Oireachtas Joint and Select Committees
Thursday, 7 November 2013
Joint Oireachtas Committee on Environment, Culture and the Gaeltacht
Association of Municipal Authorities of Ireland
We will resume our discussion of the reform of local government. I welcome from the Association of Municipal Authorities of Ireland Mr. Tom Ryan, director; Councillor Willie Callaghan; Councillor John Meehan; and Councillor Patricia McCarthy.
Councillor Willie Callaghan:
On behalf of the Association of Municipal Authorities of Ireland, I thank the joint committee for inviting me to address it following the recent publication of the Local Government Reform Bill 2013. Our organisation is a representative body for 80 town councils which have serious concerns about the Bill as proposed. It will result in the loss of 80 town councils and a reduction of 678 councillors. Like so much else that passes for reform these days, it is a populist endeavour. Our organisation does not oppose reform; on the contrary: we have been asking for it for years. However, once we scrutinised the Bill, our confidence that the legislation would deliver real reform evaporated. While it contains some positive measures, it does not go far enough. We are not confident that, as proposed, it will not deliver real reform.
In the past ten months we have been working with all stakeholders to develop a consistent reform agenda for local government. Two and a half years ago we published our own policy on reform. In April this year we outlined our vision for the powers and functions of the new municipal district councils. My fellow councillors and I believe in the spirit of the Government’s reform agenda. However, reform needs to happen at all levels of our democracy to ensure the people are served by a political system that is accountable, functional, democratic and local. As an association representing elected representatives at local level, we see at first-hand the need for reform at the lowest level of the political system. Local communities and their democratically elected representatives are best placed to decide what works best in their areas and what services are required. In many European countries councils are involved with the government in decisions that affect their local areas. They have diverse powers in areas such as early learning and education, social welfare and health care services and policing. These are the areas in which reform is needed to allow councillors to have an input on behalf of their communities. The end result of the current reform process, if not amended, will be one of the most centralised states in the European Union.
The Bill contains no fresh initiatives such as tax increment financing or an overhauled commercial rates system that would provide a badly needed shot in the arm for local economies. We believe local government should involve the retention of town councils and the creation of new town councils in towns which do not have such councils. The AMAI calls on Deputies and Senators to amend this legislation to ensure it will deliver on the promise of real reform. The establishment of the new municipal district councils at the expense of town councils is not a panacea for the current inadequacies of local government; nevertheless, it is what we are presented with in the Local Government Bill 2013. For the past two years the Minister has been quoted as saying he is not abolishing town councils but rather that he will enhance them. How can a body be enhanced when its financial powers are taken away?
We are presenting to the committee a number of amendments to the Bill which we believe would redress this situation somewhat. I urge members to support them. They call for greater transparency and a more decentralised democratic system. They are designed to enhance the Bill in order to best serve the people and reduce the democratic deficit.
I draw the attention of members to the extent to which the detail of implementation is not contained in the Bill but will be subject to further regulations and guidelines, to be enacted at a later date. That is somewhat disingenuous. Our members, just like the committee, are being asked to support the Bill in the absence of the clarity needed to allow us to make an informed decision. In the interests of transparency, it is imperative to have greater clarity. The financial mechanisms which will apply to the new municipal district councils are but one example of this deficit.
Two issues, in particular, are core principles for the AMAI. The first is the amendment which relates to the financial autonomy of the proposed municipal district councils. The Bill, as proposed, envisages that municipal district councils will be unable to determine the main financial income, commercial rates and property tax, but as elected representatives, we will have to answer to our electors for how these funds are being spent. Money matters because whoever controls it determines what services are put in place and the manner in which they are delivered. In areas across Ireland the ability to use the moneys for their own betterment is critical to their lifeblood and vibrancy. In my own town of Naas there is no doubt that the direct reinvestment of local charges and taxes has been of significant benefit in attracting investment and employment. The abolition of town councils ends that financial autonomy. Any reform of local government must safeguard these principles.
The second core principle relates to the issue of subsidiarity. This principle is recognised in all EU member states and strongly protected by the EU governing institutions. Our European partners are concerned that this principle should be sufficiently protected under the legislation and many in Europe share the AMAI’s view that subsidiarity is not being upheld under the legislation, as proposed.
