Oireachtas Joint and Select Committees
Thursday, 25 June 2015
Public Accounts Committee
2013 Annual Report of the Comptroller and Auditor General and Appropriation Accounts
Vote 25: Environment, Community and Local Government
Chapter 5: Central Government Funding of Local Authorities
Special Report No 84: Transhipment of Waste
10:00 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I remind members, witnesses and those in the Public Gallery to turn off their mobile phones as they interfere with the sound quality and transmission of proceedings. I advise witnesses that they are protected by absolute privilege in respect of the evidence they are to give to the committee. However, if they are directed by the committee to cease giving evidence in regard to a particular matter and they continue to do so, they are entitled thereafter to only a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise nor make charges against a Member of either House, a person outside the House nor an official, by name or in such a way as to make him or her identifiable. Members are reminded of the provisions within Standing Order 163 that the committee shall also refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policy or policies.
I welcome Mr. John McCarthy, Secretary General of the Department of Environment, Community and Local Government and ask him to introduce his officials.
Mr. John McCarthy:
I am joined today by Ms Bairbre Nic Aongusa, assistant secretary from the housing division, Ms Mary Hurley, assistant secretary from the community division, Ms Maria Graham, assistant secretary from the water and planning division, Mr. Barry Ryan, finance officer, Ms Fiona Quinn, principal officer from the local government finance division, Mr. Philip Nugent, principal officer from the waste policy and resource efficiency division and Ms Theresa Donohue, assistant principal officer from the housing policy division.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I also welcome Mr. Tom Heffernan from the Department of Public Expenditure and Reform. I invite Mr. Seamus McCarthy, Comptroller and Auditor General, to make his opening statement.
Mr. Seamus McCarthy:
Gross expenditure under the Vote for Environment, Community and Local Government was €1.1 billion in 2013, down 8% on the previous year. A total of 92% of the expenditure fell under the housing, water services and community and rural development programmes. At programme level, the most significant reduction year-on-year was in the area of housing, where spending fell by €94 million compared to 2012. The provision for the housing programme in 2013 was almost €77 million, or 11%, less than the previous year’s outturn. In addition, expenditure in 2013 was almost €17 million or 3% less than the amount provided. The underspend in the year was attributed primarily to a lower than expected take-up by approved housing bodies of funding available under the capital assistance and capital advance leasing facility schemes.
Spending under the Vote on the water services programme was almost €52 million less than provided in the Estimate. This was attributed to difficulties encountered by contractors in securing necessary bonds, issues with contributions from local authorities to project costs and a need to progress the water sector reform programme. As the committee is aware, responsibility for the funding of most water services passed to Irish Water with effect from 1 January 2014.
The main receipts recorded in the 2013 appropriation account were €62 million provided by the EU under the LEADER rural economy sub-programme and treated as appropriations in aid of the Vote and €43 million of extra Exchequer receipts under the EU emissions trading scheme. The net surplus on the Vote at the end of 2013 amounted to €120 million. With the approval of the Minister for Finance, capital funding of €72 million not spent in 2013 was carried over to 2014. The remaining €48 million was duly surrendered to the Exchequer.
My audit certificate refers to three chapters in my report on the accounts of the public services related to the Vote. In February last, the Committee examined the chapters dealing with matters related to water services and the land aggregation scheme.
As in previous years, chapter 5 was compiled to present an overview of the level of funding provided by central Government to local authorities and the purposes for which that funding is provided. Relevant information has to be drawn together from a number of accounts to get a full picture of the transfers and of trends over time. In 2013, transfers of funding from central Government sources to local authorities totalled around €2.4 billion. The bulk of the transfers came from the local government fund, Vote 25, Environment, Community and Local Government and Vote 31, Transport, Tourism and Sport. The local government fund, which is also administered by the Department, was financed mainly by motor tax receipts, which totalled €1.1 billion in the year.
Central Government transfers to local authorities in 2013 represented just over 40 % of the figure for 2008 when transfers peaked at around €5.8 billion. That decline reflects both the overall reduction in public expenditure since 2008 and the transfer of certain responsibilities from local authorities. The reduction in transfers has impacted on local authority capital spending in particular.
Special report number 84 was completed in July 2014. The report is the result of an initiative under which national audit offices in eight EU member states, including my own office, carried out coordinated audits of the implementation and enforcement of the 2006 European Waste Shipment Regulation, which sets out the rules for cross-border shipment of waste within, to and from the EU area.
The regulation covers classification of all types of waste, a system for licensing carriers and the notification of waste movements, as well as an inspection and enforcement regime for waste handling and transport facilities.
Under the regulation, the Department has overall policy responsibility for waste management. It assigned overall responsibility for implementation of the regulation in Ireland to Dublin City Council, effectively giving the council a national remit. The council has established the National Transfrontier Shipment Office, NTFSO, to implement and enforce the regulation and that office has contracted out certain aspects of the enforcement regime to a private sector service provider.
The co-ordinated audit established that, in terms of the structures and resources available for enforcement, Ireland compared favourably relative to other states. It was the only one of the states examined to have established a dedicated national implementation and enforcement body. Ireland ranked second highest of the eight countries examined in terms of the number of inspections carried out at waste facilities and ports. However, the number of inspections has fallen significantly. The 3,200 inspections carried out in 2013 represented a 35% decrease on the peak level of 4,900 inspections in 2011. We also found that the rate of detection of infringements during inspections of waste imports and exports had fallen from 16% in 2012 to 6% in 2013. It is unclear whether the decline is due to improved compliance or less effective inspections.
The regulation requires member states to implement an effective system to penalise infringements. In comparison with other countries, it was found that Ireland issued a relatively large number of warning letters in respect of minor infringements. However, the number of infringements leading to fines or legal actions was relatively low. The report recommends that, in addition to its risk-based inspections, the NTFSO carry out sufficient random checks and use the results to estimate the overall level of compliance with the waste shipment regulation. It also recommends that the Department ensure an enforcement strategy is developed to set the strategic direction for enforcement activity over a three to five year timeline.
The special report also deals with a programme in which the State is engaged to repatriate a significant volume of waste, originating south of the Border, that was dumped in 16 illegal waste sites in Northern Ireland between 2002 and 2004. The direct costs incurred by the State in respect of five site clearances completed by the end of 2012 totalled just over €5.4 million. The costs per tonne at the sites where clearance was completed during 2012 were significantly lower than the cost for the sites cleared earlier. This is primarily due to the lower unit rates for waste disposal available under a framework contract established by the NTFSO. The report recommends that the Department consider the potential for procurement initiatives to produce savings for other classes of expenditure under the waste repatriation programme such as the transport of the waste to licensed facilities in Ireland.
The report notes that the Environmental Protection Agency's office of environmental enforcement continues to examine material uncovered at the illegal dump sites in Northern Ireland with a view to identifying offenders and considering the potential for prosecutions. There have been no prosecutions in Ireland to date in the current repatriation exercise.
Patrick O'Donovan (Limerick, Fine Gael)
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I thank Mr. McCarthy. I invite the Secretary General, Mr. McCarthy, to make his opening statement.
Mr. John McCarthy:
I am pleased to be here as Accounting Officer for the Department of the Environment, Community and Local Government to assist the committee in its examination of Vote 25, chapter 5 of the Comptroller and Auditor General's annual report for 2013, which deals with central government funding of local authorities, as well as the special report on the transhipment of waste. As requested, I have provided an advance briefing for the meeting and will, therefore, keep my opening comments short.
The State's public finances moved further along the pathway towards sustainability in 2013. A key challenge facing the Department in that year, in common with most other public bodies at the time, was the increased pressure on resources, both human and financial. In overall terms, the Department's gross outturn in 2013, including a capital carryover from the previous year, was some 8% lower than the corresponding outturn in 2012.
The Department had significant achievements in 2013 in delivering on key policies and programmes. Our overall objectives were to improve the quality of life of citizens and communities, foster economic and social development and enhance environmental protection. In 2013 a number of critical areas benefited from increased funding over the previous year. They included certain local authority housing schemes and the Leader and PEACE programmes. In overall terms, the Department was assigned more than 21% of the total Exchequer capital allocation in 2013, which went towards implementing major housing, water, rural development and other programmes.
Total spending from the Vote on the various housing programmes, including the provision of social housing and improvement and regeneration measures, amounted to almost €580 million in 2013. This spend was used to meet housing needs through a range of programmes, including the local authority construction and acquisition programme, the approved housing body programme, leasing and the rental accommodation scheme.
An ambitious programme of retrofitting and energy efficiency upgrading accelerated in 2013, with improvements to more than 13,000 local authority units from departmental funding of almost €27 million. In addition, more than 7,000 households were supported to live as independently as possible through the housing adaptation grants scheme for older people and people with a disability, at a total cost to the Exchequer of just over €38 million.
Significant water services investment continued in 2013, with some €280 million spent by the Department on these services, including €34 million on the rural water programme. Prior to the transfer of responsibility for water services to Irish Water at the beginning of 2014, local authorities were responsible for the delivery of water services capital infrastructure, with funding provided by the Department under the water services investment programme. The final programme administered by the Department ran from 2010 to the end of 2013. Under the programme in 2013, 55 major contracts were completed. It comprised 38 water supply projects, including 21 water conservation projects and 17 wastewater projects.
Intensive work also continued throughout 2013 on the organisational, financial, economic and environmental models for Irish Water and the relevant legislative framework, leading to the enactment of two water services Bills. The first, enacted in March 2013, provided for the establishment of Irish Water on an interim basis and the roll-out of the nationwide domestic metering programme. In December 2013 the Water Services (No. 2) Act 2013 provided for the full establishment of Irish Water and the economic regulation of the new utility.
During 2013 funding of €82 million was provided under axes 3 and 4 of the Leader rural development programme, RDP, resulting in 1,301 infrastructural enhancements in villages and communities across the country and support for 786 new tourism actions. Enterprise support funding was provided under a number of RDP programme measures, resulting in the creation of 1,121 full-time jobs.
Funding of some €48 million was provided for local development bodies for the delivery of the local and community development programme, LCDP, in 2013. During the year the LCDP supported close to 50,000 people in entering the labour market. This number included some 19,700 people progressing into labour market training and more than 7,400 individuals progressing into employment or self-employment as a result of LCDP actions.
The chapter of the Comptroller and Auditor General's annual report on the central government funding of local authorities provides an overview of local authority expenditure and income since 2006, detailing the range of programmes for which local authorities are responsible and the range of funding sources. Transfers of funding from central government sources to local authorities in 2013 totalled some €2.36 billion.
In terms of accountability, under the existing policy and legislative framework, the Local Government Audit Service, LGAS, provides for independent scrutiny of the financial stewardship of local authorities and other local bodies. It audits local government bodies in accordance with a statutory code of audit practice, thereby fostering the highest standards of financial management and public accountability. Where the annual audit has been completed by the local government auditor, a local authority is required to furnish a copy of the audited financial statement and any associated statutory audit report to all members of the local authority for their consideration at the next practicable council meeting.
The Government's action programme for effective local government, in addition to providing for an expanded role for the local government system, particularly in terms of community and local economic development, recognised the need to enhance scrutiny arrangements. A significant development in this regard has been the establishment of the National Oversight and Audit Commission, NOAC, bringing an important added dimension of independent scrutiny to local government performance. The NOAC will scrutinise local government performance in fulfilling national, regional and local mandates, scrutinise value for money where State funds are channelled through local government, and support the development of best practice and enhanced efficiency in the performance of local government functions.
