Dáil debates

Tuesday, 13 December 2011

Local Government (Household Charge) Bill 2011 [Seanad]: Second Stage (Resumed)

 

Question again proposed: "That the Bill be now read a Second Time."

9:00 pm

Photo of Tom FlemingTom Fleming (Kerry South, Independent)
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I will carry on where I left off. I believe the household charge should be means tested at the very least. For instance, people with mortgage debt, senior citizens and disabled people should be completely exempt from this charge, but the categories proposed for exemptions do not include any of these. The proposal that the District Court be the final adjudicator in an exemption appeal is totally unacceptable. I do not think a court of law is the place for something like this to be judged. Particularly for many of our more senior citizens, who take pride in the fact that they have lived through their long years of life without ever having to go up the steps of a courthouse and appear before a judge, it would be a huge blow to have to go through this exercise to appeal the imposition of the charge.

This is another budget on top of the austerity measures that have had a severe effect on the old, the sick and low to middle-income families in particular. These people are already facing a plethora of hidden charges and taxes, and it is only now, over the past couple of days, as the budget has undergone cost analysis by several people, that the full impact is emerging. This charge will also result in a further delay to our economic recovery, as there will be less disposable income, which will lead to unemployment and have a detrimental effect on our small businesses.

The system under which the local authority is the administrator and collector of the charge is basically another means of obtaining maximum moneys for the Exchequer. It would be only right and proper if all of the moneys were made available to local authorities to deliver services to the public who will be paying into this scheme.

Photo of Thomas PringleThomas Pringle (Donegal South West, Independent)
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Normally, one says that one welcomes the opportunity to contribute to a debate on a Bill. However, in this case, I am disappointed in the Bill and totally opposed to it. In April of this year, the Technical Group tabled a Private Members' motion calling for a referendum on the EU-IMF bailout deal, which was rejected by the Government. At that time, in responding to the motion, the Taoiseach said in the Chamber that the people had had a referendum and that they had voted unanimously in favour of the formation of a Government by the Fine Gael Party and the Labour Party. The people did not vote for the Fine Gael and Labour parties to continue the policies of the Fianna Fáil Party and the Green Party, but that is what they got. There was no referendum and the people did not have their say. This Bill, when passed, will give people the opportunity to have their say. It proposes that people come forward and volunteer their registration for this tax, which equates to saying they agree with it. I call on people to exercise their mandate by refusing to register for this tax. In this way they will send a message to the Government that the tax is unfair and unworkable and that they will not sign up to pay a household tax that is being levied on them so that the Government can hand over money to bankers and failed property developers in support of an EU-IMF deal that has been imposed upon us. The people can have their say and refuse to register for it, and that will show that this tax is unworkable and that the people's real choice has been made.

Over the past number of weeks, thousands of people have attended public meetings all over the country. Many people who spoke at those meetings said that they simply could not afford to register for and pay this household tax. Even though the Government says it is less than €2 per week, people are saying clearly in public that they cannot afford it, and for that reason they will not register or pay the charge because it is a step too far for them. Although Members here can afford to pay the charge, I will stand with those people and say that we will show our displeasure by refusing to register for or pay this tax. I will stand with the people who cannot afford to pay it. There are many people all over the country, as has already been outlined in the debate here, who cannot afford to pay this tax. They are being forced to choose whether to buy food or heat their houses and they are living through the winter nights without heating because of the burden that has been placed on them to support the EU-IMF bailout. Those people are making a clear decision that they cannot afford it and they will not pay it, and I call on people who can afford it to stand with them. They can offer their friends or neighbours support by saying that they stand in opposition to this unfair tax and they will not register for it. They will send a clear message to the Government that this tax is unfair and unworkable and they will not support it.

The other reason I oppose this tax is that last week in the budget the Government cut the local government fund by €171 million and then, in this Bill, took the cowardly option of penalising local authorities by obliging them to raise €160 million. The cutting of the Local Government Fund will leave local authorities in dire financial straits due to the imposition of a tax that the Government does not have the courage to levy itself. It is forcing it on local authorities and forcing ordinary people to come forward to pay this tax. It is a step too far. It is unfair, and no amount of waivers for those in council houses or unfinished estates will make it fair. I call on everybody to support a "can't pay, won't pay" campaign. This will send a strong message that we are not supporting it and we will not pay up. We will stand together, say to the Government that this tax is unfair, and ask it to go back to the drawing board or to its masters in Europe and tell them it will not force this on the people of Ireland.

