Olivia Mitchell (Dublin South, Fine Gael)

I welcome the opportunity to raise this issue with the Minister, specifically the impact of section 48 levies and, where they exist, section 49 levies on business activity, primarily in my constituency but also nationally. I realise there is an elegance to the notion underlying the system of levies in that those who benefit from development should be the ones who pay for the infrastructure that is supported. However, the reality in this climate is that this is simply not practical. I do not believe it was ever practical or realistic.

It is true that in the Celtic tiger years businesses and developers were willing to pay almost anything to obtain planning permission. However, the levy was calculated in such a way that there was an incentive for local authorities to over-zone, overdevelop, increase densities and have one eye at all times on every single zoning and planning decision.

Levies are calculated by dividing the cost of the infrastructure by the quantum of expected development. The greater the quantum, the more infrastructure that local authorities could provide. We all know how that ended. The problem now, however, is that there is no building taking place. Where somebody wants to build, the levy is still in place at the old rate. All other prices have fallen and levies have not. They are now acting as a brake on development and preventing otherwise viable developments and business decisions. The levy is preventing those who might have made the decision to expand their business or add an extension to their home from doing so. Small amounts of activity are being stymied by the levies and development.

In my constituency, even to convert a warehouse from an old use to a new use attracts a levy of thousands of euro. The net result is that jobs that might have been created are not created, and businesses that might have grown decide not to bother expanding.

It is true that local authorities unilaterally decide to reduce the levies but, understandably, they are reluctant to move on their own primarily because it could attract business from one local authority area to another. However, it does not solve the overall problem, nor does it, without some nod from central Government, give some indication as to how infrastructure would be tackled in the future.

The real issue, which I do not expect the Minister to deal with today, is the very vexed question of how and by whom infrastructure should be funded. The previous Government fuelled the property bubble by loading all costs of all infrastructure onto those responsible for newly built projects. That is not sustainable, except in very unusual circumstances where there is constant expansion of the population. This only ever happens for a few years, during which it is sustainable, but thereafter one runs into the kind of trouble we have run into.

A more sustainable funding source must be identified and a fair distribution of infrastructure costs between central and local government must be found. In my constituency, I benefit from the Luas, for which I paid no contribution whatsoever. My neighbour's children, however, are paying for it owing to their new houses. The new residents and businesses pay while the others do not. That is fundamentally unfair and it is also unsustainable. I ask the Minister to address, in the short term, the immediate issue of asking businesses to pay what are effectively Celtic tiger prices in a bailout economy.

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