The final item on the agenda today is the Comptroller and Auditor General's special report on the transhipment of waste. As members will be aware, the report reviews the implementation and enforcement of the European waste shipment regulation in Ireland. It also reports on the discovery of waste originating from Ireland at a number of unlicensed sites in Northern Ireland, associated costs incurred and progress achieved in repatriating the waste. The report makes a number of recommendations which have been taken on board by the Department.
The Department established a single authority to implement and enforce the European waste shipment regulation. This authority, the National TransFrontier Shipment Office, NTFSO, has played a central role in the implementation of the waste framework directive, the waste shipment regulation and national waste policy. The primary focus is on maximising the resource that can be extracted from waste and developing a sustainable and self-sufficient approach to the management of our waste in accordance with the proximity principle. As a general rule, waste should be dealt with as near to the place of generation as possible.
The establishment of the NTFSO has been a success. It has driven significant efficiencies, improved cost-effectiveness in the sector and streamlined service delivery to industry. The office has also improved compliance with respect to the import and export of waste. Inspections undertaken by the NTFSO in 2013 indicate a compliance rate of 94% with the requirements of the waste shipment regulation. While managing the movement of waste across the Border remains challenging, these achievements are worthy of note.
The report makes a number of recommendations to improve further the performance of Ireland’s implementation arrangements for the waste shipment regulation. These are welcome and I am glad to say that the recommendations have either been acted upon since publication of the report or are actively in train. One of the recommendations relates to ensuring the costs of the North-South waste repatriation programme are minimised. This is one of the legacies from a time of less rigorous environmental enforcement on both sides of the Border, and further costs associated with repatriation will arise in the years ahead. The Department continues to engage with the Northern Ireland authorities proactively to secure the most cost-effective and environmentally beneficial disposal routes for the waste still to be excavated from the remaining sites. I am glad to note that procurement initiatives taken by the NTFSO, in line with recommendations in the report, are already realising significant cost savings.
The matters I have referred to illustrate well the broad range of programmes and activities for which my Department has responsibility. I am, of course, happy to respond to questions on these and other issues that emerge in the course of the committee's work today.
Patrick O'Donovan (Limerick, Fine Gael)
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I thank Mr. McCarthy. May we publish his opening statement?
Seán Fleming (Laois-Offaly, Fianna Fail)
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I thank Mr. McCarthy and his colleagues, who are welcome to the meeting. I wish to ask about a few specific topics. I am interested in one in particular, as are most Oireachtas Members, having served some time in local government.
The Comptroller and Auditor General laid out the figures. From the Central Fund, the local government fund and subventions from the Departments of the Environment, Community and Local Government and Transport, Tourism and Sport, approximately €2.4 billion went to local authorities in 2013. From the other documentation provided, we can see that the income of local authorities that year was in the region of €6 billion. Some 60% of their funding came from other sources, but we have no picture of that. It did not come through the Department's Vote. As the Accounting Officer of the Department of the Environment, Community and Local Government, which is the mother Department of local authorities, Mr. McCarthy might discuss the 60%. He can forward to us a general breakdown of it if he does not have the information with him. For example, what is the breakdown between commercial rates, development levies, planning fees, parking fees, housing rent, housing loan repayments, landfill fees, fire service charges and other miscellaneous income?
An issue that constantly arises for the committee is that we only get a bit of the picture. We are not the audit group of local authorities. However, given that €2.4 billion of voted funding is going to local authorities, we want to know that it is being well spent. We can only know that if we know the totality of what is happening. How does Mr. McCarthy know that the €2.4 billion is spent on the projects the Department has identified, given that it probably goes into a large pot with a lot of other moneys raised by local authorities? The Department receives headings subsequently as to where money was spent, but there is no separate stream through which it can trace that funding once the cheque is sent. Am I right in that regard? Does Mr. McCarthy get my question? It is broad.
Mr. John McCarthy:
I understand fully where the Deputy is coming from in this regard. In the first instance, we rely on the Local Government Audit Service, LGAS, and the audits it conducts. They form a crucial part of the architecture in terms of ensuring expenditure in local government is incurred appropriately and efficiently. Capital funding is more closely associated with individual projects, meaning there would be greater bilateral engagement between local authorities and us or other Departments, including Transport, Tourism and Sport in respect of road projects. There would be a specific relationship.
Regarding the wider funding of local authorities, for example, the commercial rates and housing loans and rents the Deputy mentioned, each year the LGAS produces what it calls an activity report whereby it pulls together the outcome of the audits for all the main local authorities into a single report. This gives us an overall national perspective of the performance of local authorities under a range of headings, including the specific income sources to which the Deputy referred. It provides the Department a platform to engage with local authorities as necessary.
The Deputy mentioned the issue of commercial rates. Their collection level concerns everyone, not least the local authorities themselves. In recent years and partly influenced by the economic downturn, the rate of collection has been declining. In 2009, the collection rate was approximately 86%. In 2013, it was 77%. Interestingly, 2013 was the first time in four or five years that one could see the percentage rate starting to rise again. Another point worthy of note is that this percentage is not just the percentage of the rates levied in the year but also of the arrears. If one were to strip out the arrears, which have to be pursued, one would see that the actual in-year level of collection was higher.
While it is welcome that the level of rates collection is rising, it still has a long way to go. It is at 77%. An exercise was done centrally, led by the Department of Public Expenditure and Reform, regarding debt collection generally within the public sector. That was completed last year. Arising from it, various initiatives are being taken forward in the individual sectors, including local government. A specific group has been set up within that sector to take on rates as a first area of concerted activity. In partnership with the sector, we are in a process of trying to set a target of a progressive 2% to 2.5% increase in the collection level per annum, supported by a sharing of best practice. There is significant variation across local authorities. We are trying to avoid reinventing the wheel by taking best practice from where it can be gleaned.
The other significant matter the Deputy mentioned, and it is one that is worthy of particular note, is that of loans.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Housing loans.
Mr. John McCarthy:
It is a matter on which we keep a close eye. We know a great deal about the private mortgage market and the extent of arrears arising there.
Local authorities also have an historic loan book relating to house purchases. The collection level for loans in 2013 was 69%. As things stand, in terms of the latest data available, there has been some element of improvement over the last 12 months but there are still approximately 5,800 local authority mortgages in arrears of more than 90 days. That represents approximately 31% of the total number of local authority loans, which is significantly higher than the corresponding figure in the private mortgage market, which stands at around 10% or 11%. We are now engaged in a process, working through the local authorities, which is the equivalent of a mortgage arrears resolution process. The local government system is going through those 5,725 mortgages that are in arrears of more than 90 days. Each local authority is sitting down with each of those loan holders to try to work out the best solution.
Seán Fleming (Laois-Offaly, Fianna Fail)
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We understand that and we all understand there may be a higher level of unemployment in the client base than is the case in the private mortgage sector. We understand that and, as public representatives, we all deal with it every day.
The Central Bank criticised seven financial institutions yesterday for continuing to take other actions against people, even when arrangements were in place. If the Central Bank was to examine the local authority system, it would probably find a much worse situation. The standard practice in local authorities when they have a restructuring agreement in place is to keep the court case live and to keep adjourning it, just in case the client slips behind in payments. If they put an agreement in place and withdraw court proceedings but the client falls behind in payments, the process involved in bringing the case back to court can be long drawn out. I would just make the observation that it is not just private sector operators who are continuing to take other actions against people. It seems to be standard practice and perhaps for good reason, in the interests of the taxpayer.
Mr. McCarthy made reference to a financial report from the local government auditor. When will we see the first report from the aforementioned national oversight and audit commission? I ask Mr. McCarthy to send on copies of the last report he referred to. I note that the Comptroller and Auditor General's report states that the collation of local authority expenditure outturns for 2013 were not finalised at the time he wrote his report. If they have been finalised since, I ask that they be sent on to the committee.
On commercial rates, I accept that the nominal rates have not been increased by most local authorities and there may even have been a decrease in one or two cases. That said, in 2013 commercial rates represented 34% of income for local authorities, rising to 36% in 2014 and is projected to reach 38% this year. While that is probably a reflection of other income going down, I ask the Department to give us a ten year figure for commercial rates as a percentage of total local authority income. The data for the three years to which I have referred show a shocking increase. We all talk about helping small businesses but when we look at the stark facts, we see that the percentage of local authority income coming from commercial rates is increasing year on year.
On the issue of waste, we now have three regions in the country. Submissions were completed at the end of January and we are meeting our target of 45% recycling, which is good, and landfill of 39%. However, I received a document last night called The State of Ireland 2015, A Review of Infrastructure in Ireland by Engineers Ireland. It goes through various infrastructure in Ireland, including communications, transport, waste management and so forth and grades it. On waste management the report states that "the management of waste in Ireland is being kept in equilibrium by the exporting of black bin waste". The authors go on to argue:
the current trend of exporting residual municipal (and hazardous) wastes for treatment to waste-to-energy, incineration and cement kilns in other European member states reflects the State’s inability to date to adequately manage its own residual wastes. The export solution is providing short-term gains, in terms of diverting waste from landfill
That is possibly why we are meeting our landfill targets; we are putting the waste on ships. It is a dishonest approach to say we are great because we have reduced the amount of waste that is going to landfill when we are just putting our waste in landfill sites in other countries. We are exporting our waste but, as a country, we should be able to deal with our own waste. I am sure the witnesses will tell us that there are some waste recovery projects due to come on stream.
I ask the witnesses to provide figures on the amount, in kilos, of waste produced by the average household here. My biggest issue is that despite the statistics we have on what is going to landfill, what is being recycled and so forth, I suspect that up to 50% of households in the country are not involved in the official waste management system at all. I know that where I live, for example, there was a time when everyone used to be able to afford a bin. Now a wheelie bin costs €360 per year, which is phenomenal and I can understand why householders do not bother any more. They throw their waste in the back garden, on the side of the road or dump it anywhere they can. The biggest issue and the elephant in the room, which is never captured by our statistics, is the amount of waste that is not coming into the official waste management system at all. It is lovely to talk about what is in the system but I am far more concerned about what is not in the system and is being buried in drains, ditches and bogs. The main reason is that the cost is prohibitive. If a wheelie bin was affordable, we would have a massive uptake but it is not affordable for many people. It is also almost immoral that we are dumping our landfill waste in China, England, the Netherlands and elsewhere. That is not a good idea. I ask the witnesses to address those points before we deal with the Northern Ireland transshipment issue.
Mr. John McCarthy:
I will loop back to the rates issue before dealing with the questions on waste. It is important to bear in mind that the 2015 percentages are estimated on the basis of budgets and may not be the correct final figure. I suspect there is an element of economic buoyancy in the figures, to the extent that there has been a pick-up in economic activity with new businesses establishing. There was some analysis done of the 2012 rates income and from memory, 80% of businesses that paid rates in 2012 in the Dublin City Council area had a rates bill of less than €5,000 per annum. That means there is a smaller number of larger entities that are paying a very significant amount in commercial rates. As the Deputy said himself, part of the change in the percentage is explained by the fact that revenue from other sources has been contracting. That said, in overall terms, the rate of commercial rates levied has not increased for four or five years, with only one or two exceptions. In a few cases, the rates actually came down.
The 2013 overall national report is publicly available and we will send on a copy to the committee. It is on our website and is a very useful platform for us. We take it as a baseline document for guiding some of our engagements with local authorities on the financial side of things as we progress through the year. We will certainly make a copy of that report available to the Deputy. In terms of the extent to which waste is going abroad, it is not so much for landfill but primarily for energy recovery. It is going into cement kilns or thermal treatment facilities.
That is not a sustainable way to deal with our waste from two points of view. First, the potential for recovering energy is lost to us.
Seán Fleming (Laois-Offaly, Fianna Fail)
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And the jobs.