Photo of Clare DalyClare Daly (Dublin North, Socialist Party)
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As we are sitting here today and tomorrow debating this new legislation, we do so against the backdrop of the necessity for county councils around the country to set their budgets from funding that has been slashed in order to take account of this new tax on home owners. That is an absolute joke. The reason local authorities are being starved of funding is not that we have not paid our fair share of tax but rather that the Government chooses to use our taxes to pay unsecured bondholders and recapitalise banks, and refuses, patently, to ask the wealthy people at the top of society to pay their share so we can have the public services that we deserve and have paid for. Instead, it is choosing - this is a voluntary choice - to make ordinary people pay yet again. One of the messages we need to send out is that the people sitting at home can see this as an opportunity to say "Enough is enough." We cannot consider this measure in isolation from all the austerity measures and budget cuts that have been implemented over the past while.

All Members have received some heartbreaking letters over the last few days. One of the letters I received was from a young couple, both of whom have lost their jobs. They bought a house just before the recession. They cannot afford to turn on the heating so they sit dressed in jumpers, they cannot afford to pay the refuse charges so the rubbish is piling up in the back garden, they have not been out for a drink in weeks and cannot afford to buy a pair of shoes or bring the dog to the veterinarian. Yet the young woman said: "I count myself lucky that I am not disabled, elderly or sick. I cannot even begin to imagine what life is like for these people and their families if this is what life is like for us." Asking people to pay a €100 household tax on top of all the cuts and hardships they are already enduring is ridiculous, disgusting and shameful. I will not be part of it.

This is the opportunity many homeowners have sought to have their say against all the austerity that has been foisted on them over the past number of years. Unlike the universal social charge, the social welfare cuts and all the other measures which have taken money out of our pockets in the dead of night, this is something on which we have a choice. As Deputy Pringle said, thousands of people have attended meetings on this issue recently and have indicated their resolve to have their say against austerity by not paying this tax. Undoubtedly, there will be a massive campaign of civil disobedience which will make this charge uncollectible, as happened in the 1990s with the anti-water charges campaign.

I notice the Minister finds it difficult to listen to this debate, but he certainly will not find it difficult to listen to the people when they get organised on this issue. I will certainly not pay this tax, and I will not register for the tax. I will appeal to people in the community to take similar action. People realise and understand that this legislation has nothing to do with €100. The aim of the game is to open a new tier of local taxation that will see ordinary people facing bills of over €1,000 per household in the next two to three years. This tax being foisted on people's shoulders when they currently cannot make ends meet is reprehensible.

Photo of Phil HoganPhil Hogan (Minister, Department of Environment, Community and Local Government; Carlow-Kilkenny, Fine Gael)
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Where did the Deputy get the figure of €1,000?

Photo of Clare DalyClare Daly (Dublin North, Socialist Party)
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The Minister's analysts and the ESRI have said that.

Photo of Phil HoganPhil Hogan (Minister, Department of Environment, Community and Local Government; Carlow-Kilkenny, Fine Gael)
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The Deputy should not be making it up.

Photo of Clare DalyClare Daly (Dublin North, Socialist Party)
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We are on the record now so we will return to this in two years and see which one of us is right.

Photo of Phil HoganPhil Hogan (Minister, Department of Environment, Community and Local Government; Carlow-Kilkenny, Fine Gael)
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The Deputy should not be making it up.

Photo of Clare DalyClare Daly (Dublin North, Socialist Party)
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I know it will be me. This is part of a bigger agenda and anybody who doubts that need only look at the legislation before us and the penalties to be imposed on ordinary people for not registering and not paying in terms of late interest payments, class C fines, court appearances and so forth. It is really punitive legislation which is not being introduced just for this charge.

However, the Minister and the Government cannot bring everybody to court. There are 1.4 million households eligible for the charge and, at best, the Minister can bring about 5% to court. We will go into the courts and defend those people. The Judiciary is not exactly flavour of the month and the idea of its members imposing heavy sanctions on ordinary people, while not a single banker has ended up in jail, will not be tolerated. This Bill is a step too far. People have taken enough and the Minister will face an almighty battle on this issue should he not pull back from the brink.

Photo of Joan CollinsJoan Collins (Dublin South Central, People Before Profit Alliance)
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I oppose this tax, as do the thousands of people who have already attended the meetings. I have also been knocking on doors in my community and people are absolutely opposed to it. They feel it is a tax too far; it is the straw that will break the camel's back in terms of people's incomes, how they are living and how they are rearing their families.