Last week I led a deputation to Strasbourg to meet members of the Council of Europe to address our concerns about this legislation. Ireland is a signatory to the Council’s European Charter of Local Self-Government. The charter places fundamental importance on the preservation of subsidiarity. The Council has confirmed our view that subsidiarity has been weakened under the Bill, as proposed. The EU Congress of Local and Regional Authorities accepted the report of its own monitoring committee on local government in Ireland. One of its recommendations in its report urges the Government to “strengthen their legislation in order to ensure that the Subsidiarity Principle is better enshrined and protected in the law”. It is vital that this principle is upheld. It has been suggested by colleagues that we follow the example of what has happened in Northern Ireland and Scotland, but that is not the view of our organisation. We have seen the results of that policy in England. The English local government system has not worked and is in the process of being changed.
On the question of having a town mayor and Cathaoirleach, the Minister does not seem to have a problem with larger towns and municipal districts keeping their office of mayor. This is important because many towns are in twinning arrangements with towns all over Europe and the office of mayor is held in greater respect than that of Cathaoirleach. Many people from other countries cannot pronounce the word "Cathaoirleach".
It is vital we hold on to it.
We are grateful for the opportunity to come here to speak before the committee and we have possible amendments for the proposed Bill. I will ask my colleagues, Councillors Tommy Moylan and Patricia McCarthy, to go through them.
Councillor Patricia McCarthy:
I thank the committee for the opportunity to address it. As the president has indicated, we have proposed amendments that we would like to see made to the Bill. We will go through it by section. On line 31 of page 25, we would like to delete the word "district" and insert "district councils"; on line 32 of page 25, we would like to insert "council" after the word "district"; and on line 33 of page 25, we would like to insert after "districts " "or, as municipal district councils".
We need the title "municipal district council" to give the powers, functions and members recognition in the area in which they perform. Referring to a municipal district alludes to an area rather than the body that is making laws and regulations for the body; as such, it would be demeaning to members to be referred to as a district rather than a council. The title should include the word "council".
Councillor Tommy Moylan:
I thank the committee for the opportunity to address it. Another proposed amendment relates to section 29 of the Bill. We propose that on page 36, between lines 3 and 4, the following should be inserted: "That each municipal district may, in respect of that district, vary the commercial rate and local property tax within that district from the amount applicable to the county council or the city and county council concerned.".
This amendment would allow each municipal district council to have the power to vary the commercial or local property tax within the municipal district area in order to carry out specific projects agreed by the members of the municipal area as part of its budget. When Putting People First was published in October 2012, section 6.7.8, relating to financial arrangements, had a proposal for a:
provision for members at district level to levy an amount in the district (or a town within the district) additional to the general commercial rate level (possibly by means of an arrangement similar to the “town charges” system for former town commissioners and subject to any appropriate requirements), with a “supplement” to the general rate being adopted as part of the budget process, collected at central county level, and the additional amount for a district being allocated accordingly;That provision has not been transferred to the Bill, despite the fact it would give more autonomy to local municipal districts. If they had specific projects that they wanted to carry out, they would have the power to levy an additional rate if deemed appropriate and perhaps with the agreement of the business people within the area. For example, this could relate to a town enhancement scheme. A full county agreement would not be required and agreement could be reached on a district level and applied accordingly.
In section 29 and also on page 36, our next amendment would be to insert the following between lines 3 and 4: "Each municipal district may, in respect of that district, set an additional commercial rate for premises occupied by large commercial entities which exceed such thresholds such as turnover or other economic activity and as may be prescribed." Each municipal district should be able to levy additional rates on certain types of businesses, particularly larger businesses such as multiples, which can afford to pay extra levies. The income that is generated should be ring-fenced within specific areas and used for projects to enhance town centres affected by out of town developments. We believe the Minister has opened the door to this possibility by introducing the base year adjustment as part of the Bill.
Everybody knows the "Tesco tax" that has been adopted in Northern Ireland and we believe in the base year adjustment. In all this local government reform, everything has been changed except the current rating system applying in this country. Small and medium local businesses are finding the current economic climate extremely difficult. The same rating system is applied to the independent retailer as to the large multiples. It is now time for the rating system to be examined in this country and a provision like this would give a badly needed shot in the arm to small local and independent businesses that could benefit from a measure like this and relieve pressure. I appeal to members to take that on board.