Mr. John McCarthy:
Second, it leaves us exposed to the vagaries of facilities in other countries. To a large extent, the reason there has been extra capacity in those countries in recent years is the economic decline. Accordingly, as the economy picks up elsewhere, we will find ourselves coming under pressure. As the Deputy mentioned, we have one operating thermal treatment facility in Ireland and a second is due to come on stream towards the end of 2017. Even allowing for that, based on the three regional waste management plans that have been prepared, we will need a further 300,000 tonnes of thermal treatment capacity. There is still further work to be done in that regard.
Seán Fleming (Laois-Offaly, Fianna Fail)
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How does a 300,000 tonne thermal treatment facility compare with Poolbeg?
Seán Fleming (Laois-Offaly, Fianna Fail)
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Fine. One of a smaller scale elsewhere.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Yes.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Good.
Mr. John McCarthy:
That is a considerable achievement compared to where we were ten years ago, but in reality, much of the stuff for recovery is going abroad. We are not clapping ourselves on the back without justification for household practices. Waste is being segregated and it is providing a waste stream, but the problem is that the waste stream, to a significant extent, is ending up in other countries, and they are getting the benefit of the energy recovered from it. That is something that we will-----
Seán Fleming (Laois-Offaly, Fianna Fail)
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How about those houses that are not involved?
Mr. John McCarthy:
I cannot recall the precise figure offhand, but the EPA's national waste database reports give an estimate of the number of households that are not subscribed to a collection service. I will come back to the Deputy with the precise figure. About 20% is the rough figure. That does not mean that 20% of households are throwing their rubbish on the side of the road, because people taking their refuse to-----
Seán Fleming (Laois-Offaly, Fianna Fail)
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Landfill direct.
Mr. John McCarthy:
-----to landfill direct or to civic amenity sites. It is an area about which we are concerned. Under the current waste policy, a commitment was made to introduce a regulatory requirement for households to demonstrate how they are dealing with their waste. That is in the course of being introduced in legislation that is going through the Houses at the moment.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Is that under an EU directive?
Mr. John McCarthy:
No; this is our own initiative. In effect, we will try to get to a point at which we can build up a clear picture of who is subscribed to a collection service. One can then go to those who are not subscribed and ask for a receipt from, say, the civic amenity site every second week stating that they have taken their waste there. This is an area that we need to target in the legislation that is coming on stream.
Seán Fleming (Laois-Offaly, Fianna Fail)
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With regard to Northern Ireland and the cost of taking back the waste, a figure mentioned at one meeting was that it could ultimately be €30 million. The other issue I want to link to that, which I see as the same issue and which we dealt with before, is that of land remediation in Kerdiffstown, on which €32 million has been spent to date, along with a possible €15 million on the areas included in the report, which amounts to almost €50 million to be spent internally in the State. It will take possibly up to €30 million to sort out the problems arising from illegal dumping outside the State. To me, it represents a phenomenal failure by the Department of the Environment, Community and Local Government in protecting the environment that we have to spend up to €80 million of Irish taxpayers' money on cleaning up the illegal dumping that happened under everybody's eyes. One could not drive from Dublin to Cork via Naas without knowing something illegal was happening there for years on end. We all know the cost of what happened. We all saw the smoke for many years. Simultaneously, landfill levies of €75 per tonne were imposed. Perhaps somebody thought that was a good idea to discourage people from going to landfill. However, it incentivised people to move from official landfill sites to illegal landfill sites on the island of Ireland, which we now have to spend €80 million cleaning up. By definition, most of those guys were cowboys, if that is what they were doing, and everybody knows what they were doing. As I am sure they are long gone, it will be impossible to get any money from them. Therefore, the prospect of recovering any of that money is very slim. Are there any similar problems in the system that will hit us again in the next few years? We do not want to come back, whoever is in the next Dáil, to another issue that is costing €50 million to €80 million to clear up. What lessons have been learned in the Department and what risk assessment has been done by the Department in relation to these areas?
Mr. John McCarthy:
Let us cast our minds back briefly in time to get a sense of the extent to which we have been playing catch-up over 40 years. I think we are in a caught-up space at this stage. The first waste framework EU directive was in 1975. It was 1996, with the introduction of the Waste Management Act in that year, before we had what we could legitimately say was a modern legislative framework to govern waste all the way from collection through to treatment and disposal. Already there was 20 years of catching up to be done. As we moved on we took some progressive steps around waste management plans in terms of what we wanted to achieve. We set out clear targets for recycling and recovery. We are now at the level of European norms. As the Deputy rightly said, it gives me no pleasure to sit here and speak about the extent of public funds going into Kerdiffstown and places across the Border in terms of dealing with the waste that was taken to the North illegally. It is a legacy issue. In terms of the Northern Ireland situation and the repatriation of waste, we have completed work on ten out of the 17 sites, which represents about 86,000 tonnes of waste, at a cost of about €7 million. There are two more sites in our programme for last year and this year to be dealt with, which represents about 12,000 or 13,000 tonnes of waste. After that, there are five remaining sites.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Where is this waste going? Is it going abroad on the ship again?
Seán Fleming (Laois-Offaly, Fianna Fail)
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To an approved landfill.
Mr. John McCarthy:
Absolutely - an approved landfill. It is an approved landfill south of the Border because of capacity issues north of the Border. For the remaining five sites, we will have to deal with around 100,000 tonnes of waste. All told, between what is done, what is under way and what is left, we are talking about 200,000 tonnes. While the previous estimate of the possible overall cost was as high as €30 million, our sense now is that it will be lower than €20 million. That is due to two factors. In some of the sites there was not quite as much waste as was feared, but obviously the other initiatives we have taken, on foot of the Comptroller and Auditor General's report, in terms of procuring for services and so on have generated savings as well.
Seán Fleming (Laois-Offaly, Fianna Fail)
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I have a couple of questions. The first is about Irish Water, although I do not want to start a debate on Irish Water. The last time the witnesses appeared before the committee, earlier in the year, I asked about the €400 million, whether the Department had a service level agreement and what the Irish taxpayer would get from this independent State body for the work it is doing. If the HSE is asking a hospital to do something, there is a service level agreement. I presume the Department does not have a service level agreement. Therefore, how does one know if the €400 million is going on capital or current expenditure? I assume the Department has no way of knowing this.
Will the Department draw up a service level agreement and when will we see one, or what is its intention? What is the Department's plan in that respect? I mentioned that matter on the previous occasion.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Current.
Mr. John McCarthy:
-----but purely for running costs. That is a contribution, in effect, by the State in terms of the extent to which it is buying services from Irish Water. That €399 million covers the cost of what we call a product subsidy because the full cost of water production is not being borne by consumers. The cost of capping to the extent of people's usage would be beyond the €260 and the €160 caps for one- and two-person households, and that is set out in what we call a funding letter between ourselves and Irish Water.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Can we have sight of that?
Seán Fleming (Laois-Offaly, Fianna Fail)
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I have a few other specific questions. It is indicated in the Comptroller and Auditor General's report that there was a fine in the year in question of €2.648 million in regard to the transposition and implementation of the directive relating to septic tanks. There was another fine of €1.5 million in regard to the transposition of a directive relating to the environmental impact assessment directive. That sounds as if we were fined for not having it in place, not just for non-implementation but for non-transposition of it.
The Department gets funding of €18 million or €20 million from the national lottery for housing and some of it goes to voluntary housing co-operatives, housing grants, supports for the voluntary sector and other such groups. Of that €20 million the Department receives from national lottery and passes on to the local authorities, can Mr. McCarthy identify the specific houses or projects on which that funding was spent? Is there a mechanism to monitor that, which I suspect there is not, or is such funding simply a general contribution? With sports lottery grants, people can see the completion of a running track, a sports track or a community facility. Such a project is specifically identified and a grant of €100,000, €5,000 or €40,000 is allocated for it, whereas with this funding I get the impression that a social housing programme would have got X amount of it. There seems to be a breakdown in transparency as to where the funds from the national lottery end up in specific projects. The funding seems to go as a subvention to the Department. Would the Department consider having in place a mechanism indicating a breakdown of the funding where it could identify, for example, that a housing scheme got €1 million, a programme for the elderly in a county got €40,000 and the neighbouring county got €28,000? Is it possible to provide a breakdown of that funding?
Mr. John McCarthy:
I will take the Deputy's last question first and then I will deal with the issue of the EU fines. We certainly can identify the programmes, but as to whether we can identify individual projects, I am not sure about that, but I will have that look at it. There may even be a way in which we could promote the fact that a particular project was delivered from a funding line which was supported from the national lottery without having the need to make a direct connection between them but still make the important indirect connection.
Seán Fleming (Laois-Offaly, Fianna Fail)
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That would be good for the Department and for the national lottery. It is not good for the national lottery that money goes into the Department and nobody can say this is where it went. It would be good if somebody could create a line to follow the funds through.
Seán Fleming (Laois-Offaly, Fianna Fail)
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There was my question on the fines and I have a final question.
Mr. John McCarthy:
On the septic tanks case, I think we had some discussion on this back in February. In effect, there were two cases where we found ourselves at the receiving end of fines for non-implementation. To put it in context, going back to 2010 or 2011, we were at that stage managing in excess of 30 live infringements of EU environmental legislation. Going back to what I said earlier about the legacy we were dealing with in regard to waste, these were similar legacy issues. We have put in a huge effort during the past three or four years, both from a transposition and a practical implementation point of view, to try to deal with that. The remaining number of cases we are managing, I think, from memory, is six, so they have been significantly reduced. One of those is a very large waste case which is tied into some of the issues we discussed earlier and which we expect the Commission will close later this year because of the progress made. Unfortunately, there were two cases where by the time the work associated with completing transposition and implementation was finished, the court had completed its work and had given a judgment against us. One of them was, as the Deputy said, in the application of the environmental impact assessment directive - a particular part of it. By the time it came to levying the fine, we had our house in order, so that was a lump sum fine. There was no ongoing daily fine. That was €1.5 million.
On the septic tanks fine, similarly, we were almost there, so the lump sum element of it was, from memory, €2 million and the ongoing daily fine was just shy of €650,000. One issue was still outstanding, so there was a daily fine applied for a period of about three months. We have no other cases at this stage that are at a fines stage before the European Court of Justice. From an environmental compliance and a quality of environment point of view, it is critical that we are not in that space but, equally, from a financial point of view, it is critical that we are not in that space. If we consider the experience of other member states before the European Court of Justice in that short while, in one case in Italy alone a lump sum fine of €40 million was imposed-----
Seán Fleming (Laois-Offaly, Fianna Fail)
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I doubt it will pay it.
Seán Fleming (Laois-Offaly, Fianna Fail)
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I asked Mr. McCarthy about the cost of remediating all the legal dumping and that type of legacy issue and if any other legacy issue has arisen in recent times of which the Department, as the Department responsible for the area, should be ashamed. I would say there is one and it is the issue of homelessness. The Department is the organisation responsible for housing. While we have come through a recession, we have come from a position where there was a requirement to have 30,000 houses per annum. We were building more than that number for a few years and we had a surplus and there are unfinished estates and we could talk about that. There are many vacant houses and many of them are being controlled by the banks and they will not let them be sold until their value goes up. The issue of family homelessness and children living in hostels and hotels has occurred in recent times and it was foreseeable for the past two years. If I asked Mr. McCarthy on 1 January 2013, the start of the year under consideration, how many families were homeless in Ireland, I would say the figure was very few, but if I asked him what the figure is today, the number is such that it is a national shame. That has happened and Mr. McCarthy's Department plus one other Department that is responsible for cutting rent supplement has created this issue of family homelessness. It is not all as result of the big bad banks. Some of these people might have been some of Department's tenants because it is as good as any of the banks, as I mentioned earlier, in going to court for evictions. I suspect that if we added up the number of surrenders the Department has had, it would probably be as many as some of the banks.
