Pádraic McCormack (Galway West, Fine Gael)
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Question 46: To ask the Minister for the Environment, Heritage and Local Government if he is satisfied that the level of local government funding is adequate to meet the increased responsibilities of local authorities, the increase in population as shown in Census 2006 and the increase in the level of housing due to the huge increase in construction activity in recent years; and if he will make a statement on the matter. [42879/06]

Dick Roche (Wicklow, Fianna Fail)
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This question from Deputy McCormack touches on both capital and current expenditure so I shall deal with both. The Exchequer capital provision for mainstream capital programmes funded through my Department and administered by local authorities will amount to €1,976 million in 2007 representing a year on year increase of 7%. There will be some upward adjustment, when I mention non-national roads. When account is taken of the capital provisions for national roads, funded through the NRA, the Exchequer capital funding to local authorities in 2007 rises to €3,451 million, an increase of 8% over 2006. That is significant on the capital side.

Funding for 2007 to local authorities, through general purpose grants from the local government fund, will continue the strong trend of increasing central Government support for the local government sector. Yesterday I announced the allocation of almost €958 million to local authorities for 2007, increasing the level of general purpose grants by 8% over the final allocation for 2006. The 2007 allocations figure represents an increase 2.8 times the initial allocation provided in 1997. The allocation includes an additional €10 million to certain local authorities for additional operational costs associated with new water services infrastructure, which will be distributed shortly. Deputy McCormack will be aware that some local authorities are finding it difficult to make the transition from the full capitalisation of current costs and I will provide relief for them in that regard.

In total, the increase in funding is five times greater than the level of inflation, which was about 35%, between 1997 and the end of this year. This funding will assist local authorities in framing realistic and reasonable budgets in the statutory time period available to them to complete their budgetary process. Further allocations will be made to local authorities in January for non-national roads and local improvement schemes. These allocations will also show an increase on the allocation of €558 million provided for 2006.

The Government has provided unprecedented increases in funding to local authorities since 1997. I am satisfied that with our commitment to local government and increased income generated from the greatly strengthened commercial base supported by the Government's successful economic policies, local authorities are in a very good position to respond to the public's need for quality services. In allocating funding for 2007, I have taken into account the cost to each authority of providing its services, and factors including population increases and the income from local sources.

Additional Information not given on the floor of the House.

Local authorities have also benefited from substantial income from development levies, currently bringing in over €500 million per annum, as well as buoyancy in their rates' base in line with general business growth in the economy brought about by sound national economic policies. The adoption of a budget is one of the most important reserved functions conferred on local authorities as it underpins their financial business for the following year. While I have no direct function in budgetary decision making at local level, I have urged local authorities to continue to exercise appropriate restraint in setting any increases in commercial rates and charges. This is important to the long-term viability and competitiveness of commercial operations and to the overall competitiveness of the economy. Local authorities responded positively this year to my request in this regard and increases in rates and charges for 2006 were generally of a lower order than in previous years.

Current expenditure in the local government sector in 2007 is likely to be some €4.5 billion. Within this quantum of expenditure there is scope for efficiencies, innovation and further steps to ensure greater value for money. Elected members should examine their draft budget closely to ensure that every effort is made to get the maximum value for the expenditure proposed.

Pádraic McCormack (Galway West, Fine Gael)
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I accept what the Minister is saying to the effect that funds to local government have increased. He quoted almost a 7% increase in funds this year, but the cost to local authorities of fulfilling their duties has greatly increased also. They are now responsible for many more services than previously. The Minister mentioned funds for national primary and national secondary roads. I assume he realises that in the eastern and southern regions, as regards Cohesion and Structural Funds, six times more is spent than in the BMW region. There is clear discrimination against the BMW region as regards the amount of funds being spent on infrastructural projects. Recent figures showed that about six times more was being spent, despite the fact that it was the BMW region that helped Ireland qualify for the higher level of grants the last time, because the GNP was less than 90% of the European average.

Will the Minister explain, despite what he says about the 7% increase, why local authorities are still charging development fees and setting up management companies? The householder is paying for this all the time. Despite the fact that the Minister gave me genuine assurances in the House more than six months ago that he would instruct local authorities to discontinue placing conditions in planning permissions for management fees, they are still doing this. I should like him to look into that again.

Dick Roche (Wicklow, Fianna Fail)
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I am grateful to the Deputy for that. If he wants to let me have particular details of any local authority which is operating in the manner he has outlined, I shall have the matter investigated. I am sure the Deputy is sincere in his assertion.