Like every other measure in the budget, this is a regressive, unjust and unfair tax. It is a poll tax. A progressive and civilised society should operate on the basis that essential services are provided free for all and are paid for through a progressive tax system. Those with real wealth should pay the most, and those with little or nothing should be exempt. However, that has been turned on its head and those with little or nothing are enduring the biggest hit and the most wealthy are exempt. This was a recession proof budget for the wealthy in this country. It is shameful that a Government can tax ordinary people again through this double taxation. No wealth or asset tax has been imposed on the wealthy. There are no measures to make nominal taxes on their incomes effective.

This charge is the introduction of a tax that successive Governments have tried to implement over the past 30 years. This is the Minister's opportunity and he said he is determined to introduce it, at the behest of the troika. It is a Trojan horse. The Minister knows that, given that he tried to challenge my colleague. It will lead to a property tax of €600 to €700 or more in two or three years. It will be linked to a water tax of approximately the same amount. We are not talking about €2 per week, and people know it. They are not stupid. They know what happened with the bin tax. It was introduced with the propaganda that it would be only the price of a pint. This charge is being introduced at €2 per week but between the water tax and the property tax people could be facing charges of up to €1,300 per year, which is €25 per week. People know they cannot afford that.

This is another measure to impose the cost of the disastrous bank bailout on the shoulders of ordinary people. Another aspect of this tax is the preparation for the privatisation of water services. I recall when the bin tax was introduced in the Dublin City Council area in 2001. There was a barrage of propaganda about the environment. There were pictures on the television of waste being blown down the streets. It was claimed it was an environmental tax and that it was needed to change people's approach to recycling. On 16 January, Dublin City Council will be the last local authority to privatise the waste collection service. Our bin service has become a profit making commodity for companies. It is no longer a public service for people who need it. Elderly people must pay massive amounts of money to have their waste collected. The green bin will now become part of that payment and there will no longer be a question of people benefiting from recycling.

This tax will be met with massive resistance. A national campaign to encourage non-payment is up and running. Thousands have attended meetings throughout the country. The Government is expecting this because it provided for penal fines in the Bill. If a person does not register and pay by 31 March next, they could be penalised with a class C fine of up to €2,400. In addition, if the person does not reply to the letter seeking the information the Government requires, there could be another fine of €2,400. It is a most aggressive fine on ordinary people.

However, where have fines been imposed on the people who created this mess? Former Taoiseach Bertie Ahern will see €4,000 taken from his pension. What a terrible scandal. The poor man will be in dire straits, wearing rags on his back, because of the cut in his pension. Meanwhile, the Minister is willing to impose a fine of almost €2,400 on ordinary people who cannot and will not pay this regressive tax.

There will be a huge cost for the taxpayer in imposing an unjust and unpopular tax. This is equivalent to the Domesday taxes that were introduced by a tyrant many centuries ago, whereby taxing masters travelled around taking note of what people owned, including their sheep, cattle and so forth. That is exactly what the Minister is doing. He is getting people to put their names in a register so more taxes can be imposed in the future. We know what he and the Government intend to do.

This will be a hated tax. The bin tax was the start of Fianna Fáil heading for the hills and ending up in their current position. People will fight back. We are not telling them not to register and not to pay: they are telling us they will not do it. We will stand shoulder to shoulder with them. If the Minister imposes this tax, it will be the most hated ever and this will be the most hated Government along with it.

Photo of Anthony LawlorAnthony Lawlor (Kildare North, Fine Gael)
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I am pleased to speak on the Bill. I am delighted to see some of the Independent Members remaining in the House. It is unusual for them to do so, as they usually rush out after they speak.

Photo of Clare DalyClare Daly (Dublin North, Socialist Party)
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The Deputy should look at the record.

Photo of Anthony LawlorAnthony Lawlor (Kildare North, Fine Gael)
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When Deputy Daly was a young girl running around the streets of Newbridge-----

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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That is a false statement. Where are the Government Members?

Photo of Anthony LawlorAnthony Lawlor (Kildare North, Fine Gael)
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-----her parents would have paid rates.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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It is a false statement.

Photo of Anthony LawlorAnthony Lawlor (Kildare North, Fine Gael)
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Was she not from Newbridge? The people were conned in 1977 by Fianna Fáil, when Deputy Mattie McGrath was a member.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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There was some con last February. It was the con of all cons.

Photo of Anthony LawlorAnthony Lawlor (Kildare North, Fine Gael)
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They were conned in 1977 when Fianna Fáil bought an election through the removal of rates. We have been honest in what we said today. We are introducing a household charge. When the Minister introduced the Bill he said it was an interim measure until we can put in place a fair valuation system, which means that those living in large properties, the wealthy the Opposition constantly condemns, will pay a larger share of tax.

