John Deasy (Waterford, Fine Gael) | Oireachtas source

This Bill performs several functions which seek to facilitate companies in various ways in line with existing legislation. It is essentially technical legislation which attempts to stay abreast of changes in the commercial world in which we are operating. The Department must do what it can to assist struggling companies in what for many of them - not least in my own constituency - is a devastating business environment.

We in the south east received some good news in recent days, with the latest jobs figures showing an unemployment rate of 16.6% for quarter three of this year, a significant decline from the figure of 19.4% in the third quarter of 2012. Nevertheless, it remains the region worst affected by joblessness. Moreover, the positive jobs figures were quickly put into perspective when the news came through the same day that Hasbro in Waterford is to lay off ten people from its core workforce, with plans for further restructuring in the weeks ahead. Unfortunately, we in Waterford have become very familiar with this type of announcement. The Minister for Jobs, Enterprise and Innovation is doing everything he can to improve the unemployment situation, and it is working to a certain extent. However, that effort must be sustained in the south east and there is a long way to go.

As I said, the Bill includes a range of provisions which seek to facilitate commerce. However, I intend to focus on an issue that has as much relevance to the Department of Jobs, Enterprise and Innovation as it does to other relevant Departments. I refer to the issue of commercial rates. A front-page article in yesterday's Irish Examiner detailed how local authorities have been forced to write off at least €500 million in commercial rates since 2006. There was reference to businesses collapsing under the weight of their debt. Between 2006 and 2011, the article tells us, councils wrote off almost €430 million, and there has been a rapid escalation in the amount involved in each successive year. The 2009 figure, for example, was almost €65 million, while the amount written off in 2011 was €116 million. We have not yet seen the figures for 2012, but I do not expect them to be much better.

The article included the following comment from an official of the Department of the Environment, Community and Local Government:

[T]he invoicing and collection of due amounts is a matter for the local authority concerned to manage in the light of prevailing local circumstances and in accordance with normal accounting procedures.

The article further states that the official indicated that councils were not writing off commercial rate debts lightly and would do so only if there was no possibility of collection. After all, the official pointed out, the money thus written off was not a loss to the Exchequer but rather to the local authorities' own budgets for the day-to-day running of their areas. I am not sure I agree entirely with that comment, but it is fair enough. We all know that when local authorities do not raise sufficient moneys, the Exchequer and, by extension, the taxpayer must bail them out. There are many councils throughout the country with chronically large debts. This is an issue that cannot be tackled by the local authorities alone. It is also vital for the Government to construct a rational commercial rates framework that makes sense for the times in which we are living. That is not necessarily the case at present. No one Department is to blame for what I have come to regard as the idiosyncratic, almost dysfunctional system currently in operation. It is certainly not user friendly when it comes to the essential raw material that keeps our system of local government alive, namely, ordinary businesses. In fact, part of the problem is that there is no single Department dealing with valuation and commercial rates issues.

The Irish Examiner article lists some local authorities as having written off nothing and others as having written off tens of millions of euro. When I have asked officials from various Departments to explain that discrepancy, there is no consistent answer other than that local authorities are supposed to write off rates arrears only in strict circumstances and it can be a subjective decision. The truth is that central government has not provided councils with clear direction in this area. We have ended up with an inconsistent pattern of write-downs and write-offs across the local authorities and there are policy and regulatory extremes involved in this. For instance, if a premises is being sold or leased, any rates arrears on that building follow the new tenant or owner. In many cases, this acts as a bar to moving on the property. I have spoken to many local authority officials about this and they have nearly all said the same, namely, that if they write off the arrears to facilitate a new sale or lease, they are potentially subject to the displeasure of the local government auditor. Nevertheless, they often proceed to waive the arrears in order to facilitate the deal and keep money moving in the local economy This is an example of pragmatism on the part of those working in local government, but it also demonstrates a blind spot when it comes to central government and its outdated system of governance. One might argue that if we allow local authorities to write off arrears in additional circumstances, it will make the situation worse and the arrears bill larger. I would counter that by asking the Departments involved whether they know how much is lost in overall economic activity by not waiving arrears and, in so doing, jeopardising property transactions. I expect that nobody would be able to answer that question. The arrears figure is now so large that there is little option but to consider a different approach and to strengthen and underpin the discretion of local authority officials by way of legislation.

These are issues the Department of Jobs, Enterprise and Innovation needs to consider in the context of legislation on companies. They are basic facets of commercial life that should be as relevant to the Department as are such initiatives as JobBridge, JobsPlus and innovation vouchers. The €500 million in rates arrears proves that companies throughout the country are collapsing. On Committee Stage of the Local Government Bill 2013, Deputy Robert Dowds and I will attempt to correct one issue to which I have alluded. An amendment we have tabled would allow the chief executive officer of a local authority to consider submissions from subsequent occupiers of relevant properties on which an amount of rates is outstanding and to waive the amount unpaid by the previous occupier if the CEO is satisfied, based on his or her knowledge of the local market and the vacancy rates in the area or for the category of property concerned, that in the absence of this waiver, the subsequent occupier will not occupy the relevant property. In other words, it gives discretion to local officials based on their local knowledge regarding the properties and individuals involved.

These are issues on which the Department of Jobs, Enterprise and Innovation must have a view. Sections 3 and 4 of the Bill before us today deal with facilitating electronic filing with the Companies Registration Office and remove obstacles currently faced by companies in doing so. This is a positive change, but many of the companies with which I am dealing are competing with online companies which pay no commercial rates. One might argue this point is somewhat extraneous, but all I am trying to do here is emphasise a particular issue.

The Department has as much of a part to play in the area of commercial rates when it comes to companies as the Departments of the Environment, Community and Local Government, Finance, Public Expenditure and Reform and Justice and Equality and the Valuation Office. Thus far, however, the Department has been a bystander when it comes to commercial rates and that needs to change. When the Local Government Bill is being dealt with in the coming weeks it would be useful if there was some engagement on the issue by the Department of Jobs, Enterprise and Innovation.

Ultimately, all the Departments I have referred to should meet and agree on one Department to handle solely all commercial rates or valuation issues within Government. There is at present a lack of co-ordination and coherence on commercial rates. Selecting one Department as having designated responsibility for all commercial rates and valuation issues would be a good start. This is something I have spoken to the Minister for the Environment, Community and Local Government, Deputy Phil Hogan, about. It is fair to say that we are beginning to see agreement on this point. I hope the Department of Jobs, Enterprise and Innovation will consider this, along with the Departments of Finance and Public Expenditure and Reform and everyone else involved.

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