Finian McGrath (Dublin North Central, Independent) | Oireachtas source

I am grateful for the opportunity to speak on the Valuation (Amendment) (No. 2) Bill. I, like many of my colleagues, welcome the debate. We all need to deal with valuation in the context of a modern and changing economic worry. Land and property must be managed in such a way that broader society does not suffer and people with small business who want to hire a few extra staff are not hammered by commercial rates. We need to wake up to these harsh realities.

I will come back to deal with these matters later in the legislative process.

I welcome the Valuation (Amendment) (No. 2) Bill 2012 in so far as it seeks to introduce a number of measures to speed up the valuation process. We have to deal with the changing situation. In addition, the Bill introduces a number of other changes that reflect the lessons learned over the past decade from the operation of the Valuation Act 2001. This debate is also about the current valuation system, the revaluation process and the implications of the changes that this Bill proposes to introduce. That is why it is important for us to get the broader debate right.

Over the years, a number of councils have had difficulties collecting commercial rates. According to the information available to us at the moment, which relates to 2010, the average amount collected in that year was 77.7% of the total due. This was down from 82.8% in 2009. I believe the county councils in Donegal, Waterford and Louth and the city councils in Galway and Limerick had the lowest collection rates. Between 61% and 65% of the total due was collected in those areas. Limerick County Council had the highest collection rate, with 90% of rates due collected in 2010. Many councils cited the poor economic conditions and the lack of access to credit for businesses as reasons for their low collection rates.

We all understand the commercial reality for many people, particularly during the bad few years when the economy was being hammered, situations were really getting out of control and businesses were under major pressure. We have to face the reality when it comes to commercial rates. If an entrepreneur with a small business who employs between eight and 14 people is deciding whether to take on an extra staff member, his or her decision might be influenced by the receipt of a huge commercial rates bill of €50,000 or €60,000. I just think that is something we have to look at seriously.

A number of concerns have been expressed about the Bill before the House. The first one I would like to focus on relates to outsourcing. The Bill proposes that the Commissioner of Valuation be empowered to contract out valuations with regard to the revaluation of all properties on a valuation list. Currently, the revaluation of a property on a valuation list is done by the commissioner's office under the guidance of the Commissioner of Valuation. Section 6 of this Bill would allow this work to be outsourced to a person outside the Valuation Office. My concerns are largely based on the reality of what is actually happening out there. The argument made from some people's point of view is that outsourcing the revaluation of all property on a valuation list could speed up the process and perhaps cost less. However, I would like the Minister and the Government to look closely at the many risks that would be involved in such a change. There are concerns about risks that might be associated with outsourcing, including loss of control; differences in motivation, goals and attitudes between the internal staff and the employees of outsource companies; the viability of service providers; the quality of services; a lack of expertise; and the hidden and uncertain costs. In addition, there are possible conflicts of interest. I ask the Minister to look at the situation to ensure a bit of common sense is applied when dealing with what is going on in the world today.

The Bill removes the right to appeal a valuation decision - a revaluation or a revision - to the Commissioner of Valuation. The current procedure involves an initial decision on the valuation of a property for rates purposes. Then there is a period of consultation with the owner or occupier on this decision before a final decision is made by the Valuation Office. The owner or occupier can then appeal this final valuation to the Commissioner of Valuation. If the owner or occupier is unhappy with the commissioner's decision, he or she can appeal that decision to the Valuation Tribunal. Such a decision can only be appealed to the High Court on a point of law. The Bill proposes that appeals to the Commissioner of Valuation be removed and all appeals be moved directly to the Valuation Tribunal. This is my third concern about the legislation.

I would like to return to a broader issue that I mentioned earlier. I refer to the connection between high commercial rates and the impact on small businesses in the SME sector. I could give examples of small businesses employing seven, eight or nine people that are being hammered by high commercial rates. The most recent figures that were released in this country show they are particularly high. We need this tranche of finances. It is important to note that commercial rates are generally expected to raise at least €1.46 billion in revenue for local authorities. This is approximately one third of the overall revenue.

Business groups - I am focusing particularly on small business groups - have been calling for the rating system to be reformed to allow valuations to vary with the economic circumstances of a firm. One downside of such a change is that it could undermine the system of valuation, which is based on valuations of property in the area on a specific date. It is important that we raise these issues because they are essential.

I would like to go back again to the Bill itself. It seeks to introduce a number of measures to speed up the revaluation process - for example, by allowing this work to be outsourced, allowing it to be completed by self-assessment, removing the route of appeal to the Commissioner of Valuation on a revaluation decision, modifying slightly the scope of the property to be revalued and allowing valuations to be determined by the use of general market data coupled with statistical techniques.

On 29 January last, I asked the Minister for the Environment, Community and Local Government if he would support the introduction of the small business rate relief scheme to assist small businesses in 2015. I got this idea after I heard about a proposal that was being made by a number of people I know who are directly involved in the sector. A small business rate relief scheme could be of assistance. The Government regularly claims to be all about jobs, jobs, jobs and the economy. I think this would help to kick-start things. In his response to me, the Minister said:

Local authorities are under a statutory obligation to levy rates on any property used for commercial purposes in accordance with the details entered in the valuation lists prepared by the independent Commissioner of Valuation under the Valuation Act 2001. The levying and collection of rates are matters for each individual local authority. ... I would consider carefully any application received for a rate waiver scheme. In considering any such application, it has to be borne in mind that a waiver of rates for one class of ratepayer could unfairly impact on existing businesses in the area.

In fairness to the Minister, he went on to say he would "continue to keep commercial rates related issues under consideration". I think he needs to up his game by doing something to help the people out there who are suffering. Small businesses are coming under a great deal of pressure.

I would like to refer to a number of other changes that are being made in this legislation. It is proposed to increase the penalties for most offences under this legislation to class A fines of €5,000 from class C fines of €2,500. Interestingly enough, the fine for an ongoing breach upon summary conviction has been reduced from a daily class E fine of €500 to a daily fine of up to €300.

It is important that we look at some of the ideas and concerns that are raised in today's debate. I am glad to have had a chance to record my support for the small business sector in this State. We need to give them a leg up to ensure they can survive in the economy of the next couple of years.

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