The Department was not ahead of the curve on this in recent years. When Jonathan Corrie died outside the gates of the national Parliament last year, there was a big drive to act and two buildings were converted. That is a sticking plaster in terms of what is needed. That had to be done but an underlying problem has arisen, not when we were going into or during a recession but when we were coming out of one. There is no excuse for the increase in the incidence of homelessness that we have seen on the streets and in the increase in the number of families with children living in hotels.
The Comptroller and Auditor General just mentioned that there was a €94 million reduction in expenditure on housing in 2013 because somebody did not take up the funding. That was indicative of whatever was happening in the system. We looked at the figures for total expenditure and payments to local government. Current expenditure has remained relatively static but, obviously, the drop has been in capital expenditure, which is on the housing side. Mr. McCarthy cannot be satisfied. The Department, which is responsible for housing, cannot come in here today and say it has done a good job on homelessness. It should not be the issue that it is. It is a new phenomenon that was foreseeable and avoidable. I am not talking about houses in the Shannon region that people do not want. There are good new houses for sale to local authorities priced €60,000 or €70,000 all over the country. Perhaps they are not in Dublin 2 or Dublin 4 but they are all over Ireland. The Department could house any amount of families at the moment for a minimal amount of money. As Mr. McCarthy knows, prices are starting to rise dramatically this year and the Department will be able to buy far fewer houses with the same amount of money next year. Could Mr. McCarthy give me his thoughts? I will revisit this issue because the political and permanent government systems have let the citizens down when it comes to homelessness.
Mr. John McCarthy:
I suppose everybody would agree that any person or any family finding themselves homeless is not in a good place. We have certainly been pulling out all the stops over a number of years to deal with this issue. In respect of anticipating the issue, budgets were significantly reduced every year since 2008 for reasons we all understand. The housing budget was reduced until 2015, when it was significantly increased. On the one hand, there was a large number of empty units and our budget had historically been very heavily focused on capital build and buy. We reoriented our approach towards meeting housing needs very significantly in response to the economic downturn. In the short to medium term, it allowed us to stretch the available resources through current mechanisms to be able to house more households than if we were putting the money up-front into capital schemes. The reality was that there was an oversupply of accommodation in 2008, 2009 and 2010, much of which was available at a good price both for rent and purchase. We did a very significant reorientation of our housing funding programmes. If we had not done so, the situation would be considerably worse. That is cold comfort for people who find themselves homeless and I do not mean to use it to justify that. I am just providing the context regarding how we changed our approach to meeting housing needs.
Looking at it in its broadest sense, the fundamental issue is a lack of supply in the housing market. This is translating into increases in house prices and rents. The Government has put the Construction 2020 strategy in place for the housing sector to free up more land and bring it into play for housing. Legislation is before the House at the moment that is designed to assist in that process, but Construction 2020 encompasses a range of actions to get housing supply levels back up to a better position. However, until such time as we can restore equilibrium in the wider housing market, we must devote more resources towards dealing with families presenting as homeless and trying to provide short-terms solutions before moving on to longer-term solutions. The roll-out of the social housing strategy, which was published by the Government in the autumn of 2014, is kicking in this year. The significant increase in resources will assist us in that regard. A significant increase in funding is being provided in respect of homelessness, but that involves shorter-term solutions. It is the broader increase in financial resources for housing programmes and social housing programmes more generally that will provide us with the medium to longer-term solutions. We work exceptionally closely with Dublin local authorities practically on a weekly basis, keeping the situation under review, modifying our approaches, introducing new initiatives such as giving priority to homeless households in allocations policy and the provision of additional resources to source accommodation in the rental and acquisitions markets. Even in Dublin, there are still some places where one can acquire property at good value. There are many places in the country where, from a value-for-money perspective, acquisitions would provide one with better capacity and a better return in the short term than building. Nevertheless, a significant building programme has now been announced and is moving on. It had been the focus of considerable attention for a number of years to ensure that we did not get into a difficult situation. We are in the situation we are in right now, but had we not changed our approach five years ago-----
Seán Fleming (Laois-Offaly, Fianna Fail)
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What change?
Seán Fleming (Laois-Offaly, Fianna Fail)
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Does Mr. McCarthy mean rent supplement?
Seán Fleming (Laois-Offaly, Fianna Fail)
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I will conclude. I honestly believe the Department was caught napping on this issue over the past few years. The problems were foreseeable and the numbers are increasing. If one does not build housing for three, four or five years, this is inevitable. I am sure somebody must have a list of vacant houses so we can see where we can get good value for money and purchase them. They are still out there but the vulture funds are coming in and buying 20, 30, 40 and 50 properties here, there and everywhere. The vulture funds will buy 20 or 30 houses in an area and the Department will end up giving money to voluntary housing associations to buy them back from the vulture funds, with the vulture funds having made a profit in the process. The longer the Department stays out of the market, the more it will pay in the end.
Mr. John McCarthy:
We can send the Deputy some information about unfinished housing developments. We have been carrying out an annual survey since 2010 as part of the process of trying to finish the unfinished estates and get them back into use. We can give the Deputy information on that up to 2014. The number of unfinished housing developments since 2010 is down by two thirds. The Deputy will see that as part of that process, local authorities have taken opportunities from an acquisitions point of view in meeting their housing needs.
Patrick O'Donovan (Limerick, Fine Gael)
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I thank the Chairman for the short-lived promotion. I was delighted.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I hope the Taoiseach is as kind to the Deputy.
Patrick O'Donovan (Limerick, Fine Gael)
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Pass on my regards.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I hope Deputy Deasy will be first in the Taoiseach's considerations.
Patrick O'Donovan (Limerick, Fine Gael)
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There is no doubt that he is well ahead. He is streets ahead. I welcome the officials and thank Mr. McCarthy for his presentation.
I presume the transfrontier shipment of waste is both ways, with illegal waste being brought into the country also. Recently I raised an issue with the Minister for the Environment, Community and Local Government by way of parliamentary question on foot of a report commissioned by the British Irish Parliamentary Assembly which looked at illegal fuel laundering and the diesel residue dumped along the Border, specifically counties Louth, Monaghan, Cavan and Donegal. Total expenditure by the Department in respect of these local authorities is just over €5 million, with Louth County Council receiving €3.79 million since 2011. On the report of the Comptroller and Auditor General on the costs associated with repatriating waste from north of the Border, what is the Department doing to recoup some of the €5.04 million from Northern Ireland?
Mr. John McCarthy:
This issue has been raised with the Northern Ireland authorities on a number of occasions. There is strong but probably anecdotal evidence that a large proportion of the waste in Monaghan, Louth and other Border counties from diesel washing originates from activities in Northern Ireland. The difficulty is finding proof to support what is anecdotal evidence more than anything else. We have been in discussions with Monaghan County Council and are funding a pilot programme of sampling abandoned laundering waste material. It is being put through a process of analysis and we are trying to see if we can trace particular markers to see whether they are associated with markers and dyes in fuel south or north of the Border. We are waiting for the State Laboratory to come back to us with the results of these tests. Depending on what they tell us, they may provide us with a more solid base and more concrete evidence.
Patrick O'Donovan (Limerick, Fine Gael)
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They have been detected already. It is very difficult to hide a shed with an articulated lorry. This is going on under the noses of the authorities north of the Border and nothing is being done about it. I have said before - I wait to be corrected - that the illegal trade a few miles up the road is worth approximately €200 million. Members of the British Irish Parliamentary Assembly could walk up to and be shown around these facilities by an individual who knows the area. They are not underground bunkers in the Afghan mountains. They are visible facilities in which diesel is washed, loaded onto articulated lorries and moved south of the Border. It has been ongoing for years and, to be quite honest, is not being taken seriously. Cars of people who buy diesel in good faith from garages are being destroyed all over the country, from County Cork to County Donegal. The latest figures show that the Exchequer is happy to fork out €3.7 million to Louth County Council, €1.18 million to Monaghan County Council, €23,000 to Cavan Council and €40,000 to Donegal County Council to clean up the mess.
Mr. John McCarthy:
I assure the Deputy the Department is not at all happy that we find ourselves having to support the local authorities in this way to deal with the waste because it ends up having to be transported abroad to be dealt with in hazardous waste facilities. We have been raising this issue and engaging on it at a political level through the North-South Ministerial Council. There is very strong co-operation between the various enforcement authorities north and south of the Border. It is clear that there is serious criminality is involved, in which circumstances enforcement action can be more difficult. In terms of our capacity to recover costs, such facilities have been found on both sides of the Border. Waste has been found on both sides of the Border.
Patrick O'Donovan (Limerick, Fine Gael)
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According to the Comptroller and Auditor General's report, the Department apportioned an 80:20 recovery rate to illegal landfill sites, with the State paying up to a maximum of 80% of the costs involved. We know that the bulk of this activity is happening in the Six Counties. When will a demand be made on the Northern Ireland Executive to stump up?
Patrick O'Donovan (Limerick, Fine Gael)
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How soon will we have the results? This activity has been ongoing for years.
Patrick O'Donovan (Limerick, Fine Gael)
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There is also a public health element because waste is being dumped on the side of the road and finding its way into watercourses. Is the Department aware of the risk posed to drinking water from aquifers supplying towns, group water schemes and private wells?
Patrick O'Donovan (Limerick, Fine Gael)
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Is the Department satisfied that it is not?
Mr. John McCarthy:
When the issue was raised previously, particularly with regard to the water supply for Dundalk, if memory serves me correctly, it was the subject of an investigation involving the Environmental Protection Agency and local authorities which were satisfied that it was not an issue. When local authorities come across instances of diesel laundering waste, if there are concerns about water supplies, I have no doubt that they follow up on them. I do not think any issue has been brought to our attention.
Patrick O'Donovan (Limerick, Fine Gael)
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Is it the Department's intention, if it can be proved that this stuff originated in the North-----
Patrick O'Donovan (Limerick, Fine Gael)
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According to the report of the Comptroller and Auditor General, the National Transfrontier Shipment Office is using a private company to carry out part of its duties. Will Mr. McCarthy elaborate on staffing levels in the National Transfrontier Shipment Office?
Patrick O'Donovan (Limerick, Fine Gael)
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Was the work tendered for?
Patrick O'Donovan (Limerick, Fine Gael)
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What is the name of the company?
Patrick O'Donovan (Limerick, Fine Gael)
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Reference has been made to the fact that there is a reliance on sending warning letters and a very poor record in prosecuting anybody. The fines are small and nobody has ever been sent to prison. Does Mr. McCarthy accept that there is an over-reliance on sending letters?
Patrick O'Donovan (Limerick, Fine Gael)
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In comparison to the other countries looked at, to be honest, we are standoffish.
Mr. John McCarthy:
One must look at it from two perspectives. Our performance on non-compliance is among the best in Europe.
Perhaps it is not that unusual that the extent of the enforcement actions we would have to take might be at the lower end of the scale by virtue of the smaller incidence of infractions.
Patrick O'Donovan (Limerick, Fine Gael)
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Do the statistics relating to non-compliance not rely on the number of inspections carried out?
Patrick O'Donovan (Limerick, Fine Gael)
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If something is not being inspected there is nothing to say that it is in compliance.
Mr. John McCarthy:
The significant number of inspections that have been done is one barometer. However, when the number of inspections is set in the context of a risk-based strategy, where one is targeting the inspections at areas of higher risk, to come to a point where there is a low level of infraction against a background of inspections that are targeted at the higher potential risk areas, that is a good space to be in.