I came across a quote recently and was pleased to see it came from a book called The House Always Wins: Time to Turn the Tables. It states:

The abolition of domestic rates caused great damage to local government and real local democracy. Since 1977 local government has been funded principally from central government and with the central funding came a much greater degree of centralised control, moving democracy further and further away from the citizen.

I do not see Deputy McGuinness in the Chamber but I welcome his input.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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He is not far away.

Photo of Anthony LawlorAnthony Lawlor (Kildare North, Fine Gael)
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It is not a popular position but the reality is that domestic rates payable to local authorities make local politics serious and connect people in a direct way with their politicians. I hope Deputy McGuinness will consider voting with the Government on this Bill.

I must also criticise Sinn Féin and its criticism of the Minister. It has no problem supporting a 2.5% increase in household rates in the North, yet is strenuously voting against the Bill. Deputy Stanley tabled an amendment to introduce a new section which states, "This Act, as agreed, will be temporary in nature. It will have to be reviewed within 12 months from the date it becomes law". I hope he will agree with what the Minister introduced and that the charge is an interim measure. When proper valuations are done we will be able to introduce the Bill properly.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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We had that before.

Photo of Anthony LawlorAnthony Lawlor (Kildare North, Fine Gael)
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The NPPR payment is currently paid directly to local authorities. It is the intention of the Minister that the Local Government Management Agency would be the main collector of the household charge which would go into the local government fund. Those of us who came from local government will realise that the local government fund does not fairly distribute funding to counties. In my county, Kildare, we have been fighting hard with the Department to get proper funding for the local authority. We have a much larger population and car usage within the county. The Minister might consider allowing local authorities rather than the local government management agency to collect the charge.

The tax is being imposed on the owners of properties. Some people who own second properties are being charged the NPPR and it seems slightly unfair that they will also have to pay the household charge. The dictionary definition of a household is "A house and its occupants which are regarded as a unit." Most occupants of rented properties will not pay the charge. The Minister might consider changing that provision in the Bill.

Aside from this, I welcome the Bill. What happened in 1977 was a retrograde step for the country and local democracy.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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It was an auction. You wanted 50% at the time. The Minister will remember the auction in 1977.

Photo of Anthony LawlorAnthony Lawlor (Kildare North, Fine Gael)
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Auction politics.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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You wanted 50%.

Photo of Pat DeeringPat Deering (Carlow-Kilkenny, Fine Gael)
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Like my colleague I would also like to refer to 1977, when a Fianna Fáil Government, led by the then Minister for Economic Planning and Development, Martin O'Donoghue, wanted to buy an election and decided to eliminate household rates. Since then local government has suffered drastically. At that time the total amount collected in local rates was £78.7 million, which equates to €460 million today. If we had such an amount of money to put into local government today we would not have our current problems.

Since 1977 commercial rates have been totally unbalanced and unfair and they affect only a very small section of society. That situation has to be addressed. The household charge is a very important first step in the reform of local government which since 1977 has become totally undemocratic. Local councillors have very little power and it is essential that they get back the power they deserve.

Local councillors should be in charge of the funding they raise and should be able to allocate funding in their local areas. This is an important first step in restoring power. The reform of local government has to move onto the next level. Certain town councils have become irrelevant and their abolition is an important step.

It is amazing that Sinn Féin, which as Deputy Lawlor mentioned is notable by its absence, has not been afraid to introduce stringent cuts in the North totalling £4 billion. The household charge in the North is, on average, €1,500, compared to a proposed charge of €100 in this jurisdiction. As has been mentioned it is an interim measure for a short period of time. As Deputy Lawlor said, an equitable system will then be introduced but not at the same level as the North. The Sinn Féin Deputies, who are absent, have no problem supporting cuts in the North but it is hypocritical to criticise and vote against cuts here.

Margaret Ritchie, an SDLP MLA said

Sinn Féin's position is totally unsustainable. The Sinn Féin socialists have waved through £4 billion in cuts in Northern Ireland without as much as a whimper while pretending there is an alternative to the inevitable cuts in the South. The position of that party can be summarised thus: in the North as Green Tory and in the south it is a different story completely.

I commend the Minister for his reform policies in local government. This is an important first step and I look forward to more steps in the months to come.

10:00 pm

Photo of Dara MurphyDara Murphy (Cork North Central, Fine Gael)
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Like colleagues I also welcome the opportunity to speak on this Bill. I do not think any of us like being in the position of having to put in place charges on the people in our country. We have to look at the reality of where we are and the EU-IMF deal which we inherited from the last Government. A flat charge of €100 on households cannot be argued to be fair but the Minister has been restricted by virtue of the fact that he has to have the charge in place in 2012. I particularly welcome the ambition to make the system fairer in the future. Like some of my colleagues have said, this is the first step in a journey that Minister has started in other areas with respect to the reform of local government in our country.

