Pat Gallagher (Donegal South West, Fianna Fail)

In 2003 and 2004, as a Minister of State I took the motor vehicles Bills through the House. The economic circumstances in those times were much better than they are now. We have major economic difficulties stemming largely from international factors. While we have some control over them, unfortunately being a small country, an island economy and a large exporter means the credit crunch and fuel prices are having a detrimental effect. I sympathise with the Minister and Minister of State with the economic position in which they find themselves. The price of a barrel of oil on the international market has reduced significantly. Thankfully it has been reflected at the pumps but, as I said in a debate yesterday, it has not been reflected in the fuel surcharge on transatlantic flights. Those airlines charging these exorbitant surcharges should look at them again more closely.

I commend the Minister for reducing motor tax and VRT. While it does have major advantages in reducing emissions, someone must pay for that. For example, the motor tax in 2007 on a 1.9 litre diesel was €560 and was reduced to €105 in 2008. The VRT in 2008 was 16% as against 25% in 2007. While this is laudable, there is an issue with first-time registration. VRT before 2008 was based on engine capacity while now it is based on CO2 emissions. Will the Minister and his officials examine how this is affecting garages with large stocks of second-hand cars? For example, if one brought a car manufactured before 2008 into the country and registered it for the first time, the VRT would be 16%. In the case of a second-hand car bought in Ireland it stands at 25%. There is little point in having a large stock of second-hand cars stuck in garages. It is the punter — the consumer- who ultimately pays for this.

I also wish to raise local government funding as it comes under the Bill's remit. As every Member knows all politics is local. I served as a member of Donegal County Council from 1979 to 1991. For 2009, Donegal County Council has seen a 6% reduction in its local government allocation, €41.5 million compared to €44 million last year. This does not take into consideration inflation.

Donegal is a county with many holiday homes or, as described by the Minister, non-principal residences. We welcomed the introduction of the levy on such residences because it was believed the €200 per residence would go straight to the local authority. However, it turns out that the local government fund and the allocations to the various councils from the levy have been included as a guesstimate of €40 million. Donegal County Council will collect the levy, send it to Dublin but much of it will not return to the council.

I also understand an insurance has been taken out on this. If the levy is less than €40 million, there will be a reduction of what is allocated to local authorities. It is difficult enough for us to survive in Donegal with the allocation received from the local government fund without having this threat of a further reduction hanging over us. How can a local authority plan in advance if it is informed it may not receive its share — I will not describe it as fair and equitable — of the €40 million in June next year and that it may even be reduced? The corollary is that if the levy comes to an excess of €40 million, I presume each local authority, particularly Donegal's, will receive an additional allocation.

While the levy will not be a great imposition on those with second houses, I am somewhat concerned as to how collecting the levy can be put into operation early next year. It will require legislation. When we had rates, it was the occupier who was responsible whereas now it is the owner. Many of the homes in my county are used during the summer. What is the best time to collect? Who will collect the charge? Will it be the Revenue Commissioners or will the local authority be compensated for additional work and possibly working at weekends? Many who have homes in Donegal are from Northern Ireland and many are only there at weekends. These are the micro aspects of the issue that must be teased out.

Local authorities must be compensated for this. If the Department is working on guesstimates, as I believe is the case, I can make a guesstimate that Donegal has 6,000 holiday homes. Donegal would collect €1.2 million and there would be a great incentive to do so. In the €40 million incorporated in the overall local government fund nationally, how much will be given to Donegal? What is the guesstimate? I fear that it will not be near the €1.2 million to which we are entitled. It is not a question of being critical but of being pragmatic about how this will be administered.

I return to the 6% reduction, which is in excess of that figure in real terms. This will have an effect on many people in my county, some of whom have been advised that contracts that run out in December will not be renewed. In addition, others whose contracts run out in the early part of next year will face the same fate. One might question why, if local authorities can be administered without these people, they were there at all. They would be there on a permanent basis if it were not for the embargo over the years. These are real people and their partners, spouses and families will suffer as a result of this. The Minister should examine this in light of commitments to people and front line services. It would be foolhardy of me, an ardent supporter of Government, to say that this will have no effect. Of course it will, these people are in front line services.

What we are told about roads allocation will have an effect later in the year. I will not pre-empt the decision of the Minister for Transport in respect of roads in a county where we must travel for one hour from where I am based in west Donegal to get onto a national primary road. It is important that we have facilities. I commend the Department on what it did in the past. In Donegal we have a template of which many other counties are envious, whereby each electoral area provides services for its own electoral area in the most remote parts of Donegal. Examples are in Inishowen, Letterkenny and Dungloe for the Glenties electoral area. The Department supported that at the time. It brought the services to the people of those electoral areas. I applaud all those involved in that.

Some 71 people have received notification that they will be gone at the end of December, while another 49 will be gone at the end of March and the contracts of others will run out during the year. We talk about efficiency and value for money. That is the purpose but I question how a local authority can have greater efficiency without these people playing an important role in various aspects of the local authority. The Minister must examine this closely.

I refer to the administration of the higher education grants. We know that higher education grants are administered by the local authority but the local authority does that at no cost to the Department of Education and Science. It costs my county €155,000 to administer this. There must be some equity. Why would a local authority want to provide those services when it will not be compensated?

I suggest to the Minister of State, Deputy Finneran, who has served many years in a local authority, that we want a fair and equitable share in respect of the holiday homes measure. We do not seek positive discrimination. We seek fairness and equity. The Minister must say that our share of the €40 million is written in stone and gilt-edged in the event of additional money being available. I have not heard that the Department is insisting the €200 levy on non-principal homes will be given to the Exchequer. The Minister should examine this. Donegal has done a great deal to help itself over the years and depends on tourism and people from Northern Ireland building holiday homes there. We are to be penalised for that and we must share the income with other authorities. The scheme must be much more transparent than it is.

A debate such as this is a tremendous opportunity to comment on local authority funding. The local authority is the university of politics. We are much more knowledgeable for having spent time on local authorities. They are going through a difficult period and need our support and the support of the Department. The Department must closely examine the €200 contribution. I wish local authorities well in raising this. I am sure they will make every effort to do it but there should be an incentive for those local authorities such as Donegal.

Gabhaim buíochas leis an Leas-Cheann Comhairle as ucht cúpla nóiméad breise a thabhairt dom. Mar a dúirt mé, is am iontach deacair é seo don Rialtas, go mórmhór an tAire agus na hAirí Stáit sa Roinn Comhshaoil, Oidhreachta agus Rialtais Áitiúil. Tá súil agam go mbeidh siad ábalta cuidiú linn, go háirithe ó thaobh an levy atá le gearradh ar na tithe saoire.

See this speech in context