Patrick O'Donovan (Limerick, Fine Gael)
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However, the risk based assessments are based almost entirely on the ports.
Patrick O'Donovan (Limerick, Fine Gael)
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The report also finds that there is no multi-annual strategy. Dublin City Council, which is the lead agency, does not have a multi-annual strategy for the development of the European waste strategy.
Patrick O'Donovan (Limerick, Fine Gael)
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Why?
Mr. John McCarthy:
At the time that was the case. However, in responding to the report, the transfrontier shipment office is now implementing a strategy for the 2014 to 2017 period following the recommendation in the report. That multi-annual strategy is now in place and is guiding its annual activities.
Patrick O'Donovan (Limerick, Fine Gael)
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Is there a resource issue there?
Patrick O'Donovan (Limerick, Fine Gael)
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The report also referred to the penalties in the other countries that were included in this study. There is scope for much more to be done in Ireland. To refer to the point I made earlier, this is a two-pronged issue. It is not just waste going out of the country, but waste coming into the country. Approximately 70,000 tonnes of waste come into Ireland; the vast majority of it goes out. There is a risk and the biggest risk element relates to the illegal activity along the Border. Surely to God relying on warning letters will not be a great deterrent.
Mr. John McCarthy:
To clarify, what is happening around the Border would not be encompassed in this report, or the issuing of warning letters. The warning letters would be in respect of situations where people are operating within the system but they have been found within the system not to be fully compliant. What we are talking about at the Border is will outside of that space and is not compliant with any-----
Patrick O'Donovan (Limerick, Fine Gael)
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The point I am making is that the issue along the Border underlines the fact that this is wide open to abuse. This is going on under our noses. These are huge operations involving massive sheds and articulated lorries travelling around the country. Nobody appears to be doing anything significant about it. We have heard for the last number of years that there is a joint approach north and south of the Border involving the Revenue Commissioners and the customs service in Britain, but in the meantime local authorities are experiencing all of this stuff being dumped yet the official mechanism for dealing with illegal movements of waste is reliance on sending out a letter.
Mr. John McCarthy:
The action that is being taken around the Border is never, and never will be, reliant on warning letters. The co-operation activities are taking place between enforcement agencies in the North and South and if those agencies can get to a point of identifying who is responsible for the activities that are taking place in terms of illegal diesel laundering, they will not be dealt with by way of warning letter.
Patrick O'Donovan (Limerick, Fine Gael)
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My point is that they are not being dealt with at all. Two Senators and two members of the House of Lords walked around parts of south Armagh and were openly shown sites where laundering of diesel is taking place to beat the band, but nothing has happened about it. The agency has responsibility for protecting the environment and ensuring that waste is dealt with properly. The attitude to the illegal dumping of diesel leachate across the Border is symptomatic of a very lax approach to the overall implementation of the waste policy, which is a reliance on letters.
Mr. John McCarthy:
I have to say that one does not connect across to the other. The issues that are covered by the Comptroller and Auditor General in his report are around the extent to which we are effectively operating the formal requirements under the waste shipment regulation. Those who are engaged in illegal diesel laundering are well outside of that space and must be pursued through a very different and rigorous enforcement process. As for the members of the House of Lords and others the Deputy mentioned, I do not know the extent to which their information has been passed to the relevant authorities.
Patrick O'Donovan (Limerick, Fine Gael)
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The witness is not aware of it.
Patrick O'Donovan (Limerick, Fine Gael)
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I will return to the sites in question in Northern Ireland where the material is being removed from, according to the Comptroller and Auditor General's report. I believe there are 13, but it is a number of sites. The report identifies that there is going to be an issue with the leachate that will be extracted when this material is repatriated in a country. What is happening about that?
Mr. John McCarthy:
The way leachate is dealt with is by taking it to a wastewater treatment plant where it is processed. From a cost and value for money point of view, the ideal way to deal with that would be to have it taken to the closest wastewater treatment plant, which invariably would be north of the Border. The Northern Ireland authorities have indicated that they have capacity problems in the wastewater treatment network there, so it is now being transported to-----
Patrick O'Donovan (Limerick, Fine Gael)
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However, there is no contract in place to deal with it.
Mr. John McCarthy:
There is a contract in place in terms of the haulage. A tendering process is carried out in respect of the haulage. From a cost point of view it would be better not to have to haul it at all and just take it to the closest facility, but such facilities would be in Northern Ireland where there are capacity problems. There is a haulage contract in place to take it to the closest wastewater treatment plant south of the Border, depending on where the waste is found.
Patrick O'Donovan (Limerick, Fine Gael)
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When is this expected to be finished?
Patrick O'Donovan (Limerick, Fine Gael)
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How much will the total cost be?
Patrick O'Donovan (Limerick, Fine Gael)
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Does the witness think a mistake was made at the start in that the costings were not more robust?
Patrick O'Donovan (Limerick, Fine Gael)
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The cost per tonne collapsed in terms of getting rid of it. Once tenders were sought-----
Patrick O'Donovan (Limerick, Fine Gael)
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Why was there no tendering process?
Mr. John McCarthy:
Initially, we took it to the closest local authority landfill - I believe it was in Monaghan - as part of the initial response, when we found ourselves having to get into the process of moving stuff fairly quickly. We have done a tendering process since then and the cost is €25 to €30 per tonne.
Patrick O'Donovan (Limerick, Fine Gael)
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What is that down from?
Patrick O'Donovan (Limerick, Fine Gael)
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Monaghan County Council was charging double what it is now charging to get rid of it.
Patrick O'Donovan (Limerick, Fine Gael)
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Is it not unbelievable that it could reduce its cost base by 50% once the Department started shopping around?
Patrick O'Donovan (Limerick, Fine Gael)
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The availability of landfill space has gone down, so one would imagine that the price would have gone up.
Patrick O'Donovan (Limerick, Fine Gael)
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However, the cost associated with maintaining landfills, as well as remediating and staffing them, has not gone down.
If anything, it has increased with the increase in regulations. A decision was taken to put this material into a dump in Monaghan without a cost. After the cost was examined, it was decreased by 50%.
Patrick O'Donovan (Limerick, Fine Gael)
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Has the Department policies in place to prevent a recurrence?
Patrick O'Donovan (Limerick, Fine Gael)
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In his opening statement, Mr. McCarthy referred to the NOAC. How often has it met since being established?
Patrick O'Donovan (Limerick, Fine Gael)
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Who is on it?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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An insider.
Patrick O'Donovan (Limerick, Fine Gael)
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Does NOAC meet monthly?
Patrick O'Donovan (Limerick, Fine Gael)
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Does it rely completely on the information sent to it by local authorities' audit committees?
Patrick O'Donovan (Limerick, Fine Gael)
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Has it?
Patrick O'Donovan (Limerick, Fine Gael)
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Did it find anything noteworthy?
Mr. John McCarthy:
It is really only in 2015 that it has got going. Its work priority in 2015 is to focus on the revenue collection accounts of local authorities, which relates to Deputy Fleming's question. Given the priority on housing, it will focus on local authorities' performance in managing and maintaining their housing stock.
Patrick O'Donovan (Limerick, Fine Gael)
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Has it any priority to deal with inefficiency, waste or the parts of local authority budgets that are conveniently referred to as "miscellaneous"?
Mr. John McCarthy:
If issues of that kind were brought to its attention and it believed that it should engage on them, it would be open to the NOAC to do so. The NOAC has a broad remit and has the freedom to set its priorities. The main priority that it has set for 2015 concerns revenue collection and the management and maintenance of housing.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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How many members does the NOAC have?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Who appoints them?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Does the Minister appoint all of them?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Why is there such doubt about it?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Let us say that there are 14 members. Who are they?
Patrick O'Donovan (Limerick, Fine Gael)
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Is there someone from the Department of the Environment, Community and Local Government on it?
Patrick O'Donovan (Limerick, Fine Gael)
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Who is that?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Who else is on it? Surely someone has the list.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Let us say there is one member from the Department. From where are the other 13 supposed to be drawn or can just anyone be appointed by the Minister? I am not questioning the Minister's authority to appoint. I just want to know who the members are.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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There is a councillor on it.
Mr. John McCarthy:
There is a former chief executive of a local authority. The former Comptroller and Auditor General, Mr. John Buckley, is on it. I cannot remember off-hand who the other members are but the legislation sets out the broad categories of relevant experience that members would need to have.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I want to know the names because I want to know how many insiders and outsiders are on it. From what Mr. McCarthy has told me, his Department and the councillors are represented. I presume that those positions will rotate. The others whom Mr. McCarthy mentioned were from within the system at one stage or another. If he cannot remember all of the names, can he tell me whether there is anyone from outside - the business world or an accountancy practice - or who had complained bitterly about local authorities among the 14? Is there any different voice?
Mr. John McCarthy:
Apart from the departmental representative, the former chief executive and the councillor representative - there are probably some retired councillors who are members as well - the others are outsiders, as the Chairman might classify them, including someone from RGDATA, which represents small retailers. All of the others, apart from those whom I mentioned, are from outside the system.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Can Mr. McCarthy provide a list of members, nominating bodies and how they meet the legislative criteria?
John Deasy (Waterford, Fine Gael)
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I have it here. It is on the website.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I know it is, but I am asking about how it relates to the members who have been appointed. Mr. McCarthy stated that the Department had the NOAC's report of its first six months. Is that correct?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Can we have a copy of it?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is the board paid the usual board fees?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Okay.
John Deasy (Waterford, Fine Gael)
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Mr. McCarthy and his officials are welcome. I seem to remember that the first time he appeared before us the household charge, which was the local property tax subsequently, and what percentage of that would be channelled back into local government arose as an issue. There was a bit of debate nationally. The figure that was bandied about at the time was approximately 85% or 90%. According to Mr. McCarthy, the hope was that 85% would be thrown back into local government generally. Of the funds collected so far, how much has gone back into local government?
Mr. John McCarthy:
As the Deputy knows, local property tax, LPT, is collected by the Revenue Commissioners, after which the Minister for Finance moves an amount across into the Local Government Fund equivalent to whatever has been collected from the LPT. In effect, the full 100% of proceeds in 2015 are returning to local authorities. This comprises two elements: 80% of the LPT in each local authority area returns to it while the balance of 20% is used for equalisation purposes in respect of the 17 or 18 local authorities that are otherwise at a loss by virtue of the introduction of LPT.
John Deasy (Waterford, Fine Gael)
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Everything goes back.
John Deasy (Waterford, Fine Gael)
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And has gone back. No one else has stuck a hand in and grabbed any part of the 20%.
Mr. John McCarthy:
No. Some local authorities, by virtue of the way the formula works, are in receipt of a significant windfall gain.
In terms of that windfall gain, those local authorities can keep the equivalent of 20% of the LPT proceeds in their area and they are expected to use the balance towards funding housing and roads programmes that would otherwise have been funded by the Exchequer.
John Deasy (Waterford, Fine Gael)
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Who has got the most money?
John Deasy (Waterford, Fine Gael)
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It is as simple as that. The next issue came up with the Department of Public Expenditure and Reform. One of its most recent reports suggested that the abolition of town councils would be reviewed in some fashion. I had a discussion with Mr. Robert Watt about how that would play out. Town councils have been abolished. I hear both sides of the argument regarding the Department's position. Some people are making the case that services have diminished as a result of the abolition in particular locations. Some people tell me they have seen no difference. Does the Department have a plan to determine how people feel their services have improved or disimproved since the abolition of town councils?