I appreciate that many of these proposed amendments relate to the financial measures. The next one would to delete lines 4 to 6 of section 29(2) on page 36 and substitute: "The base year adjustment shall be determined in accordance with subsection (3) and (4) by a rating authority with agreement of the members of a municipal district area where the base year adjustment will apply in respect of each year of the adjustment period for each of the specified areas of the rating authority." This relates to the harmonisation of the rating system across town and county councils. Generally, across the country town councils' annual rateable valuations would be lower than the county rate and there is a provision in the Bill for these to be harmonised over a period by way of a base year adjustment. The provisions would have this done in a three to ten-year period but we argue the members of the municipal districts should decide the period. In my county of Tipperary, there is variance in commercial rates and the annual rateable valuation between some town councils and the county of between 2% and 11%. My own area of Nenagh is 2% behind so we could achieve relatively short-term harmonisation but in south Tipperary, including Carrick-on-Suir, they are 11% behind the county rate and so might require a little more time to harmonise the rate. This should not just be a blanket harmonisation period across a county and each district could decide what best suits.
The next proposed amendment would delete line 22 on page 37. This relates to the proposed introduction and standardisation of 50% refundable rates on vacant commercial buildings on a national basis. The amendment would leave section 14 of the Local Government Act 1946 as it stands. If the 50% refund is to be introduced, it should happen on a phased basis of up to ten years, similar to the base year adjustment. This provision in the Bill took everybody by surprise, as the Minister intends to standardise 50% refundable rates on vacant buildings across the country. Currently, 100% of refundable rates are applicable on vacant buildings, barring the cities of Cork, Limerick and Dublin, but the Minister is intending to standardise the practice that only 50% of refundable rates would be refundable on vacant commercial buildings. This is an anti-business measure and in the current economic climate it is hard enough for rate payers who may have a vacant building because a business has been closed. They would be penalised by having to pay 50% of rates on a vacant building. This could lead to many buildings being devalued for rateable purposes and a change of planning being brought about for a building in order to avoid the clause. That could make it more difficult for new businesses taking over such properties. If the provision remains - we are seeking its deletion - it should come about on a ten-year phased basis like the base year adjustment.
Councillor Patricia McCarthy:
The next proposed amendment would on line 40 of page 51 insert "or municipal district". We are seeking that each municipal district be allowed to choose its own titles such as "cathaoirleach" or "mayor", and that there should be no distinction between local authorities. A town with a population of 20,000 should not have a status above another town with a population of 15,000 or 10,000. Heretofore in local government there have been different tiers of authority, responsibility and recognition, going from town commissioners to the large cities. This reform seeks to equalise, except in the case of cities or towns with charters. That would be a unique distinction and in every other area we are supposed to be equal. There is a form of discrimination in the Bill, as it gives status to some towns above others, which is unfair. The title of "mayor" is a municipal title. Whatever title a district decides to use, there should be equality that is unrelated to the size of a town. There may be three large towns in the area.
That is the reason for the amendment.
On section 40 the proposed amendment is: "In page 53, line 20, after "matters" insert ", and the chairperson of such committee will be a member of the relevant Local Enterprise Office"." We were amazed to find out that there is no public representative on the community development committees, so the local enterprise offices, LEOs, will not have public representatives. That is a serious oversight for a body that will be responsible for signing off on the various commitments of LEOs. At the very least the chairperson of the strategic policy committee that deals with enterprise and development should be a member. An amendment is required sooner rather than later. We would like the committee’s support in that regard.
On the amendment to section 44, which states "In page 57, to delete lines 9 to 20", we do not necessarily want to delete the entire section. The Bill proposes to give a right to registered political parties for their whip to be on the corporate policy group, CPG, if he or she is not nominated by the political grouping to the CPG. They will have an automatic 20% representation on the CPG. That is immediately discriminatory in that if one has a group of independents which has come together to form a grouping on a local authority the members are automatically discriminated against because they are not a registered political party, although they might be part of the largest political grouping in the council. Therefore, they will not have an automatic 20% representation on the CPG if their whip is not a member of the CPG.
