proportionately.
Whatever the formula, it must be seen to be fair. It must be fair, because if it is not fair it will not work. This must be a sharing of knowledge of facts and it must be transparent. One must be able to query and understand all of the charges. At the end of the day, consumers will accept it if it is fair.
The big challenge for Uisce Éireann is the ethos and the philosophy of why we are doing it, how it must work, how transparent it is, how one can query the system, how the regulator decides and how Irish Water plans. All of those matters must be open to full scrutiny in terms of those processes.
Deputy Coffey sought reassurance that Irish Water would be focused on asset management. The assets, I understand, are to be transferred from 1 January. He referred to mapping them, etc. I understand there is work going on with local authorities and with the Department - and, I presume, Irish Water - in that regard. That is a critical issue to get right. It is also important because if Irish Water must raise funds in the international market, the company must be transparent and the full facts must be known.
That is part of the ongoing process. It is a key question. Obviously, there must be a spatial strategy. It is a matter for legislation by the Oireachtas. I presume that local authorities will be part of a local plan, a county plan, a regional plan and a water district management plan, and my expectation is that at the regional level all of those issues will be debated and must be resolved. Clearly, the views of the communities are important in informing that decision. There will be clarity on that in the legislation, which we hope to publish in the autumn. It is an important question.
Deputy Bannon asked about the group water sector. I anticipated his question. The Department informs me that in 2013 funding for the rural water programme was €40 million. In 2012, it was €39.7 million.
It is similar. Notwithstanding the current difficulties, there is a significant continuing commitment to it. Having visited the Kilmeena group water scheme in County Mayo, I can testify that the work done by rural communities in sustaining, supporting and investing in the group water schemes is phenomenal. I have been to a number of national conferences on group water schemes. There is no intention that Irish Water will regulate or be involved in those. The regulator will be involved in the quality of drinking water and the standard that it meets, but it is up to each community to put its facts on the table.
It is phenomenal. The greatest agents for what is happening in metering are group water schemes. One goes to rooms that are chock-a-block with those who are enthusiastically committed to it.
Many of the trustees have passed away.
The Minister of State made an interesting point about the fact that there was a significant reduction in water wastage in Cavan-Monaghan once meters were installed. It is a constituency that borders my own, Longford-Westmeath, where the experience has been similar. He may not have factored in the fact that a considerable number of farmers are reverting to their deep-well water supplies.
The key point is that it is fine if one can provide one's self with safe, treated, potable water. The reason people have group water schemes is usually that they cannot do this, and so they get together to provide such a supply.
The example in Mayo is fantastic. It involves not only the householders but also their children. The committee will be glad to hear they that have water deputies; I got my little badge stating I had been made a water deputy of that scheme and I was a powerful man. Young school-going children look out for leaks and report them back. It is a wonderful community. It is really worth looking at. In fact, the Chairman should invite them to the committee to talk about what they do, because it is remarkable.
If a group water scheme requested that Irish Water take it over, that would be a matter for it and Irish Water. It would not be for Irish Water to make such a request. The request would come from the community.
The Department has requested that local authorities take over those schemes prior to their being taken over by Irish Water. Local authorities do not have the funding to touch those schemes because it would cost too much to upgrade them.
This would have been an issue ten years ago when local authorities were directly involved in the collection of waste, but things have changed quite dramatically in that time.
I want to go on to the local government area and deal specifically with two issues. One is the model. There was a reference in the statement by the Minister of State, Deputy Jan O'Sullivan, to the household charge as a "pathfinder" in the context of the local property tax. It was a good word and I must dig that out and use it again. It is an ingenious use of language on the property tax.
I am interested in finding out about the methodology for the allocation - if I am correct, it is 65:35 this year and 80:20 from next year. The needs and resources model has been traditionally used. Essentially, I make an argument that this works against developing areas, in that their needs are not established as the population grows - they become established over time - and the resources are not there to meet the needs. I am curious as to what methodology will be used to ensure there is an equitable distribution of the money that goes into the equalisation fund.
On a smaller point, in regard to the €6.3 million that is going to the local authority archives service, it seems there is a very fragmented approach to the storage of a very valuable archive. Has consideration been given to a regionalised approach or is some of that happening already? There may well be duplication and some benefit might be gained from doing it in a more collective way. There is very valuable information in those archives and we have to be very careful to maintain them in good condition.
My final point relates to the planning tribunal. Is there an estimate of the residual planning tribunal cost that is still to come? An amount of money is included in the Estimate but to what does this relate?
With regard to the Local Government Fund, the last speaker mentioned harmonisation and equalisation. While I do not want to sound parochial, I come from the Waterford constituency, where three local authorities are being amalgamated - Waterford City Council, Waterford County Council and Dungarvan Town Council - and Tramore Town Council and Lismore Town Council are being disbanded. The Minister of State will be aware the Valuation Office carried out a revaluation of properties in that constituency, which will cause an upheaval to how the local authorities are funded, particularly given the new amalgamated status.
What is happening is that the legacy system - the valuation system - will now be implemented in what is a planned system of funding local government through amalgamations and trying to create new efficiencies. I know the Minister for the Environment, Community and Local Government has said it is his and the Department's intention that rates should not increase. However, quite the opposite is happening, particularly in Waterford. It is a low rate base county, in any event, and it has traditionally depended on the Local Government Fund to keep services going. I ask that the Minister of State would look at Waterford, perhaps as a pilot project, and then look at the wider national issue with regard to rates equalisation and harmonisation in the new scenarios, particularly under local government reform.
This will become a very serious issue in terms of how services are funded and delivered. With the implementation of the property tax in particular, people are going to demand more accountability from local authorities and the Department as to how their euros are spent, rightly so. We need to look closely at how we will align local government funding with future demands and with the new structures that are being proposed in regard to the property tax, water rates and all of that. I would welcome feedback from the Minister of State or the officials on that issue.
