Brian Stanley (Laois-Offaly, Sinn Fein) | Oireachtas source

I welcome that we have a Bill, however late and imperfect. The system is from the 1800s and I have had many difficulties with it as a public representative, even before I came near this building, because of the problems experienced by constituents. It is clear that something does need to be done with rates, and this legislation represents an attempt by the Government to do this. It was originally introduced in the Seanad with the support of the Minister and we have seen a number of other proposals from Government and Opposition Members on the issue over the past two years.

I was happy to support the proposal on rateable valuations for community and sports organisations. We have all raised the issue of excluding parts of these properties other than bars from being subject to rates. Unfortunately, although the Government did not oppose the First Reading of an Opposition Bill, nothing has been done subsequently or in this Bill to address the case of premises owned by such organisations. We must make the issue clear in this Bill but the changes to the definition of charitable organisations included in section 2 do not address the problem in question.

There are other issues raised by this Bill which have been highlighted by a number of groups and which will need to be addressed through amendment if it proceeds to Committee Stage. There is clearly an urgent need to address the rates issue, as it has not been looked at for a number of years. It has been claimed by people involved with small businesses in particular that the failure to reassess rates during the recent downturn proved fatal to a sizeable number of small businesses which were unable to pay rates from a declining income. The current regime under which valuations are made dates back to 2002 and originates in the system from the 1800s. That was before the massive financial collapse, which led to a consequent collapse in incomes for many commercial businesses nationwide. At present there is no facility to provide for revision of a property’s rateable valuation based on those downward movements in values.

This is something I have raised before in the context of legacy rates, which need to be addressed. These are hangovers from previous occupiers and there is a need to assess new businesses on the basis of their own viability rather than on what might have been the case with previous occupiers. The fact that many premises were and are empty proves that rates and rents continue to present a massive obstacle in the way of start-up enterprises. The consequences of that can be seen in the many empty premises that blight the streets, towns and villages of the country. We can see it right around the State, with the commercial hearts of towns lying derelict, despite the efforts of tidy towns committees or surviving businesses. In Laois, in towns and villages like Mountmellick, Mountrath, Abbeyleix, Rathdowney, the formerly vibrant area of Portarlington, Stradbally and Ballinakill, there are sections of streets closed down. I know rates are not the only problem. It is welcome that the Bill has provision for material change in circumstances, although we may need to amend the proposal to improve it. If a licence is gone from a public house, the premises would be worth a fraction of the value - if it was ever worth it - from the boom. That changes everything. The old AIB premises in Mountrath is worth a small fraction now of what it was worth a number of years ago. There are many other examples throughout the county. In Portarlington and other towns, the nature of what is happening and what can operate in the premises has changed.

I have mentioned Laois towns like Mountmellick, Portarlington, Mountrath and Rathdowney that have a section of a street that lies vacant. Surely it would be better for the local authority, the community and the local economy, which is part of the national economy, if we could get some income from those properties which now lie vacant. There was an earlier reference to a business incentive scheme in Laois and I proposed a similar scheme 12 years ago. I was nearly devoured at that stage by the colleagues of people who are now lauding that scheme. There could be an incentive provided for starting new businesses and although there is an argument that existing businesses could be displaced, there are ways of dealing with such issues. Laois County Council has introduced an innovative scheme with grants instead of rate reductions.

There is no reason that there cannot be a system for towns such as Mountmellick, Rathdowney, Mountrath or the other towns I mentioned to provide the incentive of a rates reduction for a new business that is not displacing or challenging an existing business providing the same service in the same area. It could be a gradual scale of 25% of the rates in the first year, 50% in the second year and 75% in the third year. We have done something similar for getting people back into employment and there has been some success with it. It has not always been successful, but we do not have success with everything. There is no single solution to this, but such an incentive should form part of the package for trying to get town and village centres revitalised and inhabited again.

It is startling to drive through, not to mind walk around, towns throughout the State. In Laois, for example, it is startling to count the number of vacant premises as one walks around the towns. Only a handful of businesses are now operating on O'Connell Square in the centre of Mountmellick, where previously there were dozens of businesses. There is also the issue of getting people back to living in town centres. That must be part of the solution as well. We must make it fashionable again to live in town centres and to use the space over shops. Where there are existing businesses or shop units - it might be a Centra or a Spar - one regularly sees that the storeys above are derelict or semi-derelict. That does not augur well for the future. We must consider that as part of an overall package. The Laois scheme is an effort by Laois County Council to do something about all of that. However, it is also necessary that the Government and the Departments of Finance and Environment, Community and Local Government examine issues such as rates.

