Paul Kehoe (Wexford, Fine Gael) | Oireachtas source

I thank the Deputy for introducing this Private Members' Bill, which proposes a solution to a recurring issue on the valuation of club premises where the club is a registered club under the Registration of Clubs (Ireland) Act 1904 and allowed to sell alcoholic beverages. This issue mainly relates to sports clubs. Like the Deputy, I recognise the work sports clubs do throughout the community and the important contribution they make.

A number of categories of properties are exempted from rates by Schedule 4 of the Valuation Act 2001. These include educational and health-care institutions that are not operated for profit, art galleries, museums and property used by charitable organisations for charitable purposes. All land developed for sport is exempted from rates. This would include the outdoor surfaces of the playing pitches, tennis courts, golf courses etc., but not the club's buildings and structures. Also exempted is any building used exclusively as a community hall.

A community hall is defined in the Act and means a hall or similar building which is not used primarily for profit or gain and is ordinarily used for recreational or social purposes involving participation by inhabitants of the general locality. The definition of a community hall specifically excludes the premises of a club that is registered under the Registration of Clubs (Ireland) Act 1904. Registration of a club under this Act allows the club to sell alcoholic beverages.

I am sympathetic to the intent of the Bill regarding its attempt to address the needs of small, local, voluntary, community sports clubs and will not oppose it at this stage. It appears unfair that it is not just, the bar, function room or kitchen area of a sports club, that is valued for rates purposes, but also the non-commercial buildings and structures, including changing rooms, meeting rooms and gyms. If the club had no bar area it might have no rates liability, so the inclusion of a bar brings everything except the outdoor playing surface into the rates net. Valuing changing facilities or other ancillary buildings that are far removed from the bar could be seen as unfair and resulting in a higher rates bill than might be the case if the valuation were restricted to the bar area.

The argument is that this higher rates bill puts an undue burden on many sports clubs that are working on small budgets to promote sports and leisure for the benefit of their local community. I am also aware that there are clubs with premises in more than one location. Where these clubs are registered they might in practice only operate a bar in one of their locations but the buildings in all of their locations are valued for rates purposes.

There are, however, many problems with the proposed Bill. There are technical, practical and competition issues that need to be addressed which I will expand on here. I would like the Joint Committee on Finance, Public Expenditure and Reform to take submissions on these issues and consider them on Committee Stage. The Bill as proposed will not achieve what the Deputy intends. There may be unintended consequences for clubs that do not have a bar facility and there are competition issues to consider.

I wish to address a technical issue that makes the Bill unworkable in its current state. The proposed amendment in the Bill to the definition of a community hall is very minor. It is just the addition of one word "licensed" before "premises" and on the surface it might seem to solve the problem. It appears to keep clubs with a bar within the rates system, but restricts the valuation for rates purposes to that part of the club's premises that are used for the bar.

There are, however, a number of reasons this amendment is unworkable. First, clubs are not licensed, but are registered. It is their registration under the Registration of Clubs (Ireland) Act 1904 that allows them to have a bar in their facility. While this may seem to be a very technical point, changing the word to be included in the definition from "licensed" to "registered" will not improve the proposal. When a club is registered it is registered as an entity. It is the club in its entirety that is registered rather than different locations or parts of the club. When a club is registered under the 1904 Act, there is no delineation of what is the bar area or areas where alcohol can be sold. There are no maps or plans that the Valuation Office could use that describe the area or limits of the bar. Even where a club has premises in one location it is not possible to say that one set of premises is registered and another set is not registered.

If the word "registered" was used and the Bill was enacted, all the club's premises would be excluded from the definition of "community hall" and registered clubs would be in exactly the same position as they are now. If an exemption from valuation were granted on the physical description of the bar part of clubhouse premises how could this distinction be made and sustained in a way that would not be open to possible abuse by seeking to narrowly define the bar or that would blur the lines between truly community-based sports club facilities and those of professional sports clubs and commercial stadiums and other commercial entities.

Local government funding is dependent on having a sustainable and fair valuation and rating system. Any widening of the definition of exempted premises, no matter how well motivated, that might lead to others which could afford to pay commercial rates being exempted or partially exempted, would be unfair to genuine community-based clubs and ratepayers generally, and unsustainable as regards local government funding.