The idea of the CPG, as I understand it - that has not changed in the Bill since its inception - is that it is a mini-cabinet, the role of which is to guide and work with management to progress the plans for the council. It was intended to be a small focus group that would meet on a regular basis. The measure has the potential to be extremely unwieldy because we all know what can happen. People can be nominated and then others could be added on. We do not think the door should be opened, as it were, as broadly as is the case. Therefore, we seek to have the provision amended in addition to the removal of the clear discrimination against independents and non-aligned people. Some councils have groups of non-aligned members and the provision confers an unfair advantage on registered parties.
The proposed amendment to section 53 is: "In page 73, after line 34, to insert “(e) A county council or a city and county council is required to ensure that income redistributed to a municipal district will be on a fair and equitable basis, and reasonably proportional to the income directly generated within that municipal district." It is important to recognise that where moneys are raised in a district it may be the principal source of income for the entire county, but because there is a lot of business in the area there is also an onus on it to have certain standards and to deliver certain services that may not be demanded to the same extent in other areas. There must be a recognition in the redistribution of local funds of the balance that is needed to develop a county and an area.
Go raibh maith agat, a Chathaoirligh. I extend a welcome to the witnesses and thank them for their thought provoking presentation. Having served with many of them - particularly the director, Mr. Tom Ryan - I know that he is very good at provoking discussion and he is even better at responding to provocation. There is a strong Tipperary presence and I am particularly interested in the proceedings from that point of view. We are getting the full whack of the effect of local government reform as Tipperary is being amalgamated and six districts are being eliminated. I welcome the comments of the president, Councillor Willie Callaghan, that there are some positives in the Bill but it does not go far enough. He believes in the spirit of the reform. He said that many financial powers were being removed from local authorities. Could he elaborate on that point? I would have thought the Bill proposed to enhance local government by giving it a genuine base for funding which determines the level of services and, accordingly, the power of a local authority.
On the first amendment proposed to section 29 on page 36, could Councillor Moylan elaborate a little more on the point? We already have such a system. Having served on a local authority that shared the lowest rate in the country, I remember there was always a battle between one of the local authorities in Donegal and Templemore in that regard. We had it for many years in Tipperary. It always created a problem locally in that there was antagonism among towns in Tipperary about rates. Is there not a danger of creating difficulty by saying that the rate should not go below the county rate? Could Councillor Moylan expand on the proposal to increase the municipal rate to 10%?
I do not wish to dwell too much on the point made by Councillor McCarthy on section 36 and different tiers of government, starting with town commissions. In Tipperary, one of the largest towns, namely, Roscrea, had no municipal authority of any description - neither a town commission, a town council or anything else. That was the fault of the previous local government regime in that some towns had a town council or town commission and many others did not have. Some counties did not have any tiers of local government at all. Could Ms McCarthy elaborate a little on the matter?
Deputy Stanley quoted extensively at the previous meeting from the submission by the Association of Municipal Authorities in Ireland, AMAI. It is a good sign that he is reading and learning from it. He referred to Northern Ireland. In some instances he referred to the good things about Northern Ireland, but he condemned what the Bill contains about Northern Ireland. Some people speak out of both sides of their mouth. He did not refer to the fact that a significant local property tax has been imposed in the North of Ireland but Sinn Féin is absolutely opposed to it in this country. What are the views of witnesses on the local property tax? Does it not allow local authorities to finance local government? I thank the witnesses for attending and for their thought-provoking presentation.
I welcome the members of the delegation - Mr. Ryan, Councillor McCarthy, Councillor Callaghan, Councillor Meehan and Councillor Moylan. The presentation by the AMAI, as always, was well put together and thought out.
The point I made about the difference with the North is that the numbers in the North under the review of public administration, RPA, would give 1,185 councillors in that jurisdiction. It is correct that there are rates in the North. It is part of the British taxation system but one gets services for it. Deputy Coonan forgot to mention that. In terms of town councils and municipal districts-----
Could I please have your protection, Chairman, as I am discussing an issue with the delegation?
I have not resolved how to handle the situation in which there are a number of large towns in an area. One could pick any county where there are three or four substantial towns with a population of approximately 6,000. How do the witnesses envisage such towns being best represented? Is it the view of the AMAI that the hinterlands should be included in town and district councils? Could the witnesses elaborate a bit on the issue?