Like many current and former Members of the House I come from a local authority background and had the pleasure of being chairman of my local authority a couple of years ago. It is fair to say that local government and city and county councils are very restricted by virtue of their dependence on central Government for funding and how they can secure resources. As a people and Government we must have confidence in the great talents of many of our local politicians, as well as those who work for local authorities.

They are generally people of great integrity, ambition and talents

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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We should get rid of half of them.

Photo of Phil HoganPhil Hogan (Minister, Department of Environment, Community and Local Government; Carlow-Kilkenny, Fine Gael)
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We got rid of the Deputy's county manager.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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Get rid of half of them.

Photo of Pat BreenPat Breen (Clare, Fine Gael)
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Deputy Dara Murphy should be allowed to continue, without interruption.

Photo of Dara MurphyDara Murphy (Cork North Central, Fine Gael)
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However, we must all agree that there are too many local authorities and that there is scope to reduce their number significantly by way of further mergers. Furthermore, we have too many politicians in general. I will not look across at those whom I might choose to discard; that would be a matter for the electorate. We will soon have a referendum on the abolition of the Seanad.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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Ask Fine Gael Senators what they think about that.

Photo of Phil HoganPhil Hogan (Minister, Department of Environment, Community and Local Government; Carlow-Kilkenny, Fine Gael)
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It is called courage, Mattie.

Photo of Dara MurphyDara Murphy (Cork North Central, Fine Gael)
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There is considerable scope to give more powers and fund-raising capacity to fewer local politicians. Given the size of the State, there are simply too many of them.

I strongly support the principle, evident in our policy on the provision of primary care, that the end-user should be brought as close as possible to the suppliers of services. That also applies to local government and services provided locally. I urge the Minister to continue on the path on which he is travelling, not by virtue of being forced to impose the cost of services on the people but by guaranteeing that where they do have to pay, the services they receive are of a standard that offers good value for money.

I have studied some of the figures for other OECD countries, particularly the United Kingdom and what could be described as western Europe. They show that such charges are significantly lower in Ireland than in most European countries and dramatically lower than in Northern Ireland and Britain. In many parts of Britain the charges are higher than those which apply in Northern Ireland. Deputy Deering mentioned €1,500 as being an average figure. However, it does not include the water and sewerage charge which averages out at some £300. Therefore, the charge in Northern Ireland is closer to €2,000 on average, with many households paying more than this sum.

For the same services, we are introducing a charge of €100 per annum. Nobody likes to have to pay additional charges, but this particular charge amounts to approximately half of what we pay for our television licence. The devil will be in the detail in future years. We must see evidence of improved autonomy, integrity and responsibility on the part of local authorities. People will accept this charge in time, just as they accept similar charges all over the world. If a service is good, people do not object to paying for it.

I commend the Minister for the broad range of measures he has introduced in the area of local government reform. I wish him well as he continues his endeavours in this regard.

Photo of Áine CollinsÁine Collins (Cork North West, Fine Gael)
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I welcome the opportunity to contribute to the debate on the Bill. I begin by reminding the House that the common theme that has dominated our political history in the last 30 years is the Fianna Fáil's Party's repeated treachery in seeking to buy elections, a policy that forced us into three recessions and culminated last year in that party ceding our economic sovereignty to the European Union and the IMF. In 1977 the Fianna Fáil Party proposed, as an election strategy, to abolish rates on property and tax on motor vehicles. It proved a short-term success, with the party winning a huge majority under Jack Lynch, but it soon led to the Haughey era and the recession of the 1980s. Every economist since has accepted that a tax base which excludes property tax is unsustainable and insufficiently robust in the event of an economic breakdown.

The Minister for Public Expenditure and Reform has announced that the Exchequer contribution to the local government fund will cease from 2012 and be replaced by the proceeds of the household charge. It will be of little consolation to the households that must pay the tax, but it is important that the funding of locally delivered services is placed on a sound financial footing, with a much closer alignment between the cost of providing services and the demand for those services. It is more important than ever that local authorities receive sufficient funding to ensure they can operate effectively across their range of functions and responsibilities.

As they draw up their estimates in the coming days, local authorities throughout the State face difficult choices. In particular, both local government and central government must be mindful of the need to minimise the burden on businesses which are struggling to survive and maintain jobs. In this regard, the Government must give consideration to changes to the Valuation Acts which would allow local authorities flexibility in identifying sectors under pressure. Under current legislation, they must grant a rate reduction to all ratepayers or none. A 1% to 2% reduction is of little use to small businesses but would hugely benefit large companies such as Tesco, Aldi, Lidl and other large multinationals which already enjoy the advantage of a low corporation tax rate.

