Mr. John McCarthy:

I am pleased to be here this morning as Accounting Officer to assist the committee in its examination of Vote 34 and Chapters 4 and 5 of the Comptroller and Auditor General's annual report for 2015 dealing with central Government funding and local authorities and progress on the land aggregation scheme, respectively. As requested, I have provided some advance briefing for the meeting and will keep these opening comments short.

The State's public finances moved further along the pathway to sustainability in 2015 and, in that context, the Department's gross expenditure for the year totalled €1.24 billion, some 36% higher than the outturn for 2014. The Department had significant achievements in 2015 in delivering on key policies and programmes. Our overall objectives were to improve the quality of life of citizens and communities to foster economic and social development and to enhance environmental protection. In overall terms, the Department was assigned over 13% of the total Exchequer capital allocation in 2015 towards implementing major housing, water, rural development and other programs. In 2015 several critical areas benefited from increased funding, most notably housing where spend increased by 9% over 2014. Total spending from the vote on the various housing programmes, including the provision of social housing and improvement in regeneration measures amounted to almost €646 million in 2015. Local authorities also self-funded housing programmes from local property tax receipts in the amount of €119 million, bringing the gross spend on housing programmes to €765 million.

This 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. In total, the housing needs of 13,375 households were met under our housing programmes in 2015.

As members will be aware, responsibility for the provision of water services transferred from local authorities to Irish Water on 1 January 2014. A sum of €222 million was provided by the Government via the Central Fund for Irish Water to meet its capital expenditure in 2015. This funding helped to progress capital projects set out in the Irish Water capital plan, including key water and wastewater infrastructural projects. In addition, €399 million was provided for Irish Water from the local government fund in 2015 by way of an operational subvention. It funded the allowance of 21,000 litres of free water provided for all children in the State, the cost of capital and domestic water charges at the levels set out in the Water Services Act 2014 and the cost of providing a general subsidy to meet the cost of services to reduce the level of unit charge in line with the provisions of the Act. The water programme expenditure figure in 2015 for the Department also included €94 million for the water conservation grant introduced in that year. As at 30 June 2015, a total of 1.308 million households had registered with Irish Water and were, therefore, eligible to apply for the grant in 2015. The Department of Social Protection which administered the water conservation grant on behalf of the Department of Housing, Planning, Community and Local Government made grant payments totalling just over €89 million in respect of 890,104 applications under the scheme. A small number of residual payments continue to be made to householders who have an entitlement to the 2015 water conservation grant. Capital funding of €16.88 million was also provided under the rural water programme, which included support for the group water scheme sector. In addition, €18.88 million was provided for the sector from the local government fund by way of operational subsidies.

The chapter in the Comptroller and Auditor General's report on the funding of local authorities by central government provides an overview of local authority expenditure and income figures since 2006. It details 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 2015 totalled almost €2 billion. The local government fund accounted for 43% of this amount. There was continued change in the operation of the fund in 2015, with the ending of the general purpose grant payments and the introduction of the local property tax, LPT, paid to local authorities through the fund. Some 80% of LPT revenue was retained locally to fund vital public services, while the remaining 20% was redistributed to provide top-up funding for local authorities with a lower local property tax base due to variances in property values across the State. These measures were necessary to create a balanced system of funding across local authorities. Income into the local government fund in 2015 totalled over €1.8 billion, made up of motor tax receipts of €1.1 billion, local property tax revenue of €469 million and a payment from the Exchequer of €241 million. The main payments from the local government fund in 2015 included LPT payments to local authorities of €459 million, a payment of €355 million for the maintenance of non-national roads and public transport to the Department of Transport, Tourism and Sport and a payment to the Exchequer of €481 million, as well as a payment of €399 million as a subvention to Irish Water.

On accountability, as the committee will be aware, under the existing policy and legislative framework, the Local Government Audit Service 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, the local authority is required to furnish a copy of the audited financial statement and any associated statutory auditor's report to every member of the local authority for his or her consideration at the next practicable council meeting. Scrutiny arrangements for local government were also enhanced in recent years, with the establishment of the National Oversight and Audit Commission, NOAC. The NOAC scrutinises local government performance in fulfilling national, regional and local mandates and value for money where State funds are channelled through local government and supports the development of best practice and enhanced efficiency in the performance of local government functions.

The most significant aspect of the Department's community programme in 2015 involved the commencement of the new social inclusion and community activation programme, SICAP, which was rolled out in April that year and will run until the end of this year. Its aim is to tackle poverty, social exclusion and long-term unemployment through local engagement and partnership between disadvantaged individuals, community organisations, public sector agencies and other stakeholders. SICAP expenditure in the nine month period April to December 2015 was €26.8 million. A total of 36,854 disadvantaged individuals were engaged under SICAP on a one-to-one basis, while 2,506 local community groups were assisted.

Chapter 5 of the Comptroller and Auditor General's annual report for 2015 deals with progress under the land aggregation scheme. The scheme was established in 2010 to support local authorities by alleviating the financial burden in servicing land loans that had been taken out from the Housing Finance Agency for the purpose of acquiring land for social and affordable housing developments. It closed in December 2013. At the time the Department had approved 73 sites, with a total area of 247 ha, for inclusion in the scheme. At the time of the Comptroller and Auditor General's report 67 sites accepted into the scheme had been transferred to the housing agency. As of February 2017, this figure has increased to 71. In 2013, as a consequence of continuing pressure on Exchequer resources at the time and following a review of the scheme carried out in consultation with the Department of Public Expenditure and Reform, it became evident that further expenditure on the scheme in accepting new applications was not sustainable. Accordingly, in December that year local authorities were notified of the ending of the scheme.

The matters to which I have referred illustrate the broad range of programmes and activities for which my Department had responsibility in 2015. I should point out that, with the reconfiguration of Departments when the new Government took office in May 2016, the bulk of the Department's environmental functions transferred to the new Department of Communications, Climate Action and Environment, while a range of rural development functions were transferred to the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs.

My colleagues and I will be happy to respond to questions or deal with issues that will emerge in the course of the committee's work today.