Phil Hogan (Carlow-Kilkenny, Fine Gael)

I thank the Deputy for raising this issue.

The key objective set out in the programme for Government is to get people back to work, and this will be reflected in policy and programme development across Departments, agencies and local authorities, now and for the coming years.

The Planning and Development Act 2000 provided for a radical overhaul of the development contribution system. One of the central tenets of the reforms under the Act was to introduce greater transparency in the way in which development contributions were levied and applied. Under section 48 of the Act, elected members in local government were given the powers to make, amend or reject the development contribution scheme proposed by the manager following a public consultation process. It is the elected members, therefore, that have the central role in overseeing the level of contributions being sought and the way in which these contributions are spent by the local authority.

Section 49 of the Act provides for the drawing up of a supplementary development contribution scheme to fund a particular strategic public infrastructure service or project and these have been used typically, but not exclusively, to fund in part transport infrastructure projects. Notwithstanding that, I understand where Deputy Mitchell is coming from in regard to the contributions that accrue to the local authority under these schemes and the part they play in drawing down necessary infrastructural finance from the Departments, particularly from mine.

The policy guidance framework for development contributions set out by my Department is designed to draw the attention of local authorities to their obligations under the legislation, while also recognising that the adoption of development contribution schemes remains a reserved function. The most recent policy guidance requires the county development board to be consulted in the framing of development contribution schemes, thus ensuring input from a broad spectrum of sectors.

Section 135 of the Local Government Act 2001 requires managers, before the start of each financial year, to prepare and submit to the council a report indicating the programme of capital projects proposed for the forthcoming and following two years. The development contributions collected by local authorities are ring-fenced and committed to fund a planned capital programme as set out in the development contribution scheme adopted by the elected members. The rate of development contributions must have regard to the actual estimated cost of providing the classes of public infrastructure and facilities. There has been a steep decline in revenue from these schemes and income will undoubtedly continue to be adversely impacted upon in the current economic climate.

A number of local authorities have responded to the difficult economic circumstances by amending the scheme to reduce their contribution rates, in particular for employment generating projects. For example, Louth County Council has halved its development contribution rates for expansions to authorised industrial and manufacturing operations, for IDA and Enterprise Ireland supported manufacturing, international trade and the financial services sector, and for businesses grant-aided by the county enterprise board. This is an example of what local authorities can do if they have the existing resources to achieve it. The Department is also aware that in many cases the payment of development contributions has been phased by local authorities.

The Department is preparing updated guidance for local authorities which will require them to consider the impact of development contributions on businesses and competitiveness generally in the development of the scheme in the current climate. The guidance will be finalised by the middle of this year. Any changes made by local authorities to their schemes on foot of this updated guidance will also have to consider the overall funding of the authority, existing contractual commitments and the importance of supporting local employment through projects funded by development contributions.

I am conscious of the difficulties projects have in getting off the ground because of the imposition in recent years of development contributions that may be more closely related to more buoyant economic times. I am glad to say these schemes are constantly under review and will be continually monitored in the coming months to see whether we can ensure the development contribution scheme is not hampering business and employment projects from commencing.

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