I also want to ensure that our current treatment of sports clubs from a rateability point of view is not endangered in any attempt to improve it a little further. The existing definition, as interpreted by the Valuation Office, allows many sports clubs, local GAA clubs, etc., to be exempted completely from rates. As their facilities are often made available for use by people in their locality for social and recreational purposes, the premises of these clubs are deemed to fit within the definition of a community hall. The current definition therefore works for many sports clubs that do not have a bar. This contrasts with, for example, the situation in Northern Ireland where the entire club facility, whether licensed or not, is rateable including the outdoor playing surfaces.

The purely sporting parts of the facility can get an 80% reduction. This regime would not be welcomed by those clubs that do not have a bar facility. It is important for the sports clubs that enjoy the current exemption that nothing be done that could jeopardise their position. Were the amendment proposed technically feasible, it would make a mockery of the definition of "community hall" as what Members would be trying to exempt as community halls would be the ancillary club facilities, the changing rooms etc. Where might this leave those clubs that benefit from the interpretation, were its general use challenged? I would not wish to see endangered the current interpretation, as it is working for the benefit of many sports clubs.

It is worth noting again that the land developed for sport such as playing pitches, tennis courts and golf courses is exempt from valuation regardless of whether the club is registered. I also understand the manner in which clubs are valued for rates purposes differs from the valuation of licensed premises. This is based partly on the Registration of Clubs (Ireland) Act, which is more restrictive on who can be served alcohol. While I am not an expert on valuation, were sports clubs with a bar to be valued in the same way as licensed premises, many then would have a much higher valuation, regardless of whether the non-commercial premises were included in the valuation. Very few clubs pay more in rates than the bars in their own locality. The regime that currently is in place favours sports clubs as a rule. It recognises that voluntary community-based sports clubs, with or without a bar facility, seek to promote and fund social activity on a not-for-profit basis for their members. It strikes a balance between the needs of community sports clubs and those of commercial sporting facilities and licensed commercial premises, while contributing to a sustainable source of funding for local authorities that must provide essential local services. Any effort made to improve that position must be considered carefully to ensure it does not have the opposite effect to that intended. Each club must consider its rates bill from a commercial standpoint. If a club has a bar, it is aware the bar will not be exempted, as this would clearly be inequitable to licenceholders operating public houses and to other parts of the hospitality sector. If the business the club transacts in its bar is limited, it may not be worth maintaining a bar when all costs, including rates, are taken into account. If it reaches this conclusion it can choose not to renew its registration under the Registration of Clubs (Ireland) Act and seek to qualify for an exemption under the definition of a community hall.

The third issue I wish to have addressed on Committee Stage is the impact any change will have on licensed competitors. The exclusion of clubs that have a bar from the definition of a community hall makes sense, as many clubs run their bar and function facilities in as professional a manner as licensed pubs or hotels. It would not be fair to licenceholders were these clubs fully exempted from rates. I note the Private Members' Bill is not proposing that clubs with a bar should get a complete exemption from rates. I believe the Deputy appreciates that his amendment sits in a middle ground between equity with the licensed trade on the one side and the position of clubs without a bar that are completely exempt on the other. He is trying to improve marginally the position of those clubs with a bar without upsetting the position of commercial licenceholders. This is a difficult task that is complicated by the other legislation in this area. The licensed trade should be given an opportunity to make its position known to the aforementioned committee on any proposed changes.

The argument will be and has been made that the Government should be supporting sports clubs and not penalising them by imposing commercial rates. However, the Government provides significant support for sport locally and nationally. Using rates exemptions to support any category of organisation is neither transparent nor targeted and better policy interventions are available and used to support sport. As outlined above, the Valuation Act 2001 provides a range of exemptions for sport including the exemption of land developed for sport and the exemption that is there for clubs that do not have a bar. The exemptions that are provided for currently are close to what is desired under the current licensing and club registration laws but I am interested in ascertaining whether alternative workable and sustainable solutions can be brought forward on Committee Stage that would respect the benefits of the current regime and the licensed trade with which many clubs compete.

In conclusion, I wish to inform Members that the Valuation Amendment (No. 2) Bill 2012 will return on Committee Stage to the Seanad shortly, probably after rather than before the summer break. The Committee Stage amendments have been drafted and at present, there are no proposed Committee Stage changes to the definition of "community hall" in the Bill for the reasons outlined earlier.

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