Oireachtas Joint and Select Committees

Thursday, 7 November 2013

Joint Oireachtas Committee on Environment, Culture and the Gaeltacht

Dublin Chamber of Commerce

2:35 pm

Photo of Michael McCarthyMichael McCarthy (Cork South West, Labour)
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Tá an cruinniú ar siúl arís. We are back in public session.

On behalf of the committee, I welcome, from the Dublin Chamber of Commerce, Ms Gina Quin, the chief executive, and Mr. Aebhric McGibney, director of public affairs.

Ms Gina Quin:

I thank the Chairman and the rest of the committee members for allowing us to come in and speak to them. We submitted a document and I am aware the committee is taking that as read.

There are three areas on which I will focus in my brief few words. First, the Dublin chamber, on behalf of its 1,300 member companies with 300,000 employees in the greater Dublin area, is supportive of the work that continues to be done in the area of local government efficiency. I sat on the committee that looked specifically at local government efficiency in the Dublin area. Our major concern in this area is the cost of services to business. When we look at the funding that has been provided by businesses to local authorities over recent years, we see that, as a percentage of local authority funding, businesses are paying 46% of the total funds of local authorities in the Dublin area, whereas in 2008, they were paying 38% of them. There has been a significant increase in the proportion of moneys going into local authority funding from businesses. We would be concerned about that escalation, particularly given that it has happened over the five years of the worst recession in many decades in this country.

We fully support local government efficiency. We want to see local government become more effective and more efficient. We want to see more consolidation of services and less duplication. We are also interested in seeing local authorities really embrace outsourcing as a means of gaining that efficiency because not only does it help them to be more efficient but it also provides an opportunity for the private sector.

The second area I wanted to mention is the local property tax. This is something for which the Dublin chamber has campaigned for many years. We are glad to see it introduced We believe that it brings a balance to the taxation for local services, between the domestic householder and the businesses. To date, businesses have been paying - and householders have not been paying - a direct local tax. The property tax addresses that.

However, we have always campaigned for a local property tax to be put in place on the basis that taxes collected locally are spent locally and we have a major concern, particularly following a parliamentary question asked by Deputy Barry Cowen in recent times, that the Minister has stepped back from an earlier commitment that 80% of the taxes raised locally would be held within that local authority and spent on services for the citizens and businesses within that local area. The Minister intends to defer that particular condition of the collection of taxes. Instead, as I understand it, taxes will go into one central pot. We are looking for clarification from the Minister's office to see whether that is simply a one-year deferral or a more permanent development where taxes collected locally will not be spent locally, which we see as a retrograde step. It is particularly important that we get clarification of this as we head into a new calendar year in which there will be local elections. We all are in favour of tightening the link between local representatives and the citizens who vote them into office.

The committee will not be surprised that the third area I want to raise is one close to the Dublin chamber's heart, that is, the issue of an elected mayor for Dublin. When I joined the chamber in 2001, the chamber was already campaigning for an elected executive mayor for the Dublin area. We do this for good reason. The global position is that city regions are driving national economies. There is strong evidence to support our belief that Dublin is a significant driver of the national economy. We believe that Dublin, therefore, needs to be run in the most efficient and effective way. Around the world, in cities such as London, New York and Chicago, executive mayors are key to driving the economies in those city regions and the benefits that those city regions accrue for the rest of the economy around them.

We are looking for an elected mayor who can be a strong voice for the Dublin region, who can promote the Dublin region internationally and who can ensure that local services across the four local authority areas in Dublin are delivered efficiently and effectively, that there is strong co-operation and shared objectives and that those local authorities are held accountable. We have debated this issue over many years with the member businesses of the chamber. We are clear that we will only support an elected mayor if it is a mayor who has executive powers. We are not interested in another layer of bureaucracy. We are not interested in a mere figurehead. We must have executive powers with that office.

Photo of Michael McCarthyMichael McCarthy (Cork South West, Labour)
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I call on the only Dublin member present, Senator Keane.

Photo of Caít KeaneCaít Keane (Fine Gael)
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I will start where Ms Quin finished, on the elected mayor. As she will be aware, the consultation is out there. It will be a matter for the local authorities.

I agree with Ms Quin that there is no point in having a figurehead of a mayor for Dublin if the office does not have the powers to go with it. It would only be another office and another bureaucratic facility.

The theory was that 80% of the local property tax raised would be spent locally. In anything, there is a bedding in period. It is not easy to change a system, from black to white, in one fell swoop. I can see that there are reasons for deferral. It is a question we will keep on the agenda because that is the theory behind the local property tax. The deferral is until 2015. That is what has been stated so far. It is not an ongoing and rolling deferral. That is my understanding of it but we will question it further.

