Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Question 107: To ask the Minister for the Environment, Heritage and Local Government if he will make a statement on the financial position of the local authorities for 2009; his plans to improve local government funding in the context of the White Paper on local government reform; and if he will make a statement on the matter. [36114/09]

John Gormley (Dublin South East, Green Party)
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Local authorities have budgeted to spend some €11 billion in 2009 between current and capital expenditure. The capital income is funded mainly through grants, borrowing and other capital income sources. Current expenditure is funded from specific grants, commercial rates, income from goods and services and general purpose grants. I am providing some €905.2 million in general purpose grants from the local government fund to local authorities for 2009. These grants are my contribution to meet the difference between the cost to local authorities of providing an acceptable level of day to day services and the income available to them from local sources and from specific grants. It is a matter for each local authority to prioritise its spending, within the resources available to it, across the range of services it provides.

The Government decided to broaden the revenue base of local authorities by introducing a charge on all non-principal private residences. I consider this to be a very important development in providing local authorities with a new source of local revenue and one which will reduce their dependency on central funding.

Local authorities are not immune to the effects of the downturn in the economy. However, while there are pressures on resources at all levels, local authorities are required to introduce efficiencies where possible and to prioritise their expenditure to focus on essential services and to maximise the use of all resources available to them. I intend to advance the White Paper on local government later this year following, in particular, Government consideration of local government financing in light of the report of the Commission on Taxation and the commitments included in the renewed programme for Government.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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The Minister is aware that the debt of local government financing as of 31 December 2008 is €4.9 billion, which has led to many local authorities being in a serious financial position. A programme for Government review was agreed by the Minister's party and Fianna Fáil last Saturday. On 30 September the Minister stated that we cannot have a document that is not costed; it must be costed and it will be costed. What are the costs associated with the measures that will assist local government bodies to meet their financial targets over 2010 and 2011?

John Gormley (Dublin South East, Green Party)
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The Deputy is aware that when I spoke about costing, it was in the context of a forthcoming budget. The budget provides the costings for a programme for Government. The programme is simply a series of political commitments but the budget puts a financial shape on those commitments.

With regard to the programme for Government, we have considered a number of issues relating to the financing of local government. As I have always stated, it is our intention to broaden the revenue base for local authorities. We operate a system which, in my view, is unsustainable in the long term. The difficulties relating to it date back to 1977 and we are still trying to recover from them.

We have already begun the process of introducing reforms to broaden the revenue base. There are a number of steps in this regard. As already stated, I have introduced a tax on second homes. I would like to examine - this is included in the new programme for Government - the idea of a site value tax. In addition, we want to consider introducing some form of a system of water rates that will be based on allocation or metering. A capital investment will be required in this regard. The process of reform will be slow and difficult. There must be a political commitment to introduce the reforms to which I refer, and we must not shy away from the difficult choices to which I refer.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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As the Minister stated, the programme for Government refers to a site value tax, water charges and extra local government taxation. Which of these measures does he intend to prioritise for 2010 in the context of local government finances, particularly as there will be an 8% reduction in the local government fund next year? What measures will the Minister prioritise in order to ensure the debts of local authorities can be serviced and their current costs met?

John Gormley (Dublin South East, Green Party)
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A two-pronged approach is required in this regard. In the first instance, we must consider a number of expenditure cuts. I am sure the Deputy will agree that it also will be necessary to reform the public service. It is common knowledge that, unlike the boom years, there is not a great deal of activity in planning departments at present. I am obliged to ask myself what these staff are doing at present. There are demarcation problems in respect of the public service but I would like a situation to develop whereby it would be possible to move people from the public service into the Civil Service. I have tried to encourage some of the planners in the departments to which I refer to assist An Bord Pleanála in clearing its backlog. Therefore, the approach I am advocating involves obtaining real public service reform and examining the introduction of new revenue-raising measures.

I cannot state for certain whether we are in a position to introduce any form of water taxation. In light of the logistics involved and the capital investment required to put in place a system of water metering, it would be difficult to see it being introduced in 2010.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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In the context of the programme for Government and the Minister's plans to deal with the financial issues relating to local government, will he indicate the income that is likely to be generated from the introduction of water charges and a site value tax?

John Gormley (Dublin South East, Green Party)
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I have asked my Department to prepare scoping documents in respect of both matters. The process relating to introducing water meters into people's houses would be both extensive and complex. It will be some time before I can make available to the Deputy a scoping paper on that matter. However, I will keep him well informed of progress.

It will take a great deal of time to introduce a site value tax. As the Commission on Taxation recognised, this will prove to be an extremely tax. I am of the view that it will take up to two years to obtain the necessary valuations. We must obtain those valuations before we can even consider introducing such a tax.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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So nothing is going to be done.