Heretofore there has been an emphasis within local authorities on reductions and efficiencies to reduce costs while at the same time seeking to maintain front-line services. However, given the huge reduction in staff numbers, it is becoming increasingly difficult to strike a balance between competing demands for resources. Most taxes depend on economic activity which produced huge budget surpluses in the boom times. These surpluses were spent in expanding State services with little regard to value for money. Moreover, other taxes were reduced in order to further inflate the economy on an artificial basis. The building boom of the last decade led to increased tax revenues but undermined the real economy.

The reintroduction of a household charge was part of the deal reached by the last Government with the EU-ECB-IMF troika. It is unfortunate that the Government is forced to introduce the tax in the midst of a severe recession. Each of us here understands the difficulties it will cause for already struggling families. These adjustments should have been made during the boom years. Taxes on property introduced at the correct time would have helped us to avoid the worst effects of the building boom on the economy.

It is often stated we no longer have the tools to guide the economy since joining the eurozone. While we no longer control interest rates and devaluation policy, we do control tax policy. That is the means by which the building boom might have been controlled and deflated. Unfortunately, the opposite was done by previous Governments. With the building industry now at a standstill, it is the wrong time to introduce a property tax. However, we have no choice in the matter. The Minister for the Environment, Community and Local Government, Deputy Phil Hogan, has kept the tax to a minimum, with exemptions for those who are unable to afford it. That the building industry was allowed to run out of control in the last ten years does not mean the Government should not support its renewal on a sensible basis. Genuine builders, tradesmen and subcontractors need support. A stable building industry should be producing 6% to 7% of GDP. The Minister has recognised this by introducing several measures which will promote the industry in a sensible way and thus create jobs.

The abolition of rates had several serious effects. It meant that county and city councils had to rely on commercial rates and commercial water rates for much of their funding. This led to an undue burden being placed on industry and the agriculture sector. This would inevitably affect our competitiveness as a nation, costing jobs in the public sector. These changes were manageable in a booming economy but have a serious effect in a recession.

Local government is the basic building block of democracy. It must be close to the people and communities and responsive to their needs on a day-to-day basis. When the Fianna Fáil Party decided to abolish rates and vehicle tax, it attacked the very basis of local democracy. That funding was replaced by a central governmental grant which was gradually reduced during the years. Central government, through the Department of the Environment, Community and Local Government, controlled the purse strings and increasingly influenced the direction of local government. This inevitably led to greater centralisation and less accountability.

The Government is concerned to ensure local government services are delivered to communities in an efficient and effective manner. The Minister is examining new and more effective ways of achieving efficiencies, including the sharing of services, outsourcing and co-operation, if not amalgamation of local development groups, including enterprise boards. This reassessment and realignment will maximise the impact of investment in creating jobs at local level and delivering front-line services. A properly resourced local government sector is vital to local democracy. This legislation represents a step in that direction by affording local authorities a greater degree of financial independence. I commend the Bill to the House.

Photo of Michael MoynihanMichael Moynihan (Cork North West, Fianna Fail)
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I propose to share time with Deputy Dara Calleary.

Photo of Pat BreenPat Breen (Clare, Fine Gael)
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That is agreed.

Photo of Michael MoynihanMichael Moynihan (Cork North West, Fianna Fail)
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Before dealing with the Bill, I take the opportunity to pay tribute to a member of Cork County Council who passed away last week. Councillor Michael Donegan was a great friend of mine and a councillor of great experience having served in local government since 1978. It would be remiss of me when speaking on local government reform and the household charge not to mention him and to send our sympathies to his family and to all his friends and supporters in Milford.

We are in agreement with the principle of the Bill but we must ensure that vulnerable households, low income households, are exempted from this charge. We have been listening to history lessons from some of the speakers opposite about the abolition of rates in 1977. It might interest them to know that between 1973 and 1977, 75% of the rates were abolished by the then Labour-Fine Gael Government. Those parties promised, if elected, they would do away with the remaining 25%.

Photo of Phil HoganPhil Hogan (Minister, Department of Environment, Community and Local Government; Carlow-Kilkenny, Fine Gael)
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The car tax was not included.

Photo of Michael MoynihanMichael Moynihan (Cork North West, Fianna Fail)
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We are dealing with rates and local government reform-----

Photo of Phil HoganPhil Hogan (Minister, Department of Environment, Community and Local Government; Carlow-Kilkenny, Fine Gael)
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It was a local government funding issue.