I do not know whether Ms Quin raised something else, but we have her submission and the other ones that were presented by the other two organisations earlier.

On commercial rates, as I stated to IBEC earlier, there is now more leeway to help businesses at local authority level because heretofore local members did not have a facility to reduce or increase the rates by 15%. That provision now exists. If there is the wherewithal in counties, it is a power of the local authority.

Co-ordination is an issue between businesses and local authorities. With the chamber, the local development companies and the enterprise board being more integrated, the process will be more transparent. It will drive businesses in each county that the responsibility is with the county as well rather than having the enterprise boards responsible to Enterprise Ireland and one having to spend X amount of money, for example.

This is a good move which will lead to greater transparency. It was either the representatives from Chambers Ireland or IBEC who inquired as to whether the offices to which I refer would be hidden away at the back of local authority offices. I can only speak from experience in this regard and inform the committee that the enterprise board in south Dublin is very much to the fore. I hope this will be replicated throughout the remaining counties and that people will know, from the off, where to find the relevant offices. They often do not know the location of these offices.

2:45 pm

Photo of Marcella Corcoran KennedyMarcella Corcoran Kennedy (Laois-Offaly, Fine Gael)
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I am interested in our guests' position on money raised locally being spent locally. I come from the midlands, the population of which is reaching critical mass, and live in a county which has a very poor rates base. The equalisation measure in place is extremely important to my county in the context of ensuring citizens are provided with adequate services. We rely very heavily on money from more highly populated areas. What is our guests' position on equalisation? I am curious to discover their view on the measure in this regard, particularly in the context of money remaining in the areas in which it is raised. Not everybody can live in Dublin, Cork, Limerick, Waterford or Galway. There are other counties with smaller populations. If the local authorities in these counties are to depend on the money they raise locally and if there is no overflow from more populated counties, the people who live there will not have access to very many services.

Photo of Barry CowenBarry Cowen (Laois-Offaly, Fianna Fail)
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I thank the representatives from Dublin Chamber of Commerce for both their presentation and submission. I accept the sentiment Ms Quin has expressed. I am glad to hear that water rationing measures are to cease this evening. It has been a difficult ten or 12 days for the members of Dublin Chamber of Commerce and residents across the city. That is, however, an issue for another day, particularly in the context of the means and methods that will be used to resolve it in the long term. I hope a mechanism will be put in place to address it in the short term. We will be raising the matter with the powers that be at other fora.

Ms Quin has stated Dublin Chamber of Commerce, in conjunction with the local authority, played an active part in seeking cost efficiencies and so forth in recent years. I am aware that the process in this regard was difficult for both local authorities and the recipients of the services they provide. During the initial two or three year period cost savings of 20% to 25% were made by my local authority in the area of manpower. This meant that my local authority and others like it were obliged to seek to provide the same level of service with fewer personnel and less funding. I commend everyone concerned for achieving the necessary efficiencies. These efficiencies continue to be achieved by means of changes to procurement processes, etc.

What Deputy Marcella Corcoran Kennedy said reflects the methodology and reasoning behind the parliamentary question I tabled to the Minister about this matter. I understand he previously gave a commitment to the effect that what was raised locally would be retained locally. The money raised in Dublin by means of the local property tax would amount to in the region of €50 million over and above the amount available under the existing equalisation measure. It is in the latter context that I asked the Minister to make a firm statement on what was the long-term objective in this area, irrespective of what might be the position in order for people to address the ensuing situation in the wake of the original statement on his part. I hope clarification from him will be forthcoming. I have my doubts about his remarks to the effect that the deferral will only apply next year. I expect that in 2014 he will continue to state the deferral will remain in place for a longer period. I agree that clarity and finality are required in this issue.

I fully support our guests' views on a directly elected mayor for Dublin. In the context of the Local Government Bill, my party produced a document which detailed our support for directly elected mayors who would have effective executive powers, not only in Dublin but also in the other major cities throughout the country. While I welcome the plebiscite, I do not believe it is necessary to hold one. The matter could have been dealt with in the legislation.

There is a need for a complete overhaul of rates. I am aware that a revaluation was carried out in Dublin, but I do not believe this addressed all of the issues our guests' members would have raised. We will be tabling amendments that would lead to the creation of a system which, at its core, would be cognisant of the position on commercial rents. There has been a reduction in such rents in recent years, but there has been no corresponding fall in commercial rates. This matter must be addressed. We are of the view that some weight must be attached to turnover and the ability of business owners to pay.

I request that our guests furnish the committee with amendments they believe might reflect their requirements or address the deficiencies they see in the legislation. We are all realists and expect that the Government will exercise its majority in the passage of the Bill through both Houses. However, I hope there will be consensus on a wide range of issues and that we will be in a position to seek agreement on particular amendments. To that end, I ask our guests to make available to the members of the committee suggestions they may wish to bring forward. I hope we will be able to work further with them on this matter.