Mr. John McCarthy:
We are just coming now to the first anniversary of the new arrangements coming in since the town councils were merged with their counties. The Minister has said that first anniversary provides an opportune time to see how those new arrangements have worked out in the first 12 months, acknowledging at the same time that the significance of the changes that were introduced are likely to take longer than 12 months to really come to fruition. He has established a group to look at this, working with selective representatives to start to get a sense of the extent to which particularly the new municipal districts in place of town councils are working out in practice.
John Deasy (Waterford, Fine Gael)
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Can Mr. McCarthy flesh that out for me? How does this work? Getting feedback from councillors is fine. What exactly is the proposal? Is it piecemeal? Has it not been though through yet? Is there a definite plan with regard to surveying?
John Deasy (Waterford, Fine Gael)
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I am not suggesting that.
John Deasy (Waterford, Fine Gael)
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Is it right that there is no specific plan in place to determine whether there has been improvement or disimprovement when it comes to the abolition of town councils and the restructuring of local government generally?
John Deasy (Waterford, Fine Gael)
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I think the Department should. This committee deals with how money is spent. The change was so transformational with regard to the local authorities and those living there that there should be a plan for how to determine that on an ongoing basis to see if things are working or not working. Some people already have very definite opinions about the weaknesses in the system one year on. The Department should take a more proactive approach in determining whether this is working considering the amount of money we spend on local government. It is a fairly basic request when it comes to the provision of services for citizens trying to find out if they are getting value for money. I think it is fundamental.
Mr. John McCarthy:
One of the other pieces of work that will be important as part of that is the work the National Oversight and Audit Commission is doing on performance indicators for local authorities in order that we are in a position to be able to track performance under a range of headings between local authorities and over time. That will feed into it as well.
John Deasy (Waterford, Fine Gael)
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I do not know if the Department of Public Expenditure and Reform has moved that on at all. I do not know if Mr. McCarthy knows what I am talking about. It was discussed when Mr. Robert Watt last appeared before the committee.
John Deasy (Waterford, Fine Gael)
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That is fine. By the end of 2013 there was an estimate of €103 million in expenditure on the Mahon tribunal. In September 2014 a final estimate was put on the planning tribunal at roughly €159 million. Where are we at with the tribunal right now? What is the estimated price tag?
Mr. John McCarthy:
The estimate for the overall cost of the tribunal remains at the figure the Deputy outlined there. It was just over €158.5 million, almost €159 million. By the end of 2014, up to the end of last year, €111 million had been spent. The balance of about €47 million is to be spent over this year and, it is hoped, next year, but the ultimate timescale for when the cost will finally crystallise will be partly determined by the resolution of a number of ongoing legal cases. The tribunal has confirmed, however, that the overall cost estimate of €158.5 million, about €159 million, remains valid.
John Deasy (Waterford, Fine Gael)
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That remains. I obtained some information from Waterford County Council which is probably applicable to every local authority. It suggested that the allocation for roads in Waterford was 40% less than the allocation made in 2008. I do not know if that strikes Mr. McCarthy as being correct. Those are the figures I obtained. It indicated there had been a massive drop since 2008. I am not quite sure why 2008 is chosen, but we know there has been a drop. We have had a couple of pretty benign winters. The case it is making to me and others is that it is not feasible to provide the appropriate road infrastructure with current levels of funding. Can Mr. McCarthy assist me with that?
John Deasy (Waterford, Fine Gael)
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The local government fund was part of that.
John Deasy (Waterford, Fine Gael)
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Does Mr. McCarthy consider that the Department of the Environment, Community and Local Government has no role in the allocations?
John Deasy (Waterford, Fine Gael)
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So that is a big "no". That is okay.
Mr. Seamus McCarthy:
If Deputy Deasy wants to look on the screen, he will see a figure from the chapter that may illustrate the point of drawing together from the various sources the funding. He can see what happened nationally to funding provided to local authorities for transport. The Deputy can see the funding for national roads. As the Accounting Officer has said, there is a payment from the local government fund to the Department. The Department then pays out voted funds. Some of those funds go through the National Roads Authority and so on, and then on to local authorities. The figure for national roads transfers has gone down from €1.5 billion to probably about €250 million. The amount for regional and local roads has not gone down by quite as much, but it is still down.
John Deasy (Waterford, Fine Gael)
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That is a massive drop when it comes to the national roads.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I wish to return to a point made by Deputy Fleming about Irish Water. With the break-up of the local government fund, 26% of that fund went to Irish Water in 2014. The fund included receipts from the local property tax. Mr. John McCarthy indicated in response to Deputy Deasy's question that 80% the local property tax will go directly to local authorities, with the remaining 20% being used as an equalisation fund. This means the local government fund will mainly comprise motor tax revenues of €1.2 billion. Is it envisaged that the money for Irish Water will come from that fund? The fund was larger in 2014 but now it will depend on motor taxes.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The fund was €1.57 billion in 2014, of which €439 million went to Irish Water. Can I presume that road tax will be roughly the same in 2015 and the outgoing to Irish Water will be approximately €400 million?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Approximately €399 million will be transferred to Irish Water every year. The documentation supplied includes a list of assets transferred, which are valued at €11 billion.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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At our last meeting, Deputy Fleming asked the value of projects that were in train. We were discussing the contracts that were not included and the way in which they were being transferred. Is that figure included in the overall €11 billion?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It is solely the assets that can be described.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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There is, therefore, a further transfer of assets beyond the €11 billion figure.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I am concentrating on the assets for the moment. Are there any further assets beyond the €11 billion which will have to be transferred?
Ms Maria Graham:
The PPPs are never in the ownership of anyone other than the local authorities. They would be within the €11 billion. The PPPs are operational contracts but the ownership of the assets was always with the local authority. It is not like some forms of PPP in which the assets are held by the private operator. The PPPs should be within the €11 billion.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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They should be or they are within the €11 billion?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Are they included in the list supplied or will a further list need to be drawn up to include them?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Assets valued at €11 billion have transferred over and €399 million, mainly from motor tax revenue, will be transferred annually for how many years?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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There is no end to it.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is that policy?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What happens if there is a shortfall in the operations of Irish Water? When the Department started this process, it had the makings of a business model that would transfer assets to Irish Water, which would then finance itself. Adjustments were subsequently made by way of policy. As that policy stands at present what happens to Irish Water if there is a major shortfall in its income?
Mr. John McCarthy:
Irish Water was established on the basis that it will collect the revenues due to it from its commercial and domestic customers. Inevitably there will be a time lag between billing and receipts. That will have to be financed by working capital loans but Irish Water is established on the basis that it will collect revenue.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is a plan B in place in case that does not happen?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Given that the experience to date was somewhat chaotic - that is not Mr. John McCarthy's fault - in terms of how it compiled information and dealt with queries and the other teething problems associated with its establishment, what happens if difficulties arise in regard to the collection rate?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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In terms of the Department's involvement in the transfer of the €11 billion in assets and the annual transfer of €399 million, what accountability is provided in return? Is Mr. John McCarthy able to tell me how many have signed up for Irish Water and how much is being collected? Does his Department receive that information or does it get any accounting for the €399 million?
Mr. John McCarthy:
We have information on registrations. The latest information indicates that there were 1.329 million responses to the Irish Water campaign, of whom 1.054 million are customers. The balance of respondents were clarifying that they were not customers because they have septic tanks or are on group schemes. The 1.054 million customers are approximately 70% of the expected customer base of 1.5 million households.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Some 30% have not registered.
Mr. John McCarthy:
Thus far, 30% have not responded but through information compiled by Irish Water those households none the less received their first water bills. I do not have information on payments as yet. Irish Water is working its way through its analysis and I expect it will be presenting information to its board within the next week or so. I expect we will have greater visibility of this information at that stage.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is that the type of arrangement the Department enjoys with Irish Water? Every so often it receives a report. I asked how Irish Water accounts for its €399 million.
Mr. John McCarthy:
The €399 million is covered by a funding letter we issued to Irish Water to set out the basis on which it premised. It involves the State buying from Irish Water the cost of the product subsidy because customers are not being charged the full amount and for the cost of caps where usage is beyond the norm. The funding letter sets out the basis on which the €399 million is claimable and we get a quarterly invoice from Irish Water.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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How is it claimable? What is the breakdown of that?
Mr. John McCarthy:
On the basis of the information it has from its billing system and from the extent to which it has meters in place, it will be able to work through the product subsidy, the child allowance - again, depending on the number of children it has registered on its system as being claimed for - and the information it has in terms of the extent to which there is usage beyond the cap, which in the ordinary course of events it would be able to charge for if the cap was not in place. All those data are used to underpin the invoice.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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When did the first invoices go out from Irish Water?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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When did the invoices go out to the customers of Irish Water?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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We are now heading into July.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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And you have no idea what the response is.
Mr. John McCarthy:
The bills started to go out during the first week of April. I think it was 6 April. It was over an eight to nine-week period before all the bills went out and there is a normal 14-day credit period after that. We are now coming to the point at which some useful information can be gleaned from the totality of that first billing cycle. Irish Water is doing some work on that. I understand it will be considered by its board within the next week or so and we will have some information after that.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Will Mr. McCarthy provide us with a copy of that information when he has it?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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This money is being paid over, yet Mr. McCarthy does not have a forecast of how much will be paid to Irish Water, except that 70% of the potential customer base have responded and registered. Registration is one thing but collecting the money is another thing. Given that the bills went out in April, I would have expected, given that this is a new venture, that Irish Water would have at least been keeping Mr. McCarthy regularly informed of the response from the public in paying their bills.
Mr. John McCarthy:
This is a new endeavour. It is a massive endeavour in terms of billing 1.5 million households. It is legitimate to allow the first billing cycle be completed, let the credit period associated with it pass, and let Irish Water do some evaluation to establish what it is being told from this, how in line or otherwise it is with its expectations and, from a governance point of view, for it to consider that with its board, in the first instance, and then come to the Department.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is there some section within Mr. McCarthy's Department that is overseeing this and has responsibility for it?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is the Department of Public Expenditure and Reform happy with that?
Mr. Tom Heffernan:
It is a matter for the Department of the Environment, Community and Local Government to make its arrangements as the responsible authority for Irish Water in terms of the broad policy framework. We have no direct involvement in those arrangements. They are a matter for the Department.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Does the Department of Public Expenditure and Reform keep an eye on them?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I want to ask about the new system of local government which has been in place for 12 months now. Deputy Deasy touched on it earlier on. Has there been any feedback from local authorities?
Mr. John McCarthy:
We receive regular feedback from local authorities. We have a range of bilateral relationships with them across our functional areas, that is, housing and other services that they are now moving into, particularly in the community and other areas. Our sense is that the new system has bedded down reasonably well in its first 12 months of operation. It will take some further time to see it bedding down fully because there has been a lot of change happening at the same time, not just between the mergers of county and towns but also the establishment of Irish Water and what that means for local authorities. There are also new functions in the community area where the local community development committees have a new role. There has been a lot going on simultaneously but, in overall terms, our sense is that good progress has been made.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Can I give you news from the front?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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My information, from dealing with councillors and officials at local level, and councillors of every political party, is that it is proving to be a bit of a disaster. Foremen within the county councils will say that they have still not sorted out their boundaries. There is a row over budgets. The urban centres that are associated, for example, Kilkenny city versus county, are not functioning as they should. It is almost impossible for the elected members to do their business in each of these electoral areas. From a people's perspective, they believe that they have been short-changed in relation to the structure of local government. It is becoming a real issue politically for people who are tapped in to local communities and local government.
