Dick Roche (Wicklow, Fianna Fail)

The new arrangements for financing local government, based around the local government fund which the Government introduced in 1999 have had a major positive effect on the finances of local authorities. The fund provides a buoyant and dedicated source of funding for local authorities to supplement the income they derive from other specific Government grants and from local sources such as commercial rates and charges for services.

A measure of the success of the new arrangements can be gauged from the general purpose grant allocations from the fund in 2005, which amount to some €817 million. These allocations are significantly greater than the equivalent figure in 1995 which was €240 million and the 1997 amount of €339 million. The 2005 allocation represents an increase of 8.7% over 2004 and an increase of 140% over 1997 allocations. In the case of the Deputy's constituency, for example, the allocations for Galway County Council have increased from €9.9 million in 1994 to €13 million in 1997 and to €32.6 million in 2005. This is an increase of almost 330% over the figure in 1994 when the Deputy opposite had more influence with the Minister of the day. I have therefore been kinder to Galway than he was.

The level of grant aid for non-national roads, which since 1999 receive funding from the local government fund, has also increased very significantly over recent years with 2005 allocations totalling €495 million compared to €139 million in 1994 and €225 million in 1997.

The recently published Abridged Estimates Volume provides for an Exchequer contribution to the fund of €518.575 million in 2006 which is a 6% increase over 2005 levels. Taken together with motor tax buoyancy, I am confident the general purpose grants which I will shortly notify to local authorities for 2006 will again make a significant contribution to meeting the increased costs of local authorities in the year ahead.

Additional information not given on the floor of the House.

This will enable them to provide a reasonable level of services without the need for any undue increases in commercial rates, fees and other charges.

Notwithstanding the success of the changes introduced in 1999, my predecessor commissioned a review of the funding of local government in light of developments in the economy and the evolving challenges facing the sector into the future. The main elements of the review, undertaken by Indecon International Economic Consultants in association with the Institute of Local Government Studies, were to project the income and expenditure of local authorities over the short and medium term, evaluate the existing method of funding the sector, examine potential alternative funding systems and identify the scope for efficiencies in the sector.

I received the Indecon report recently, and am currently considering its wide-ranging analysis and recommendations. I intend to bring the report to the attention of my colleagues in Government within the coming weeks and to publish it very shortly thereafter.

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