Ms Gina Quin:

I will deal, first, with the issue raised by Senator Cáit Keane in respect of the 80% deferral. Our concern is that the Minister was not clear in his answer to Deputy Barry Cowen's parliamentary question on the period for which this deferral would be in place. It is couched within the context of the establishment of Irish Water. We agree that water is an absolutely essential resource and that during the past eight or ten days Dublin has experienced water shortages. In such circumstances, there is an urgent need for this matter to be addressed. In the context of investing in water infrastructure, the decision to be made must reflect the long-term reality. We are concerned that there will not be a clear cut-off point at the end of 2015 in respect of the reinstatement of 80:20 rule relating to local authority funding. We will be seeking further clarification from the Minister on whether the 80% to which he committed will come into place in 2015.

With regard to Deputy Marcella Corcoran Kennedy's question on equalisation, we recognise that there are very significant differences between various areas of the country in the context of population base, the commercial rates base, etc. We must also recognise the scale and scope of Dublin. The greater Dublin area accounts for 40% of the population on the island. The individuals who live within that area must be provided with adequate services. The other factor which is very real for local authorities in the context of planning is that the Central Statistics Offices estimates that the population of the greater Dublin area, currently 1.3 million, will rise to over 2 million by 2020. That is a significant increase and we must seek to run slightly ahead of the estimates in providing services and putting in place the necessary infrastructure such as schools, adequate water supplies, roads, public transport, housing - a major consideration - and so on. Many of these are supported and supplied by local authorities.

While I appreciate that there are challenges throughout the country, I am strongly of the view that the principle of 80% of local taxes being retained in the areas in which they are raised should be implemented. Dublin will, of course, continue to contribute very significantly in terms of the income tax spend. Over 50% of the national income tax yield, 62% of the national VAT yield and 59% of the national corporation tax yield emanate from the Dublin area. It is still making a major contribution to Exchequer funding and revenues and, as a result, we want the principle to which I refer to be implemented.

It is a question of connecting local services with political representatives, such as local councillors, who have responsibility for those services. With regard to the plebiscite, I agree with Deputy Cowen that we might have moved more quickly, but we are confident that the online surveys the Lord Mayor, Oisín Quinn, is conducting will show a very strong level of public support for an elected mayor of Dublin. We are somewhat concerned by some of the discussion about local authorities having the ability to veto the legislation. We think it should be up to all of Dublin's local authorities to collectively make the decision on whether to hold a plebiscite next May, in tandem with the local elections. It has been shown empirically in other cities that a mayor can have a significant effect, not only on the economy of the region and Ireland as a whole, but also on the well-being of all citizens living here now or in the future.

2:55 pm

Photo of Caít KeaneCaít Keane (Fine Gael)
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The aforementioned survey and consultation are being carried out by all four local authorities and I understand the decision will be based on their combined weighted percentage votes.

The local property tax is relevant to the equalisation fund to which Deputy Corcoran Kennedy referred. In 1976 approximately 62% of local government funding was locally sourced from rates. The figure changed drastically after the abolition of rates. By 1982 the proportion had reversed, with 67% of funding coming from the national level. We are reverting to the position of 1976. It is not new that he who pays the piper calls the tune. Local authorities regularly ask to be given more powers but if they need power they also need to be able to raise their own money. However, as not every county has a sufficient business base, the equalisation fund will have to change that. Some counties will perform better than others and a central fund will always be needed for smaller counties. There is no way that Longford will be able to produce similar amounts to Dublin.

Mr. Aebhric McGibney:

To clarify, I have a draft of the legislation in front of me. Section 61 of the draft Bill requires that a resolution be passed by each of the four local authorities in Dublin. It is possible that three local authorities will be in favour of a directly elected mayor with strong powers but the opposition of the fourth defeats the proposal. The bar is very high in terms of the legislation.

We are happy to share our analysis of the legislation with the committee. A point was made about water supplies. Dublin faces particular problems with water and we would welcome an opportunity to speak to the committee about this subject on another occasion. There has been a delay in the provision of the alternative sources of supply that Dublin desperately needs. Dublin has 800 km of pipes older than 100 years and they need to be replaced. Some level of redundancy will need to be built into the system from an enterprise point of view, for industries that are heavily dependent on water and that would not be in Ireland without adequate water supplies.

Photo of Michael McCarthyMichael McCarthy (Cork South West, Labour)
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I thank the witnesses for their contributions. This is an important part of our deliberations in advance of Committee Stage of the Bill.

The joint committee adjourned at 4.25 p.m. until 12.45 p.m. on Tuesday, 12 November 2013.