With the reductions planned for local authorities from the next elections, the major consideration is the lack of funding for many local authority projects. Having served on local authorities over the years, I know that lack of adequate funding was always the main complaint.
To follow on from Deputy Coffey's point, only this morning I had a meeting with Leitrim County Council in regard to rates issues. Most businesses are struggling at present and the biggest initial investment each year is the cost of the rates. My meeting with officials of Leitrim County Council this morning concerned what could be done on behalf of one business, and I want to know whether there is any form of appeals process. This business person has appealed on two or three occasions, and each time the rateable value of the business has gone up. The business is in a small village with a population of a couple of hundred. This man is trying to survive and rear a young family, but no consideration whatsoever is given by the people carrying out the valuations, who are not engaging in any way. Are these people untouchable or can they be touched? I raised this issue last week with the Minister in regard to new legislation. These people should be made accountable. An inspector recently gave the impression that the Valuation Office has great sympathy for business, but when the valuation came back up from the country, the official in charge decided it would be at the same level as previously.
Members will know that small businesses, which are the lifeblood of this country, are closing daily because people cannot pay the rates. Unless something is done very quickly, many of these companies will not survive, many of the people involved will be unemployed and businesses will close, to the detriment of the communities in these areas.
I thank the Deputies for their questions. On local government funding and the property tax, an interdepartmental group is examining the various issues in detail at present. Obviously, a model will have to be worked out in regard to how the 80:20 allocation is administered and how the entire Local Government Fund is administered. The interdepartmental group will be bringing forward proposals in the context of budget 2014. That work has not yet been completed but, obviously, there are different issues in different parts of the country. The fact is we need appropriate recalibration to ensure all of the issues are dealt with, and that work is ongoing at present. The figure of 80:20 has been reached in terms of the amount that is retained and then goes into the general fund.
Deputies Catherine Murphy, Tony McLoughlin and Paudie Coffey raised issues around valuation, equalisation and so on. I will deal with those issues first before I go back to Deputy Murphy's more specific questions. On the specific issue of Waterford, I know the Minister, Deputy Hogan, is very conscious of the various local authorities that are being amalgamated and also those that will be subsumed under the new local government proposals. I have some experience of this because there is already an ongoing process whereby Limerick city and county are being brought together. There was an issue with the Limerick county rate being lower than the Limerick city rate, and a gradual process is underway to bring them closer together. The intention is to do something similar in Waterford. The Minister is aware of the concerns of local business people in the different authority areas, so this will be strongly borne in mind.
The valuation process, to which Deputy Coffey referred, adds another layer of complication to the issue. To address the concerns of Deputy McLoughlin, the valuation is an independent process, for very good reason. I know the Minister, Deputy Hogan, and his officials are very conscious of the need to ensure there are not undue costs on businesses generally around the country, because businesses are struggling due to the current economic situation. It is an ongoing process in Waterford and there is a timeframe during which all of these changes will take place. We are very conscious of the issues, and communication will be continued with regard to the implications.
On the other issues raised by Deputy Murphy, as she said, there is €6.3 million for the archives service. There are already some measures in place with regard to the sharing of work - for example, there are joint archivists who are shared among local authorities.
Regarding interaction between libraries, the Local Government Management Agency, LGMA, has a library unit to provide centralised supports to local authorities.
In all areas of local government, we are trying to find ways to share experience, services and efficiencies in terms of procurement, etc. There is more of a coming together than there was previously. This also applies in respect of archive services, which are valuable to the public, as has been rightly stated.
The notional figure in the current Vote for the Mahon tribunal is €2 million. We have needed to estimate how much will be required. The 2012 estimate for the tribunal's overall cost was €196 million. Of that, €101 million has already been paid by the Department, leaving some €95 million due in third party costs. The timing depends on when bills are submitted. People with bills are being urged to submit them as quickly as possible. It has been agreed with the Department of Public Expenditure and Reform that the costs will be met centrally, but we must propose a notional figure on the amount that we expect to be spent this year.
I thank the Minister of State for her response. I wish to reiterate the importance of examining the valuation process. I acknowledge that it needs to be independent, but it is working in an inherited system that is not fit for purpose, given the current economic reality. The Government is doing good work by creating efficiencies in local government and how services are delivered. We have broadened the tax base through the introduction of the property tax, in return for which people rightly expect the delivery of services, and water charges. We have proposed a new sustainable system, yet the valuation system is dated and is still working to the older model. Waterford's problem with this, particularly given the amalgamation and the issue of rates equalisation and harmonisation, is that the rates for the large multinationals in my constituency have decreased despite their being able to pay rates. Small shops and retailers in small villages, towns and the city centre have seen their rates increase by 300%. This cannot work. I am asking the Minister of State in the presence of her senior officials to examine this issue closely. It is happening in my constituency now, but it will happen across the country as the rates valuation process gets under way. I understand that a Bill is before the Seanad and will enter the Dáil, at which point we will all have an opportunity to examine this issue more closely so that local authorities can be more sustainable and efficient and can deliver value for money services. We have time on our side and I expect the Minister of State and her officials to listen to what I am saying. I thank the Minister - sorry, the Chairman - for allowing me to contribute.
Some work is being undertaken in consultation with the Minister for Public Expenditure and Reform on reviewing the various options for streamlining the valuation process. His Department is central to the issue, but I take Deputy Coffey's point. We will convey this debate to central government.
That concludes the committee's consideration of the Revised Estimates for Vote 25. I thank the Ministers of State, Deputies O'Dowd and O'Sullivan, and their departmental officials for their attendance. They are free to go.