Photo of Michael MoynihanMichael Moynihan (Cork North West, Fianna Fail)
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-----but that point was missed if there is to be a fair-----

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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I am too young to remember it.

Photo of Michael MoynihanMichael Moynihan (Cork North West, Fianna Fail)
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-----and balanced debate. We all deal with local government officials and we know they are courteous and efficient, by and large. The local authority system was established 112 years ago and long-standing practices require reform. Like my colleague, Deputy Áine Collins, I never served on a local authority. However, I contend that the abolition of the dual mandate was a mistake. The connection between national and local government was lost. Many of those who served under the dual mandate had the ability to bring issues and concerns arising in local authority meetings to the attention of the Oireachtas. The local authorities were then left adrift and the establishment of regional authorities added to the drift. The role and importance of local authorities in the daily lives of communities cannot be overstated. They provide guidance and funding to local and community groups. The proposed reform of local government must provide a connection between local and national government. The abolition of the town councils will not make any difference because they are probably the most effective local authority bodies and some town councils are progressive and bring in a balanced budget. They encourage enterprise centres and play a positive role in the life of the town. I support the commercial ratepayers in towns and those who contribute to the coffers of the local authorities. Retail centres in towns must attract the people from the hinterland so that they spend money in the towns rather in the cities. I suggest the Department should be very cautious about changing the planning regulations regarding large retail outlets. It has been demonstrated in Britain and elsewhere that these large retail outlets have caused the closure of the smaller retailers in towns. Policymakers over the years have made decisions that have resulted in small, sustainable rural communities dying out. The Minister needs to take great care to ensure those regulations do not cause the death of provincial towns and that these are protected. The legislation on household charges under discussion must ensure that the most vulnerable, those on low incomes and in receipt of social welfare, those who do not have the ability to pay, are exempt from the charge. I urge the Minister that his reform of local government should preserve the best practices of local government as well as rooting out those which are no longer suitable for this century and that any lifting of planning restrictions will not cause further suffering in small and provincial towns.

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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I welcome the opportunity to discuss local government and the household charge. I commend the Minister on his initial steps towards reform of local government, in particular, in Limerick and in Tipperary. The country has too many local authorities but the bigger problem is the existence of pseudo-local authorities, such as community groups, partnerships, county enterprise boards, county development boards, organisations acting as a local authority that are not. I commend the decision to include responsibility for the community sector in the Department of the Environment, Community and Local Government and included in the Minister's brief. I hope he will merge the two sectors together to create a streamlined process.

However, the rush to abolish town councils is slightly premature.

Photo of Phil HoganPhil Hogan (Minister, Department of Environment, Community and Local Government; Carlow-Kilkenny, Fine Gael)
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I did not abolish any yet.

Photo of Dara CallearyDara Calleary (Mayo, Fianna Fail)
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That is good. I will speak for my own town council. I do not have the emotional attachment of having served on a local authority. The programme, Better Local Government, has been criticised the length and breadth of the country and there is no doubt it has added a significant cost burden to local government. However, Ballina Town Council is one of the winners in that we now have excellent officials who are based in the town and are planning the proper development of the town, which was not previously the case. There are party divisions within the council but these are generally left at the door. The nine councillors will always work together for the good of the town. The same is true for other town councils such as in Westport where the town council has made a difference and it has acted as the development agency for the town.

I have no difficulty with this household charge because, in my view, we must think differently about local government. Forcing businesses to pay for local government, as we have done since either 1973 or 1977, depending on one's side of the argument, is wrong and is the reason we are where we are now. The Minister may be determined to cap the charge at €100 but charges are the opposite to gravity and they go up. People will be asked to pay for services which they may no longer be receiving. For instance, most councils no longer provide a refuse collection service and householders must instead pay €300 to a private operator. Urban dwellers will get water for free but rural dwellers in general must pay into the group water scheme. The roads in urban areas are well maintained but in rural areas this will become a problem due to the more severe winter weather and roads maintenance budgets are being cut. It will be difficult to explain to people what they are getting in return for this charge. I suggest that a summary of the services provided by local authorities be included with the invoices for the charge. The NPPR, non-principal private residence, scheme, is a model of how local government should operate and I presume the same model will apply in this case. People should know what services they are getting. Residents of counties Mayo or Monaghan, for example, should be able to list the services provided by their local council, whether street lights, planning and development services or more general services. Unless people have a connection to local government and know what they are getting for the money they are handing over, they will resent having to pay the household charge as they believe they pay enough taxes. If it is explained to them what their money is being spent on, the level of resentment will, I hope, be reduced.

