Seán Kyne (Galway West, Fine Gael)

I welcome the Minister's speech and am delighted to support the Government amendment to the motion. I was a member of Galway County Council from 2004 until the general election this year. The councillors had their annual rates discussion at budget time. In fairness to all members, there was general consensus among all parties and independent councillors about the burden on small businesses and the impact the rates bill had on the viability of such businesses and their capacity to grow, retain staff or employ extra workers. The rates bill may not have been the only burden, or the most significant one, but it was no help to firms' ability to grow and survive, especially in rural areas. In my first year in the county council, 2004, there was a rates increase of 7% or 8%. The increase was not popular but it was a different era in which the Celtic tiger was in full flight and these matters were not as difficult as they would be now.

Since 2008, the annual rate increase on that county council has only been 1% or frozen. This is a recognition of the burden of rates on these companies. At all times, there has been an appetite to decrease the rates. That is the general consensus but as is pointed out to us so often by council officials, our largest rate payer in County Galway is an energy company in east Galway that would pay circa €1 million or more. I am not sure of the exact figure at this stage. A 1% rate reduction for such a company would have a huge impact in terms of giving a cheque back that it would not have sought. However, a 1% rate cut for a small shopkeeper, while important, would not have the same effect. When we discussed meaningful rate reductions we spoke of cuts of 10% or 20%. However, the county council could not afford such reductions across the board that would benefit the large companies, including multinationals. Meanwhile, such a reduction would have a major impact on small rural businesses, including corner shops. We all strove to achieve that.

In reviewing local authority funding, including rates, it is important to examine a tiered approach whereby we can set higher valuations for larger companies, including multinationals. It should be framed to allow for a tiered system so that smaller companies can benefit to a greater extent from a larger rate reduction. There are a number of possible ways of approaching this, including targeted relief for businesses. For example, is it right that a business benefitting from the 12.5% corporation tax and all that goes with it should also benefit at the expense of other businesses from the rates valuation? Those matters should be examined.

Rural businesses in Connemara, east Galway or on the islands may feel they are being unduly hit by rates. Whenever we raise this matter at county council level, however, we are always told that the legislation did not allow for such a differentiation because the system operates across the board. Whatever approach is taken, we must change the system to allow for more freedom by county councils to levy rates from those who can best afford to pay them.

The Minister referred to efficiencies, which is the name of the game in terms of how we can progress and save money. The Minister cited examples of council mergers in Tipperary and Limerick. Galway city and county councils have been slightly amalgamated in that the county council is responsible for fire services, motor tax and libraries. That is an example of the importance of both local authorities working together to deliver a service without the extra burden of administration.

We have seen a spiralling of directors of services under the better local government programme, which has increased the cost burden and has thus raised the requirement to raise funds to pay for these higher levels of bureaucracy. There is scope for a wide range of reforms and efficiencies within the county councils. County councils can also work to increase the proportion of electricity generated from wind power, and local authorities own many sites suitable for wind turbines, solar collectors or other technologies that can be used to save money or create efficiencies. There is much scope in that regard and local government reform could be used for positive change within our local services.

See this speech in context