I must also mention the issue of upward only rent reviews, and this is not an attempt to head-butt the Minister on the matter. It is a problem. It is lunacy to have a situation where commercial rents can only go upwards. Imagine trying to run a business on the basis that something can only go upwards in price and that one can never reduce the price of something on the shelf. No business could operate like that. We are talking about commercial realities and the world of capitalism here. It is outside this building. When one walks onto Kildare Street one is into that world. We must try to deal with this issue.

Spokespersons for the Government have said there is a constitutional impediment. I have heard that said in respect of many things over the last 30 years and, to be honest, listening to it has put grey hairs on my head. I am extremely concerned about this. If there is an impediment, why not change that clause in the Constitution? We are changing the Constitution to give a young person the right to become President. I support that, but it will hardly shake the world. This is a far more important issue for this Government to address, but it has failed to do so. The previous Government also failed to address it so the current Government inherited the problem. The two issues of rates based on the real value of the property and upward only rents must form part of a package.

We repeatedly hear lectures about enterprise. Our party wishes to see businesses survive and develop. We want to give people a leg up, particularly people in small businesses. Everybody is aware of the statistics regarding the number of people employed by small business. Members of this House have a responsibility to deal with the rent issue. We cannot simply doddle along through the Government's term and leave it for the next Government to tackle. The attitude is that the five years are nearly over so the Government cannot do it. Somebody must grasp this issue. I appeal to the Government to do it, given that it has approximately 14 months left in office so it has the opportunity. Dealing with this issue would leave a far greater legacy, particularly for regional development and for town centres. I have given the example of the towns in Laois. The problem of upward only rents is having a huge effect on the town of Portlaoise, as is the rigidity of the rates scheme.

We are supposed to be experiencing a significant economic upturn, or at least the beginnings of such an upturn. I hope that proves to be the case, but the fact that new businesses are still being forced to close their doors within a short period of starting up is worrying. In that context, redressing the problem with rates is important but I am not confident this Bill does enough to do that. We must ensure that we can have an impact. The Government's record in respect of rent reviews is not encouraging with regard to creating the conditions where start-up enterprises have a better chance of thriving without having to set aside a huge chunk of their income to pay rents which are often arbitrarily increased. These are the two major issues that continue to be raised by small businesses.

The consequences of failing to alleviate the burden on small businesses can be seen in the many premises that remain empty throughout the country. Even in Dublin, and close to Leinster House which is in the highest value area of the city, we can see premises that remain unused or premises where new businesses have opened in the last year or two but closed again within a short period. Many of those business owners claim that they would have had a viable business but they were unable to survive due to the massive burden of rates and rents.

With regard to the provision in section 4 relating to the exemption of State property for the purposes of rates, how does this relate to Irish Water? Irish Water received an exemption. First, the Government took a bill of €500 million back from Irish Water and handed it to Joe and Mary public by giving it to the Minister for Finance, Deputy Noonan. It related to the money owed to the Housing Finance Agency for water services. The Government also drew a line through a little over €59 million in rates this year. Irish Water paid over €40 million last year but this year it will pay nothing. As far as I am aware, it is the only commercial semi-State company that is not paying rates. Bord na Móna, Coillte and the ESB are substantial ratepayers. They make a substantial contribution to Laois County Council because they have headquarters or branches in County Laois.

The sleight of hand regarding Irish Water has made it rates exempt. That has been done to improve its balance sheet. It is part of the voodoo economics the Government has engaged in to make Irish Water look right for EUROSTAT and to keep as much as possible off-balance sheet. Will Irish Water be exempt forever? Is it just for this year or will it enjoy the same privilege of not having to pay rates next year? Again, the taxpayer will pick up the tab.

Section 6 provides for the appointment of a person who is not an officer of the Commissioner of Valuation or attached to the Valuation Tribunal to carry out valuations. There must be a clearer definition of who that will be. Is it proposed that such an appointee might come from a private company engaged in the property sector? Will we outsource this to the agents of developers? This proposed outsourcing has serious implications. It would not be a healthy development and there must be a clearer explanation of who it is proposed might assume such an important role. If it is a local valuer, does the Minister know how many auctioneers and valuers there are in the country? One cannot throw a stone without hitting one, given that so many auctioneers and valuers licences were issued over the years. I am very concerned about somebody carrying out that role on behalf of the Government and of the taxpayer. Self assessment for rates has been suggested. We have done it for local property tax, LPT, so I cannot see why it cannot be done for rates. It has also been used for other forms of taxation. However, to outsource this to companies and people who might have a far different interest from the people paying the rates is very worrying.

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