Deputy Moynihan referred to the need to provide exemptions. It is wrong that under the proposal, a person living in a "Downton Abbey" style mansion will pay the same as someone living in a "Coronation Street" style terrace. Once local government has been fully reformed, the Government must introduce a tax which reflects the services people use based on the size of their residence and ability to pay. People will want to ensure the inefficiencies that are endemic in local government are eliminated before such a system is introduced. They will also need to be sure their money is paying for services as opposed to excesses in their local authority, for example, in staff numbers. For this reason, the Government must continue the work it has started to reduce costs in the back office and administration sides of local government.

Deputy Moynihan also referred to retail planning guidelines, which are an item on the Minister's agenda. I ask the Minister to consider what has taken place in the United Kingdom because we do not want to go down the British route. The current position meets the needs of our retail sector. While the exemption made for IKEA has been commercially successful, we do not want a form of "Tescoisation" of the country, as has occurred in England where people travel for many miles to shop on Sundays because retail services have been sucked out of small towns and into larger ones. Such a process is not good for rural or urban living, consumer choice or prices.

Let us challenge local government. I accept that this is an easy argument for me to make given that I, unlike most Deputies, did not serve my political apprenticeship in a local authority and do not therefore have an emotional attachment to the system. Every local authority must ask what is its purpose and what is it adding to the equation. They must be given an opportunity to prove themselves or leave the stage.

We have heard discussion about super regional authorities. I cannot imagine a Kilkenny man and Laois man or Mayo man and Galway man agreeing on what is good for their respective regions. County loyalties and parish boundaries in Ireland do not conform to European norms and for this reason super regional authorities will not work. When we define the role of local government and the business it is involved in we must devise a structure to allow it to deliver properly.

It strikes me as strange that a city of 1 million people has four local authorities, all of which display signs at their boundaries informing people that they are entering such and such a county council area. Despite this, they all don the same jersey on the third Sunday in September. Perhaps the GAA is a model of how to operate efficiently. While the introduction of the current structures 20 years ago was probably well intentioned, we must ask whether these structures are delivering. Do we need four local authorities to deliver services in a city as small in international and comparative terms as Dublin? A similar question must be asked in areas which have city and borough councils or city and county councils.

On retail planning, we are stuck in a rut in respect of business rates. The reform of the valuation system is too slow and must be transformed. That is the fault of previous Governments but the current Government has an opportunity to do something about it. The Minister should start from scratch. I receive replies to parliamentary questions which suggest people are comfortable with the prospect that it will take ten years to complete the valuation process. This is not good enough given that many businesses have the remaining ten days before Christmas to generate sufficient income to enable them to continue to operate in January and February. As Deputies Niall Collins and Michael Moynihan noted, it is ridiculous that councils do not have the flexibility to offer specific rates to companies establishing a business in a certain town or offer discounts to firms which agree to employ a certain number of staff. If we want local authorities to have a local economic development role, they must have the power to give businesses in their respective areas a break. They do not have the flexibility in the area of development charges and rates that is required for a modern business model. I ask the Government to make this an urgent priority in its local government reform programme.

The Department is in a comfort zone on the issue of the valuation process because it has been completed in Dún Laoghaire and Dublin and will be rolled out nationwide over the next ten years. We must collectively challenge this comfort zone by starting again and delivering a completed valuation process in 18 months or two years. The 2014 local government elections will take place in two and a half years. This is a short period which will fly by. Unless we have a completely new model of local government by 2014, the recent trend of low turnouts at local government elections will continue because people will believe voting at local level does not matter. It does matter, however, because local government is the coalface of government.

In two and a half years, when people go through their wallets they will have a closer connection to local government than is currently the case. They must be convinced that local government makes a difference in their daily lives and is relevant to them. As the Minister implements the legislation and bills for local government charges are sent out in the coming months, he has an opportunity to drive home this message and show people what they will receive for the charges they are paying, as is done on invoices in other areas. I hope the reforms on which he is embarking will be in place before the 2014 local elections in order that people are given time to buy into them. I also hope that when we come to vote in June 2014 the electorate will vote for a system that has been transformed and become much more effective.

Photo of Liam TwomeyLiam Twomey (Wexford, Fine Gael)
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I support the Minister's efforts to reform local government and make it work for citizens. Having been the Fine Gael Party spokesperson on environment and local government while in opposition, he knows the issues inside out. It would have been useful if Sinn Féin Deputies had remained for the debate given that their party is the only political party represented in the House which has experience of a valuation system and household charges. For this reason, Sinn Féin's position on this issue would have been very useful. I fully support the Bill.