John Paul Phelan (Carlow-Kilkenny, Fine Gael) | Oireachtas source

I thank Deputy Ó Broin for his very pertinent question. In the past four years, since 2015, the revenue of local authorities has increased by 25%, from €4 billion to €5 billion. I suspect it is a much bigger figure than is widely known. This mainly comprises income from goods and services, commercial rates, Government grants and local property tax.

Between 2015 and 2019, Irish Water was not liable for commercial rates and approximately €47 million per annum was paid to local authorities to compensate them for the water services-related rates income they would have previously received. The local government sector itself, through the CCMA, then sought to have Irish Water globally valued and that process finished recently. Having regard to a recommendation from that sector that the exemption be removed, commercial rates will be imposed instead of the compensation that existed since 2015. Irish Water will pay commercial rates directly to individual local authorities, following the global valuation process undertaken by the Commissioner of Valuation, in a similar arrangement as applies to other utilities. The majority of local authorities will see an increase in their rates income arising from this process.

Of course, this is just one of a number of variables that feed into local authority budgets. For example, there have also been revaluations of other utilities and all of the local authorities likely to lose rates income from the Irish Water valuation would be likely to see their rates income increase from the ESB revaluation. In addition, funding is made available from the Local Government Fund, LGF, and Exchequer funding of €156 million, which is being made available through the LGF on a like-for-like basis, will see local authorities receive €23 million more in Exchequer funding in 2020 when compared to 2019.

The Department has kept the anticipated financial impact of the changed approach to the rating of Irish Water under review. Senior officials have liaised directly with sectoral representatives, including in the most impacted authorities, some of which the Deputy has referred to. Taking account of other expected changes in incomes and the financial positions, Waterford City and County Council and Wicklow County Council were identified as facing significant challenges and did not have other sources of income to offset the loss. For that reason the Minister, Deputy Eoghan Murphy and I agreed to a once-off compensatory payment in both of those cases.

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