Peter Mathews (Dublin South, Independent) | Oireachtas source

The Custom House was where the Minister launched this Bill, remarking that it had been 122 years since our system of local government had been introduced. That is a long time, and the Minister is to be commended on undertaking a root and branch examination of the system. I admit that my reading of the situation obtaining across the country is probably cursory compared with his own, but some features that have been examined by others stand out. Generally speaking, the country is under-represented in a democratic sense compared with other countries. Perhaps this could be highlighted in terms of the important engineering aspect of what is afoot.

The Bill, which features 65 sections in ten Parts and five Schedules, is a comprehensive piece of work. To digest what it is all about, perhaps we could have the main parameters or pitch markings set out in an easy-to-understand form, showing what the democratic pluses and minuses are in headline bullet points, the number of town councils to be dissolved, the reduction in head count, etc. This is what one would do with a war planning map, with one's divisions of tanks and troops.

The thrust of what is being done is commendable. With this Bill, we intend to build a better, stronger, more efficient, "more responsive and more accountable system of local government where the voices of all citizens are heard and the needs of our communities are addressed". Let us use a template to measure outcomes against these aspirations. When we measure, we can get a handle on things and make adjustments. We can let more water in or out. I am not referring to water meters, but the Minister knows what I am saying with that analogy.

To pick up on Deputy O'Donovan's comments, it is worth mentioning in the course of this discussion that the majority of councillors, be they town or county councillors, do a big day's work without being particularly well paid. Savings of €45 million were mentioned in the commentary on the Bill. It is an attractive headline figure for discussion, but let us go down to the troops, the men and women serving on the councils. The public deserves to know the hours they invest. That figure could be in one column, the average number of days councillors work for citizens could be in another and their remuneration could be in a third, with a large asterisk pointing out that it is all part-time and that it can work against their promotion prospects in other walks of life. This needs to be recognised in the debate.

My next comment follows on from the Taoiseach's statement at 11.30 a.m. today on how the country will progress without a formal standby line of credit following the completion of the disbursement part of the troika programme. The public does not understand what exiting the bailout means. In truthful and everyday understandable words, exiting means that we will finish drawing down over a period of three years loans that were given by a combination of three lenders to cover the shortfall in our national income vis-à-vis our national expenditure as we tried to achieve economies and efficiencies in that expenditure and maintain revenues or, in certain cases, increase them.

The wisdom of moving forward without a formal standby arrangement does not meet the requirement of the day, but that is a different debate and I will not distract the participants in today's discussion with that idea.

I want to flag it because there was a temptation, which became a reality, for the Government parties to say that income tax was not touched in the recent budget. Technically that statement is correct because the headline rates did not change at any level. However, the realities of life for every citizen - and more particularly for those at the lower end of the income scale and in the middle and lower-middle levels - concerning indirect taxation were very noticeable. I will explain how that is the case. The income of the average citizen or family will be more than spent because borrowings have risen in order to meet expenditure. Their net income after tax, which is the stated headline figure for income tax, will be spent on the following main areas: one third on mortgages; and half of gross earnings on light, heat, food, transport and medical expenses, including health insurance. Those expenses have risen by more than 15% in one year. The local property tax is in that bracket also.

If the expenditure of an average household has increased by at least 15% in a year, in the absence of inflation that amounts to an increase in taxation on gross income of about 7.5% or 8%. That is a mathematical fact. That is the sort of pressure that households at the lower, middle and lower-middle income levels are experiencing. That is the truth of it, which is why indigenous national income has stalled and is unlikely to rise in the foreseeable future. At the same time, such households have suffocating legacy debts. Everything is interrelated in a nation's debt experience, including household debt, SME corporate debt and Government debt, which is referred to as the national debt. I am afraid that our international creditors, including the ECB and euro system creditors, do not want to acknowledge that level of stress and burden on this country.

Only a few weeks ago, the Minister for Finance was presenting the 2014 budget, which was constrained by the rigorous demands of the troika. At the same time, the German finance minister, Wolfgang Schäuble, said that it was not on the agenda to consider what is referred to euphemistically as retrospective bank recapitalisation because everything in Ireland was fine and fiscal consolidation was progressing well. That is not true, however, because it is not fine. Every second day I meet people who are hugely distressed. Their distress is caused by a situation that is not being addressed properly by their creditor banks.

Given the inter-relatedness of things, our banks in turn are in debt to the euro system, even including the survivor banks, AIB and Bank of Ireland. They are indebted to the euro system in two ways - through moneys they borrowed from the Central Bank of Ireland and moneys borrowed from the European Central Bank, mainly to redeem historically large tranches of bonds that were due for redemption. They were redeemed to the bondholders at the time, not to the original bond investors. The bondholders were speculators because they had bought bonds in the hope of making profits, which they did. The Irish people are now paying the price, half of which - some €28 billion - is in the form of long-dated bonds of up to 40 years, replacing promissory notes that were of a shorter maturity.

One of the measures we were forced to introduce as a result of the lending programme was a local property tax. That brings me back to today's discussion. The Government has promised that in Dublin, Cork, Galway and other cities 80% of the local property tax collected will be directed to local authorities in the areas where the tax is applied. Local property valuations tend to be much higher in cities than in rural areas. That plan is not necessarily happening, however, because there is foot-dragging on that promise, which is not right.

After 2015, local authorities - under new arrangements envisaged by this Bill - will have the ability to raise local property taxes by up to 15% or to lower them, but that is unlikely. Government Deputies Olivia Mitchell and Robert Dowds have made these points already.

As regards local authority representation, the main concerns are about council services and rates that businesses must pay. More recently, concerns have been raised about property tax because of the promise to dedicate 80% of that collection to fund local authority services. The aspiration for the Bill is to build a better, stronger, more efficient, responsive and accountable local government system in which all citizens' voices will be heard and community needs will be addressed. In order to check that those aspirations and objectives are delivered - and to measure the outcomes - we should have a report card, to use the Taoiseach's analogy, or a template. In that way we could have an annual or bi-annual score for the efforts and outcomes involved.

The Oireachtas Library's digest does excellent work and has published charts of representation in other countries and in Ireland.

We are at the top of the league table in terms of our having the greatest number of citizens per local authority member. Another aspect of the Bill in headline terms is the appointment of chief executives of authorities, which appointments will be made through the Public Appointments Service and ratified by members. It is important these positions of responsibility are not captured by Government. From my reading of the Bill in regard to the structures to be introduced, there will continue to be a strong link between Government and the proposed chief executives. In my view, that link is too strong. Counter-balancing that, the establishment of the national oversight auditing committee is a welcome aspect of the proposed structure.

The interface between local area plans and local enterprise boards should be continually encouraged, improved and strengthened. Business and family communities within areas need to be participants in the efforts of such boards and committees. They need to feel that their inputs are taken on board and, equally, that the committees and boards accept their observations, criticisms and suggestions. It is important the communications channels both ways are realistic and accessible.

I would like the following points to linger in the minds of everybody present. While in the context of the framing of the recent budget and Finance Bill, the headline rates of income tax were not touched, the indirect expenditure of households, including light, heat, transport, including bus and train fares, gas, the local property tax and the claw-back of relief on VHI premiums, account for 50% of household incomes. All of these costs have increased by a minimum of 15% in one year, notwithstanding that the consumer price index is low. While this is not called income tax it, is a tax on the income on which families have to live. We cannot sneak those extra burdens on families while their incomes are depressed, jobs continue to be lost and young people are emigrating. This is smoke and mirrors. It is not true.

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