The points on the amendments are well made. I will not go through all of them. I agree with some and find others questionable. The amendments focus on devolving maximum power from the county to the municipal district. What powers and functions would the AMAI like to see devolved from central government to councils?
The powers of managers and their executive functions is a point of frustration for councillors. What executive powers would the delegates like to see transferred to councillors? Under the legislation, we will have chief executive officers instead of managers. On paper at least, it looks like there will be some shift of power. Obviously we welcome that because Sinn Féin supports reform. We see the need for real reform but we do not agree with the proposals in the Bill, particularly those that will result in the complete destruction of local democracy.
Where there are a number of administrative districts, in some cases five or six in a county, there will only be two representatives on the regional authorities. Not alone will smaller parties and Independents be squeezed out but whole districts could be squeezed out. For example, in Tipperary there could be five or six districts but only two of them would be represented on the regional authority. There will only be three regional authorities in total - one for the greater Dublin area and two others. Regional government will be a long way away from the district. I ask the delegates to comment on that.
I welcome delegates from the Association of Municipal Authorities in Ireland, particularly the President, Mr. Callaghan and some of the executive members who are in attendance. Most people in this room will know that the AMAI is my nominating body for the Seanad. I am delighted to say that I was successful in winning a seat on behalf of the association and have worked very closely with it since becoming a Senator.
We have reached the point where the legislation has been published and my personal views on it are on the record of the Seanad. I believe that town councils should be retained but the Minister and the Cabinet have made their decision on that. We now have a Bill in front of us and that is what we are debating. We must move forward with that Bill. The AMAI has come here today with a very positive presentation on how it sees the reform of local government playing out.
How does Mr. Callaghan see this legislation affecting local communities? At the outset of this process, the Minister sought lists of powers that could be devolved from each individual Department but to the best of my knowledge, only one Department responded to his request regarding the devolution of powers to local government. What powers do the delegates think we can still seek to have devolved to local government? The issue of local government autonomy vis-à-vis rates and the local property tax at municipal district council level was raised. I ask the delegates to expand further on that issue.
I will not go through the individual amendments now because we are pressed for time but wish to only deal with them in a broad sense. In amendment No. 2 it is requested that municipal district councils be permitted to vary the commercial rates but we already have a system in the country called the business improvement district scheme, which does something similar. The Government should be open to considering this amendment because we already have practice and precedent in this regard. The request from the association for powers to vary rates is a reasonable one and the AMAI has asked that we amend section 29 of the Bill to do this. The proposals on rates rebates will have an enormous impact in rural Ireland. In fact, I would go so far as to say that if that is introduced, the State will never see a lot of that money. Effectively, the State is telling people who have vacant buildings that they will have to pay full rates on those buildings and will not get anything back. Generally speaking, in small towns in rural Ireland, people who have closed up their businesses have no money so they will not be able to pay the rates anyway. A more practical approach to this issue would be very welcome.
The issue of calling municipal districts 'councils' was referred to earlier and it stands to reason that this should be the case. There should be no full stop after municipal districts and the word council should be added at the end. I strongly support that suggestion. The case for mayors has been well made by Councillor Mc Carthy. Many people refer to the situation in Europe and the fact that we must be seen to row in with our European neighbours. Municipalities and mayoralties go hand in hand and I support the delegates in that regard.
My final point concerns the recognition of elected members on the Local Enterprise Offices, LEOs and the Corporate Policy Groups, CPGs. We must have autonomy and I support Deputy Stanley's arguments in that regard. Autonomy does not mean that powers are devolved to the officials of councils but to the elected representatives. That is what we want to see.
Councillor Willie Callaghan:
Deputy Coonan referred to the local property tax as a way of getting extra funding for local government but that is a myth. It is very disingenuous to say that the property tax will give more money to councils and local authorities because it will not. If €10 million is taken in through the LPT in my county, the Government will take €10 million from the local government fund for the county. The myth about the LPT that needs to be put to bed. We will not get any extra money.
Senator Landy asked what effect this legislation will have on communities. It will have a huge effect in terms of community grants and community involvement. My council, like all others around the country, is hugely involved with various sporting and cultural groups, tidy towns committees and so forth. We have an awards night coming up in three weeks time in my local town. We will be giving out about €180,000 on the night. I cannot tell the people of my area that they will have the same level of funding from next year onwards and neither can any of my colleagues. The chances of having that money available are very slim.