The increased funding for local authorities is five times higher than the rate of inflation over the past ten years, and that is a very significant increase. A question has been tabled for later on development charges in general, but there are absolutely phenomenal amounts of money flowing into the coffers of local authorities. The Deputy touched on the issue of the spend on non-national roads. The national road spend comes under the auspices of the NRA. He has a point in that regard. It is disappointing that as the Exchequer, under a number of different Administrations over the past decade, increased the resources it made available to local authorities for non-national roads, councils have cut the proportion of local funds they are putting into non-national roads. I have published some details on the website because it is important public representatives know the facts in this regard.

It is simply not acceptable that as central Exchequer funding for non-national roads rises, the proportion of funding from some local authorities falls. Ultimately however, this is within the control of local councils.

Pádraic McCormack (Galway West, Fine Gael)
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I have a supplementary question. If the Minister is giving this money to local authorities, why are there higher charges for water rates and development fees? Why are local authorities' commercial rates rising every year? Why are local authorities unable to balance their budgets, even with the 7% increase approved by the Minister, and still must impose such additional costs on the householders and business communities within their localities?

Dick Roche (Wicklow, Fianna Fail)
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The Deputy is aware that last year saw relatively moderate rate increases nationwide and one local authority — Limerick City Council if I recall correctly — cut its rates for the first time for a long period. The circular letter I will issue this week to local authorities will ask them to exercise caution regarding rate increases. However, the gross rates figures achieved by local authorities reflect a considerable buoyancy in the commercial sector. The Deputy should note there are approximately 250,000 more small and medium sized companies than was the case and consequently, the rates yield is significant.

The Deputy is correct as this illustrates that tighter control within local authorities will certainly squeeze out more value for money. I made an announcement yesterday to the effect that I would make significant changes regarding audit committees within local authorities, to allow them to bring in expertise. A point made by councillors from across the political spectrum is that they find it increasingly difficult to come to grips with the estimates as presented. The latter are frequently described as being impenetrable and frequently are so. I want this to change because, like the Deputy, I want value for money in local government.

Catherine Murphy (Kildare North, Independent)
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Question 47: To ask the Minister for the Environment, Heritage and Local Government if he will seek an early review of local authority development contribution schemes; if so, when that will occur; the amount that has been collected by each local authority since the new schemes were adopted; if he has given consideration to the wide variation in the amounts levied per dwelling; if so, the impact this has had on the cost of house prices; and if he will make a statement on the matter. [42633/06]

Dick Roche (Wicklow, Fianna Fail)
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This issue touches on the point raised by Deputy McCormack's supplementary question. Prior to the enactment of the Planning and Development Act 2000, planning authorities could require payment of a development contribution as a condition of a planning permission on a discretionary basis. From 2004, in order to introduce transparency and openness to the system, each local authority was required to adopt a development contribution scheme stating the basis for determining the contributions to be paid in respect of public infrastructure and facilities in its area and indicating the contribution to be paid for different types of infrastructure.

Development contribution schemes are adopted by the democratically elected members of the individual planning authorities. They are reserved functions and it is a matter for councillors in each locality to decide democratically what the scale will be.

I consider the new system that was endorsed by the Oireachtas and which helps to ensure contributions are levied appropriately across all sectors of development to be fair and transparent. The question is asked as to why there are significant differences between localities. As development contributions constitute one of the fundamental sources of financing for infrastructure and underpin the facilities required in particular areas, it is inevitable there will be variation in development contribution rates.

However, in circular letter PD 4/2003 my Department advised planning authorities that they should be mindful of the policies adopted by other authorities in their immediate area in respect of setting the level of development charges. Planning authorities were also advised in the aforementioned circular that while it is expected that developers should make an appropriate contribution towards the costs of public infrastructure, care should be taken to avoid development contributions that are excessively high. Deputy McCormack's supplementary question touched on this point. My Department also has the opportunity to comment on draft schemes before they are adopted and has so done.

Circular letter PD 4/2003 also stated it would be advisable to review the scheme at two to three year intervals, where the scheme is adopted for a longer period. The Department has established an interdepartmental committee to consider issues raised by different interests regarding development contributions schemes. There have been some complaints in this regard.

As previously noted, since the introduction of the planning code paying a development contribution has been a basic cost for developers, which is payable in advance of the start of construction. There is no evidence that development contributions have had the effect of increasing the final price charged by developers, as is sometimes suggested. While the tabular statement is too lengthy to be read in the House, the Deputy will find the figures staggering. Last year, the amount collected by planning authorities in development contributions came to €519.4 million.