I draw Mr. McCarthy's attention to the statement made by the Minister for Public Expenditure and Reform, Deputy Howlin, in which he raised doubts about how the new system was working. From my perspective and through dealing with this committee, I wonder about the costs involved in all that in terms of the changes that are being made, the regrading, and the spending and division of the budgets. How well is that division of the budget serving local communities? Are we getting real value for money or are further moneys being taken from the top to feed into bureaucracy at local levels? Is less being spent on the various programmes of work within the local authority areas? I suggest to Mr. McCarthy that if he asked most councillors and, indeed, most officials, if they were to be straight with him, they would raise a huge number of questions over what is now going on at local government level. My concern, apart from the value for money aspect, is that it has disconnected local communities from what they had before in terms of their sense of local democracy and their input and their importance within it.
I use the example of Kilkenny Borough Council versus Kilkenny County Council again. The geographical areas that the foremen and engineers within council areas are asked to service are just ridiculous. I know that is not Mr. McCarthy's call but I am giving him feedback on it. The budgets of urban areas have been cut so significantly that local authority employees do not have the range of work to do. That is a serious problem. It is not just about the structures and the political administration or the work for councillors, it is about the administration of those areas. There was a comparison made to Cromwell in Kilkenny, which I do not want to repeat here, but something like that was mentioned, to the effect he did less damage than this local government Bill. I will discuss this further with Mr. McCarthy.
John Perry (Sligo-North Leitrim, Fine Gael)
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I welcome Mr. McCarthy and his team. On the funding of local government, when one looks at the graph of the allocation of funding, one sees that there has been a dramatic drop since 2008 and I think that has impacted on the level of services. While there has been a subvention of funding, the €2.4 billion now is considerably less than the €5.8 billion in 2008. There is a real deficit or shortfall.
Will Mr. McCarthy explain the situation on the status of the gateway cities?
There was a huge investment programme by the Department in Sligo predicated on the population in the region growing from 20,000 to 100,000. Mr. McCarthy's Department encouraged the necessary adjustment and spend which resulted in huge inherited debt which is now left on the books of local authorities. Every service was put in, encouraged, designed and promoted by the Department and the debt has been left with the local authority. There is now a huge deficit in Sligo County Council where services and essential services are being cut and libraries are being closed. I understand they have spoken with Mr. Lemass but this huge debt was promoted by the Department, taken on board by the CEO of the council at the time and driven by the Department, yet there is no retribution at all. The local authorities are expected to service this debt and it is cutting back services.
A case was taken in Sligo which went to the Supreme Court. It was encouraged by the Department of the Environment, Community and Local Government and its officials who are witnesses in the case, and which will cost €5 million or €6 million in legal costs alone. The local authority is duty bound by the State and the Department and the Government. This case will set a precedent on rights of way which were deemed to be local authority but were proven, in court, to be private. That legal bill has to be paid by the local authority. Should it not be paid by the Department? The payment of this legal bill will result in the removal of practically every service in the area. Will Mr. McCarthy comment on this?
The gateway status was a very ambitious plan at the time but the insight or the vision behind it was very much misguided. It was based on the concept that one could quadruple a population in a region of the west. Could the Department advise on how local authorities are to deal with this huge debt? Even with the local property tax, the distribution by the State of motor taxation and what was given by the Exchequer in 2008, I believe that local authorities have a major problem of funding. In a small population with a small ratable base there is no point in saying we are giving back the LPT or matching the equivalent fund. It is different in Dublin and it is not equivalent.
Mr. John McCarthy:
I thank the Deputy. Sligo and a number of other locations were designated as gateways under the national spatial strategy which was launched 13 years ago in 2002. The world changed dramatically for everybody in 2007 and 2008, which necessitated a significant process of retrenchment and efficiency across the local government system and public bodies. Staffing reductions, for example, in local government over the period 2008-14 were significant, at 28% to 29%. All local authorities had to implement measures to balance their financial situation. During that period the Department took a number of initiatives to assist local authorities before we found ourselves not having the resources to sustain some of those, but we did make efforts. The new national planning framework process is starting. The implications for Sligo or other parts of the country remains to be seen but the primary responsibility of the budget of a local authority rests, under the law, with the elected members of the local authority.
I would not like to give the impression that there is no compassion from the Department. Last year and this year, within the available funding, the Department has set aside an additional €1 million to be provided to Sligo County Council on the basis that there was an acceptable and sustainable plan for the council's finances into the future, upon which there has been much work and engagement between the Department and the council, with some considerable progress made. We are not quite there yet but we will continue to work co-operatively with the council.
On the Lissadell case costs, the State was not a party to those proceedings, it was Sligo county council. I note what the Deputy said about the council being encouraged by the Department but I am not aware of that. The issue of costs will have to be dealt with when they finally crystallise. I am not in a position to say any more on that at this point.
John Perry (Sligo-North Leitrim, Fine Gael)
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There is over €100 million in debt in Sligo at the moment. It is an appalling vista where outstanding facilities and libraries are being closed for the summer months. Somebody has to take the responsibility. The Lissadell case was taken by senior executives, advised by legal people employed by local government. Their fees had been paid.
It is reprehensible to think that an investment of €100 million was encouraged in the gateway strategy without taking cognisance of who was going to pay for it when there is a reduction in local authority income. The water charge is a cop-out and even with the property tax there is a deficit. The remit is that the resources of local government are mainly used to provide local authorities with funding for the day-today activities and for the upkeep of regional and local roads. Local government funding has been financed mainly by the proceeds of the motor tax, the bulk of which is now going elsewhere. Could Mr. McCarthy confirm that of the €1 million set aside to be provided last year the figure of €700,000, which was agreed by the Department, has still not been paid?
John Perry (Sligo-North Leitrim, Fine Gael)
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That is €700,000 not paid because there was so much pressure put on the local authorities to bring in draconian actions. It was the responsibility of elected members to make the decisions to forfeit services and the authority had a huge job to get the €250,000, yet €700,000 was not paid by the Department. I have been told that the figure of €1 million which is promised for 2015 is also tenuous. The €100 million debt now being paid by Sligo County Council includes a huge investment in water services. Has that portion of the debt been removed to the water authority?
Where has the debt incurred from the water services in Sligo gone to?
John Perry (Sligo-North Leitrim, Fine Gael)
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Has it transferred yet?
Mr. John McCarthy:
It has not transferred yet, but the costs have been paid from the local government fund to the local authorities, so they have been reimbursed for the servicing costs associated with those loans. The €1 million extra per annum was very clearly contingent on there being a credible plan to get towards financial sustainability from-----
John Perry (Sligo-North Leitrim, Fine Gael)
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It is a catch-22 situation. I fully subscribe to a plan, but when the council is so heavily indebted, with up to €100 million owed, and still keeping essential services going after a massive reduction in staff, it is very difficult. In some cases, it cannot even write cheques. That is how bad it is. I have been speaking to Mr. Lemass about this and he has been very co-operative in every sense, but Sligo has been called the Greece of Ireland when it comes to the funding of local authorities. The amalgamation of town councils was mentioned and there is a huge expectation in respect of the reconfiguration of services. The number of elected officials has been reduced from 35 to 18 and the CEO is doing an impossible job with no money and no services. It is not good enough in this day and age when one considers the amount of tax collected locally. This €100 million debt is ultimately the responsibility of Mr. McCarthy's Department because he is the Accounting Officer responsible. Perhaps the Comptroller and Auditor General might advise me on that. Who is ultimately the Accounting Officer for Sligo County Council?
John Perry (Sligo-North Leitrim, Fine Gael)
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Who is accountable?
John Perry (Sligo-North Leitrim, Fine Gael)
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Mr. McCarthy told me he has regular audit committees with local authorities and that he has an audit team going into Sligo County Council and checking how it spends its money.
John Perry (Sligo-North Leitrim, Fine Gael)
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Who audits the money coming from Mr. McCarthy's Department into the local authority?
John Perry (Sligo-North Leitrim, Fine Gael)
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What co-operation is there with Mr. McCarthy as Accounting Officer for the voted Estimate?
Mr. John McCarthy:
The local government auditor produces an annual report drawing together the outcome of the audits of all the local authorities, which comes back into the Department and which we act on. In respect of Sligo, that is where we would draw some of our information.
Deputy Perry has used the phrase "no compassion" in respect of the Department. He has rightly pointed out that I am the Accounting Officer for moneys that go to local authorities through the local government fund. It is against that background that we find ourselves in a situation where we need to come to a sustainable solution regarding Sligo's finances. We have indicated that we are willing to play an extra part in that in terms of providing additional funding. At the same time, it is entirely legitimate that in a situation where the rates collection level in Sligo County Council in 2013 was 59% versus a national average of 77% or 78%, and housing loan collection was at 46%, significantly below the national average, and we are offering to provide additional funding to reach financial sustainability, that a process would be gone through to bottom out areas such as these and staffing levels by comparison to other similar local authorities. We have a shared objective, namely, to get Sligo County Council back on the path to financial stability.
John Perry (Sligo-North Leitrim, Fine Gael)
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I will finish with this point. I am very grateful to the Chairman for giving me time on this, because this is a catch-22 situation. I do not know how it can be solved. Regardless of the collection of debt, given the subvention from the State and the fact that as Accounting Officer the payments are made by him to the local authority, regardless of independent audit, it still is the main Department responsible for local government and the environment. If one goes through the different responsibilities of Mr. McCarthy's Department, the funding includes general purpose grants, housing and urban regeneration, environmental initiatives, education and employment, recreation and other local services. It is a huge remit of services.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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On what Deputy Perry said, nobody will support bad housekeeping by local authorities. They are expected to collect their rates, to do their business and get sorted out. We have had many other Departments in here, for example, the Department of Agriculture, Food and the Marine, which did not collect their debt for years on end. They did not issue invoices and they had no leases. A focused effort had to be made to get them back on track. We had another issue where SUSI overpaid €4.1 million to grant recipients. Its suggestion was just to write it off. Deputy Perry is highlighting the need for someone to attempt to restructure the financial situation in Sligo.
Part of the Department's mission statement is to improve the lives of citizens and communities. I suggest it puts that first and that whatever cuts or reorganisation are necessary should start from the top in Sligo. The people hardly created the situation and from a public representative's point of view, the last thing we want to see is libraries and other resources provided by local authorities being cut, particularly now that people are using them to a greater extent. Members, like me, who were on local authorities for some years never felt we had the power to do anything because the City and County Managers' Association is a pretty powerful outfit and it calls the shots for public representatives.
In the opinion of many in the medieval city of Kilkenny, who can say Cromwell was there, this new piece of local government legislation has done more damage to that geographical area than Cromwell did when he was there. That is the feeling of ordinary people. If the Department's mission statement is to improve the lives of citizens, it must take that into consideration. I did not ask Mr. Heffernan, because it was the Minister for Public Expenditure and Reform, Deputy Howlin, who made the comment, but it is clear that on the likes of the issues raised by Deputy Perry and other issues we have raised here, everyone is pushing local government further and further away from them because no one seems to want to account for it. That is why we do not have a central audit office. I do not know why that continues. That point was raised by Deputy Perry. This new national thing that has to report is just a veil to cover up the criticism of the Department and how its audit functions are delivered on. This public debate is not happening at any level within local government where issues of the day, or issues that have been discovered through audit, are debated and resolved and people know what went on and what is being done to correct it.
While not wanting to speak for Deputy Perry, that is why he is having to make the case here. I ask Mr. Heffernan to give his view on the debate so far and what Deputy Perry has said about the complete destruction of local government in terms of the democratic structures and the methods of reporting. Having set up this whole new project, one year on there is no real analysis of how it has operated for the past 12 months.
Mr. Tom Heffernan:
The system was put in place on foot of a policy decision. Taking that as the reality, as the Secretary General has said today, the anniversary of the system was the occasion on which his Minister committed to review it. It would be normal practice if one puts in place a new structure or system to evaluate its impact on services. Obviously the detail of that arrangement, as the Secretary General indicated, has yet to be worked out. That is a work in progress.
