Dick Roche (Wicklow, Fianna Fail)

This question from Deputy McCormack touches on both capital and current expenditure so I shall deal with both. The Exchequer capital provision for mainstream capital programmes funded through my Department and administered by local authorities will amount to €1,976 million in 2007 representing a year on year increase of 7%. There will be some upward adjustment, when I mention non-national roads. When account is taken of the capital provisions for national roads, funded through the NRA, the Exchequer capital funding to local authorities in 2007 rises to €3,451 million, an increase of 8% over 2006. That is significant on the capital side.

Funding for 2007 to local authorities, through general purpose grants from the local government fund, will continue the strong trend of increasing central Government support for the local government sector. Yesterday I announced the allocation of almost €958 million to local authorities for 2007, increasing the level of general purpose grants by 8% over the final allocation for 2006. The 2007 allocations figure represents an increase 2.8 times the initial allocation provided in 1997. The allocation includes an additional €10 million to certain local authorities for additional operational costs associated with new water services infrastructure, which will be distributed shortly. Deputy McCormack will be aware that some local authorities are finding it difficult to make the transition from the full capitalisation of current costs and I will provide relief for them in that regard.

In total, the increase in funding is five times greater than the level of inflation, which was about 35%, between 1997 and the end of this year. This funding will assist local authorities in framing realistic and reasonable budgets in the statutory time period available to them to complete their budgetary process. Further allocations will be made to local authorities in January for non-national roads and local improvement schemes. These allocations will also show an increase on the allocation of €558 million provided for 2006.

The Government has provided unprecedented increases in funding to local authorities since 1997. I am satisfied that with our commitment to local government and increased income generated from the greatly strengthened commercial base supported by the Government's successful economic policies, local authorities are in a very good position to respond to the public's need for quality services. In allocating funding for 2007, I have taken into account the cost to each authority of providing its services, and factors including population increases and the income from local sources.

Additional Information not given on the floor of the House.

Local authorities have also benefited from substantial income from development levies, currently bringing in over €500 million per annum, as well as buoyancy in their rates' base in line with general business growth in the economy brought about by sound national economic policies. The adoption of a budget is one of the most important reserved functions conferred on local authorities as it underpins their financial business for the following year. While I have no direct function in budgetary decision making at local level, I have urged local authorities to continue to exercise appropriate restraint in setting any increases in commercial rates and charges. This is important to the long-term viability and competitiveness of commercial operations and to the overall competitiveness of the economy. Local authorities responded positively this year to my request in this regard and increases in rates and charges for 2006 were generally of a lower order than in previous years.

Current expenditure in the local government sector in 2007 is likely to be some €4.5 billion. Within this quantum of expenditure there is scope for efficiencies, innovation and further steps to ensure greater value for money. Elected members should examine their draft budget closely to ensure that every effort is made to get the maximum value for the expenditure proposed.

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