I will be interested in the months ahead to ascertain how these funds will be spent. The circular letter issued to local authorities has asked them to ensure the local councillors, as they enter the estimates process, are aware of the amount of money being collected. Based on returns made for the annual planning statistics, in 2004 the figure in development levies came to €337 million, which rose to €519.4 million last year. Consequently, any suggestion that local authorities are short of funding for the types of services all members wish to see them provide deserves close scrutiny.

Additional information not given on the floor of the House.

The table below provides a breakdown of these figures by planning authority.

Catherine Murphy (Kildare North, Independent)
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I voted for the scheme in Kildare and sought some ring-fencing in order that councillors would have some control over it. It is obvious that in seeking local contributions from any capital schemes, the Department of the Environment, Heritage and Local Government is one of the drivers of the final extent of the levies. There is no shortage of projects on which money should be spent. Indeed, a considerable amount was excluded from the Kildare scheme because it would not have been sustainable.

However, the burden has been shifted from the Department of the Environment, Heritage and Local Government to local authorities. Although much money is being collected, some local authorities are in significant debt. I received a parliamentary reply from the Minister regarding capital and current debts as of last year and the amount came to €3.5 billion. Apart from a major capital debt, Kildare County Council has an additional overdraft of €25 million.

The jury is out as to whether levies have an impact on the price of houses. I will provide one example with which I believe the Minister will agree. In a development which was carried out in two phases, the price of a first phase apartment was €350,000. However, by the time the second phase was being sold, the price of an identical apartment with the same development levies and planning permission had risen to €500,000.

Last night's "Prime Time Investigates" programme demonstrated that unscrupulous auctioneers, valuers and estate agents have as much of a role in driving up prices as do development contributions. While I am unsure whether this is a cause for concern for the Minister, there can be variations in house type, as opposed to the amount of contributions paid. In the case of County Kildare, a large number of apartments are being constructed——

Séamus Pattison (Carlow-Kilkenny, Labour)
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The Deputy should ask a question.

Catherine Murphy (Kildare North, Independent)
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——for which there is a lower level of contribution. Such issues must be considered because apartments rather than houses are being built under the Part V provisions. Frequently, they are not the best solution in family situations.

Dick Roche (Wicklow, Fianna Fail)
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At the outset, the Deputy noted she had voted for development contributions in County Kildare. She was correct in so doing because development contributions are meant to deliver value on the ground. She also mentioned the idea they should be ring-fenced, which is also appropriate. I have no issues in this regard. However, I wish to see greater transparency in order that councillors who enter the estimates process know exactly what money is on hand.

The Deputy also referred to an issue that is outside the scope of this question, namely to the treasury management or fund management capacity of individual local authorities. I find it difficult to understand the reason some local authorities run substantial overdrafts on schemes when, on investigation of the issue, one discovers the existence of draw-downs and a range of other issues. Perhaps the audit committees to which I have referred will be able to deal with this matter.

I accept the Deputy's other point that undoubtedly, there is unscrupulous profit taking. I know of a case in my constituency in which two housing estates were for sale. When the first estate sold out, the houses in the other estate immediately rose in price by €50,000. As for the issue regarding public funds and the control of development levies, the latter are now well in excess of €500 million and are heading for €600 million this year. This provides a significant fillip to local authorities and is one reason I become extremely impatient when local authorities state they lack money to install a footpath as they have imposed levies to do precisely that. This issue must be driven at both local and national levels and I am highly conscious of the value for money points raised by the Deputy.

Catherine Murphy (Kildare North, Independent)
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On the Minister's point about the funds available to local authorities, he spoke of the development levies being part of the budget process. The budget process relates to the revenue account rather than the capital account. In his circular letter of 2004, the Minister specifically excluded the use of development levies. Where is the relevance there?

Dick Roche (Wicklow, Fianna Fail)
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The relevance is that many of the activities for which local authorities now return the excuse to Deputy Murphy, me and every other public representative that they do not have funds are by their nature capital activities. Deputy Murphy correctly stated that local authorities cannot use the development levies. She mentioned that they are ring-fenced in Kildare, and properly so. They cannot use for current purposes developmental levies which were incurred for capital purposes because that would be simply unacceptable, but they can use them for all sorts of activities, for example, new roads, car parking, specific public traffic infrastructure in their own areas and specific land acquisition. They have used them, for example, to create certain facilities in individual areas.

I need and am looking for far more transparency for the people. The councillors have had to make the brave decision to introduce a levy scheme. They should have a clear account of where the levy scheme money is going and all too frequently that has not been the case. Councillors of all parties and none, from many different councils, have told me that they want to see the system more transparent. That is why I am introducing additional audit committees and will provide additional resources and supports for that by way of regulation in the new year.