As far as the specifics of Sligo are concerned, I am not aware of the details but would say that if additional resources are being made available to assist a public body, it would not be unreasonable to expect that this would be linked to performances, to improving the financial management and the overall management of resources within the body. Again, without knowing the full details of the situation, from what I have heard from the Secretary General, the Department seems to be taking a reasonable approach.
John Perry (Sligo-North Leitrim, Fine Gael)
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A sum of €750,000 was not paid last year although it was expected to be paid. The council is now taking draconian action and the CEO, Mr. Hayes, has implemented staff reductions. The council has made massive cuts all over the place. Is there any possibility that the €750,000 plus the €1 million from this year will included in the revised plan? I ask the witnesses to revert to me on that matter.
John Perry (Sligo-North Leitrim, Fine Gael)
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As the Accounting Officer, Mr. McCarthy is here to deal with the accounts of the Department of Environment, Community and Local Government. I would encourage him to make a special case to the Minister on behalf of Sligo, in light of its gateway status. I ask that consideration be given to a bailout or a write-off of some of the debt of Sligo County Council.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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A solution should be born out of the Department's statement about improving the lives of people in the community.
Mr. John McCarthy:
Indeed Chairman, but I wish to go through the debt situation in Sligo. The total loan book in Sligo is about €120 million, €30 million of which is housing related loans, which goes back to the issue I mentioned earlier about revenue collections on the housing side. There are water loans of about €18 million, which will be dealt with. There are loans connected to the local authority offices amounting to €12 million and there are debit balances and other capital account projects of €22 million. Clearly there are some solutions in sight with regard to some elements of the debt but there are other elements that were not visited on Sligo local authorities by central Government.
John Perry (Sligo-North Leitrim, Fine Gael)
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The legal charges attached to the case run into millions. The case was in the High Court for 57 days and it is unfair of the Department and the Minister to place that debt on the county.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I ask that both Departments consider the issues being raised by Deputy Perry and consider what further efforts can be made to resolve the issue.
John Perry (Sligo-North Leitrim, Fine Gael)
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Thank you, Chairman.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Mr. Heffernan and Mr. McCarthy should be aware that all I am hearing about from all over the country is the death knell for local democracy, transparency and accountability. It is outrageous and if it was a business, they would step in immediately and attempt to rescue it. We have abandoned not just transparency and accountability but also our traditions, our heritage and all that local government stood for. I know we should not comment on policy here but I think it is an appalling policy and it is one that will have to be reversed, undoubtedly, at some stage. That is my personal view.
An issue involving Meath County Council and dumping was raised at this committee previously. The Department of Transport, Tourism and Sport were involved in the discussion because it related to road construction. Everyone is now running a million miles away from that problem and no one seems to want to resolve it. The latest twist in the story is that the individual who owns the site in question and on whose lands significant amounts of material was dumped, is now being asked for significant sums of money from the FOI section in the council in his efforts to resolve what was a wrongdoing by somebody in local government, the Department of Transport, Tourism and Sport or somewhere. Is there anything Mr. McCarthy can do to determine exactly what the current position is in regard to this matter? It involves the Departments of Environment, Community and Local Government and Transport, Tourism and Sport and a citizen. It appears that the State is using its considerable muscle and understanding of the system to give this individual the runaround. All he wants is for whoever allegedly wrongly dumped material on the site to sort it out but he cannot get to first base with the local authority or with anyone else. In terms of serving the citizen, is there any possibility that someone from the local authority would intervene in some way and give him some direction as to the course he should take? I am not referring here to legal action but the course he should take to try to resolve the matter. Who is the decision maker in this process? We talked earlier about the transportation of material to Northern Ireland, illegal dumping and compensation of €30 million and here we have an individual who is trying to resolve matters and cannot do so.
Mr. John McCarthy:
This is an enforcement issue associated with suggestions of illegal dumping. We are constrained, legally, in terms of getting involved in individual cases, be they in waste management, planning or other areas. That statutory prohibition has been in place for a long time and for good reason. My understanding is that this issue was raised previously and that the Department of Transport, Tourism and Sport was following up on it with the committee. I am happy to follow it up with my counterpart in that Department to find out the current status of the issue.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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We are being sent around the houses on this and I am anxious to ensure that somebody comes back to us, either from the Department of Transport, Tourism and Sport or the Department of the Environment, Community and Local Government. A transcript of today's meeting will be forwarded to both Departments and I ask that someone decides who will be the lead problem solver.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I put a query to my own local authority recently regarding the employment of private contractors for the purpose of traffic management, that is, traffic wardens. I was told that the authority could not tell me about the procurement process and how much it cost because of commercial sensitivity. I find that strange because when we are at this committee, after the event, we can get the figures but a local authority official told me that I cannot have the figures now. As a public representative, I want to get those figures. Can Mr. McCarthy tell me how I can get those figures?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It relates to the procurement of traffic wardens in Kilkenny city and I want to find out how much it costs. It is a simple query-----
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I should not have to raise it here but unfortunately that is the way business is being done locally now. Nobody wants to answer anyone and they feel they can get away with it, which is worse, because of the strange structure of local authorities now.
I raised the issue of the Tipperary Hostel Project with the Department and I understand that the county council is now considering taking over that project.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I presume after the council takes back the lease that it will give life to the project.
Mr. John McCarthy:
The council will have to make a judgment on the best avenue to utilise the investment already made. From the viewpoint of public funds, the council would need to be satisfied that there was a robust business case for progressing the project rather than throwing good money after bad. Other avenues it could look at would include exploring the extent to which there might be private sector interest in bringing the project to fruition. That is the space the council is in in considering the project.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Deputy Perry raised the issue of costs to Sligo County Council. Kilkenny County Council incurred costs on the central axis scheme and the case went all the way to the High Court. Considerable investment in the site in Kilkenny has been promised by the National Treasury Management Agency. How stands the Department on these costs? Are they to be borne solely by the local authority?
On the investment in the brewery strip of land around St. Francis Abbey, will the archaeological dig that is necessary be conducted by the national agency, or will it make money available to conduct it? Does it come under the Department of the Environment, Community and Local Government or some other agency?
Mr. John McCarthy:
There is no funding from the Department for the project at St. Francis Abbey. It is a matter for the local authority, the National Treasury Management Agency and the Ireland Strategic Investment Fund, ISIF.
On the legal costs associated with the central access route, given that it is a road project, it is a matter for the Department of Transport, Tourism and Sport which I presume is funding the project. It would not come within our remit in the ordinary course of events.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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On national funding for the brewery site-----
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That body should be alerted to the fact that it is an historic site and that it, therefore, needs to know what is involved.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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We should bring it to its attention.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I wish to raise two other items. Deputy Sean Fleming raised the issue of homelessness in the context of the work done in refurbishing houses. I am always taken aback by the number of local authority houses that continue to remain unoccupied. I know from my constituency which covers two counties, Carlow and Kilkenny, that there is an unacceptably high number of local authority houses that are not occupied. I also know that at any one time up to ten families can be placed in a hotel in Kilkenny and that more is being paid to accommodate people in a hotel than would have been paid if they had remained in rented accommodation paid for by the State. When their rent was increased, there was no negotiation with the landlord and they ended up homeless and being housed in a hotel. What funding is available to fast-track the refurbishment of houses in order that they will be available for tenants?
My second question relates to Moore Abbey in County Kildare in another constituency where there has been ongoing discussions for six years on a voluntary housing scheme. We need these houses urgently, but there seems to be a bureaucratic obstacle course in proceeding with projects. I do not expect Mr. McCarthy to know the details of the project at Moore Abbey, but I would like him to have it checked, as it is similar to a housing scheme in Kilkenny, the weir housing scheme which has been transferred to a housing agency, although the houses have not yet been allocated. The issue has been ongoing for months on end. Where are the road blocks that cause projects to stagger and not be completed within a specified timeframe?
Mr. John McCarthy:
I will deal first with the last question on the weir housing scheme as the Chairman raised it with us when we appeared before the committee in February. A proposal involving 41 units, comprising 26 apartments and 15 houses, was submitted to the Department in March. We reviewed the proposal and gave full funding approval in March. In April Túath Housing was appointed as the approved housing body to enter into lease agreements. These agreements are being finalised.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Therefore, the hold-up is not in the Department but elsewhere?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Can Mr. McCarthy give me any idea of what is happening in respect of houses that need to be refurbished?
Mr. John McCarthy:
I absolutely agree with and fully understand the Chairman's comments on the issue of boarded up local authority houses. In the ordinary course of events, in times past, the local authorities would have funded the refurbishment of these houses from what we call their internal capital receipts, that is, from the sales of property and so on. In the past few years that revenue source has dried up. We have put in place a programme to provide funding for local authorities for refurbishment works to bring houses back into use. Given the pressures we are under, it is absolutely essential that we make efficient use of the available stock. In 2014 I think just over 2,000 units nationally were refurbished under the programme.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It is fair to say there is funding available and that a concerted effort is being made to do the work?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Could the same effort be made in the provision of wetrooms and making houses accessible for people who are disabled or the elderly who have fallen ill? There is a list, but according to my information many local authorities do not have any money to proceed in 2015. They are dealing with applications made in 2014.
Mr. John McCarthy:
Under the housing adaption grants scheme, there were 7,000 grants nationally in 2013. In 2014 that figure increased to just over 7,500. More money is available this year. The Exchequer funding provided last year amounted to €37.1 million. The allocation this year is €40.4 million. We expect in excess of 7,000 households to benefit.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is that funding matched by the local authorities?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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A local authority may be at fault in not coming up with the 20%.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Will Mr. McCarthy provide a note on the Poolbeg project, rather than go into detail on it now?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I mentioned it in the context of people ending up in hotels when it would have been cheaper to maintain them in the accommodation in which they had been living, even at higher rent. People were not granted an increase in rent allowance or payments under other schemes to meet the rise in their rent.
Mr. John McCarthy:
The policy decision taken by the Department of Social Protection - this was discussed a few weeks ago with my counterpart in that Department - has been not to change the rent supplement cap levels. I think my counterpart indicated that they had arrangements in place to use discretion where a tenancy was coming under threat because of an increase in rent that would pose a problem in terms of rent supplement rates.
In fact, that discretion was exercised in over 2,000 cases in which the rent supplement cap was likely to become a problem. In the first place, any tenant who finds himself or herself in a situation where the rent is to be increased and the rent supplement cap is going to be a problem should approach the Department of Social Protection because there is this flexibility on a case by case basis. While there are no guarantees, the discretion has been exercised in more than 2,000 cases. From everybody's point of view, maintaining a family in their home rather than finding them totally unsuitable hotel accommodation is entirely logical.
Seán Fleming (Laois-Offaly, Fianna Fail)
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The exercise of the discretion in 2,000 cases is welcome. It is a well kept secret and I am delighted to hear about it. I will be on the case straightaway.
Seán Fleming (Laois-Offaly, Fianna Fail)
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People do not know that and are not aware of these rights.
Seán Fleming (Laois-Offaly, Fianna Fail)
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The public does not know that.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Does the Deputy have further questions?
Seán Fleming (Laois-Offaly, Fianna Fail)
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I assure the Chairman that I will leave it at that.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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This has been a test case. In the past few weeks we broke at lunchtime and members had a second wind when we came back. As a result, we did not get out until 4 p.m. As such, I did not mention taking a break at 1 p.m. and we are finishing at 2.10 p.m. I thank everybody for their patience. Will we dispose of Vote 25, chapter 5 and special report No. 84? Agreed.