Deputy Stanley asked what other powers or functions we would like to see devolved to local government. We see what is happening in other European countries, where local government is involved in education, health, social welfare, policing and so on. We believe that we should have an input in those areas because we are on the ground in a real sense. A lot of problems in those areas are being brought to councillors' clinics anyway so we should have an involvement in them.
Councillor Patricia McCarthy:
Deputy Coonan asked about the existing towns which have no political representation. Until recently, there was a process in place whereby towns could seek to have political representation. We did that in my own home town of Shannon and we got first tier representation, with town commissioner status. The option was there to move on up to urban status. However, the whole process changed and we never moved up from town commissioner status.
Councillor Patricia McCarthy:
Yes, but prior to 2001 there was no population requirement. The restriction did not apply before then and once the people decided they wanted it, a plebiscite was held and a decision was made, which is what happened in Shannon. It was the best thing that ever happened to Shannon, to become part of the system. Up to that point, we had tried town councils, political alliances and so forth but they had all fallen by the wayside. It is to the credit of the political system that Shannon has survived as a local authority town since 1982 or 1983.
It is good that the municipal districts will give status and recognition to towns within their district. That is a good thing, as is the fact that there will be equal representation. I cannot deny that this move is a good one and I certainly welcome it. Deputy Stanley asked if we welcomed the coming in of the hinterland to the towns and we do. We believe that a strong town can help a hinterland to develop. We would see that in the case of Limerick city, where the city should be the centre of the region and if the city is strong, the rising tide will lift all boats.
A vibrant town can help its hinterland.
The Association of Municipal Authorities in Ireland made a strong submission several years ago seeking more devolved powers for municipal authorities in the areas of health, education and policing. We did have joint policing committees, with public discussions between communities and the Garda, which proved beneficial. They also allow us to have an input into yearly policing plans. There has also been the involvement of community forums. We need to strengthen these initiatives and increase participation.
There is no reason a block grant from the national lottery cannot be decided by a municipal authority. There is no need to centralise such decisions.
On the question of regional authority representation, we agree two is a small number, but that is the hand with which we have been dealt. A group can get together to sign a petition that it wants to nominate a person. I am not sure if that works in the case of two, but it works in the case of three positions. Perhaps the legislation will have to be tweaked to ensure proper representation. We are all politicians in this room. The one thing we do after elections is get together, haggle and reach an agreement. That is how I see positions being divided out, but that safeguard is provided in the existing legislation for the minority groupings. I have seen nothing in the Bill that removes it.
Mr. Tommy Moylan:
On section 29, on varying the rates, this should be a power at municipal level. If a specific project was in place, the municipal authority members should be allowed to come to an agreement on a small variation of the rate which could return to the county rate if it was not used properly. This was provided for in Putting People First, but it was not included in the legislation. For example, Nenagh town businesses were given an option of having a 3% reduction in rates or a parking incentive in the town centre, with free parking at weekends. The parking incentive was chosen with the agreement of local traders as we pointed out they would get more value out of it than a reduction in their rates. The other two town councils in north Tipperary saw a reduction in rates. Our incentive provided a boost for local traders in Nenagh at the weekend. That is local democracy and power working at local level. Next year we will not have that option. All municipal areas, whether it be Nenagh, Templemore or Thurles, will not have that choice next year as the matter will be decided at county level.
The Bill provides for local property taxes to be brought back to county level. This will have an awful effect on the local government fund which will be reduced drastically. The kernel of the issue is that this tax is to be collected centrally at county level and redistributed back to district level by way of a general municipal allocation. As Mr. Callaghan stated in his opening statement, without the guidelines and regulations being published, we do not know how this will be redistributed back to municipal authorities. This will affect our credibility as public representatives. If someone in Nenagh asks me what he or she gets for his or her €500 in local property tax, he or she will not want to hear me tell her or her that the money paid for a footpath in Clonmel, with all due respect to my colleagues in south Tipperary. He or she will want to hear how much was spent in his or her local district. The priority must be the direct correlation between municipal allocations and what was raised by the local property tax. That is the priority in having full financial autonomy.