Brian Stanley (Laois-Offaly, Sinn Fein)
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To ask the Minister for Environment, Community and Local Government in relation to the proposed local government reforms, the way in which the €420m savings will be made; and the time frame for these savings and the cost of the introduction of district councils and proposed mergers of the three local authorities. [46513/12]

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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The estimate of €420 million in savings on full implementation of the reform programme is comprised of a number of components including savings arising from structural reconfiguration, implementation of the recommendations of the Local Government Efficiency Review Implementation Group, local authority workforce planning and savings arising from agency rationalisation.

Direct savings identified in the Local Government Efficiency Review due to efficiency measures in local government are estimated at €345 million, comprising some €195 million achieved in the period 2010 to 2011 and estimated further savings of €150 million to be achieved in the period up to the end of 2013. These savings have been achieved to date primarily from areas such as staffing and procurement and I expect that further efficiency savings will continue to accrue in these areas and also into the future following the examination of a shared services approach across a number of programmes, particularly on treasury management, transactional human resource issues, shared payroll systems, and ICT back-office functions. This estimate does not include any reductions in expenditure due to reduced activity.

It is estimated that payroll savings of €20 million will be achieved in the period to the end of 2014. In this regard, a workforce planning process is in progress to determine optimum local authority organisational and staffing requirements. Significant rationalisation of State agencies in the local government sector is also under way which has achieved savings of €10 million to date.

Potential cost savings due to structural reform will arise from local authority mergers and the integration of county and sub-county operations and structures, resulting in elimination of duplication, economies of scale and removal of the need for separate back-office and support units. While more definitive assessment of costs and savings will become available as implementation proceeds, it is considered that total savings in the range €40 million to €45 million relative to 2010 expenditure are achievable through the various structural reforms.

The changes in local government structures will have some implications, both for local authority revenue and costs. On the revenue side, savings will be used to reduce commercial rates and harmonise the levels of other charges. Some one-off costs associated with the transition to the new arrangements, including IT costs to implement revised service arrangements and retirement gratuities, can be expected to arise, but should be quickly recovered through savings.

I am confident that significant net savings will result from the structural reforms and these will have enduring effect in the budgets of the local authorities.

Additional information not given on the floor of the House

Moreover, it is important to note that the benefits of the proposed changes cannot be measured adequately in terms of financial savings alone. The measures contained in the action programme are designed to promote both increased operational efficiency and value for money through more integrated administrative and implementation arrangements, and also to enhance the capacity of local authorities to achieve their broader role of promoting the sustainable development of their areas, the welfare of local communities and the quality of life of individual citizens by virtue of the effectiveness with which they perform their range of regulatory, representational and service delivery functions.

Brian Stanley (Laois-Offaly, Sinn Fein)
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This is the first time we have had an opportunity to comment on the announcement on local government reform. From my party's point of view, there is a need to reform local government. We may not agree totally on the nature of the reform but there was a need to deal with the multiplicity of outdated structures. What is important is the powers and functions that we give to what is there, how they operate and the level of accountability.

On the issue of the savings, there is some €830 million saved since 2008 in local authorities' spending. The staffing numbers are down 23% to approximately 28,000. That is the highest fall in any section of the public sector. My concern is the issue of front line staff, that in taking out a quarter the Minister is cutting back well into the bone. At that stage, he is starting to hack away at front line services.

Michael Kitt (Galway East, Fianna Fail)
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I thank the Deputy.

Brian Stanley (Laois-Offaly, Sinn Fein)
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I ask the Leas-Cheann Comhairle to give me a minute. I am not too sure the cost of amalgamations have been factored in. There is the cost of making 500 staff redundant because that will involve a pensions cost. There is also the cost of outsourcing services. Does the Minister anticipate services being outsourced? The Minister might address those three questions on the amalgamation cost, the cost of making 500 more redundant, and whether there will be outsources and whether there has been a calculation done on the outsourcing of services.

Michael Kitt (Galway East, Fianna Fail)
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I thank the Deputy. I must call the Minister.

Brian Stanley (Laois-Offaly, Sinn Fein)
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For the record, I welcome the shared HR and the shared payroll.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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I thank the Deputy for his constructive remarks. He knows from the rationalisation of structures in Northern Ireland that it is not an easy business.

Brian Stanley (Laois-Offaly, Sinn Fein)
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It is not easy. It is also very costly.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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The Government in Northern Ireland is trying to do the same as we are trying to do here. It is trying to reduce the number of local authorities to 11.

I agree with the Deputy that we have taken a lot of staff out of the local government system in the last three to four years. Staff numbers are down by 8,500, the highest number in any segment of the public service. Obviously, numbers in this sector can only go so low, as otherwise it will not be able to deliver services to the citizen. I am very conscious of this. I am particularly concerned about outdoor staff because they are getting older and will need to be replaced. We have already hit the 2015 target in terms of the employment ceiling set and do not expect to make many further reductions in terms of staff costs. However, we must examine ways by which we can streamline the structures at higher levels in the local government system, namely, the administrative and director of services levels, in order that we can make savings there rather than in front-line services. The proposed amalgamations will save money. The amalgamations to date, in Limerick, Tipperary and Waterford, have shown that savings of between €5 million and €7 million, depending on the local authority involved, will be achieved, once structures are streamlined. It is a matter for each local authority to decide how it wants to deliver its services, either in-house or through outsourcing. Waste management services have already been outsourced in almost every local authority.

Brian Stanley (Laois-Offaly, Sinn Fein)
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On the question of outsourcing, the Minister made reference to the age profile of outdoor staff in local authorities. What is the intention of the Department in this regard? The logic of what the Minister has said is that the recruitment embargo will have to be lifted. There are some local engineering areas in which there are only eight to ten workers. The local authorities will have to outsource work to the private sector or the embargo will have to be lifted. What is the intention in this regard, given that local authorities can only go so far in cutting back on staff?

The Minister referred to Northern Ireland in the context of amalgamations. The intention there is that there will be 11 local authorities or almost two councils per county. Amalgamations are ongoing-----

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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How many local authorities are there at present?

Brian Stanley (Laois-Offaly, Sinn Fein)
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There are 27, which is far too many. However, there is a heavy cost associated with amalgamation, of which the Minister should be aware. I ask him to address the questions of staff numbers and outsourcing.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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On staff levels, we are keeping everything under review. Given that we have hit the 2015 target in the local government sector, we will examine ways to supplement staff numbers in some areas, such as outdoor services, particularly in rural areas. We are examining ways by which we might be able to achieve this. I cannot make an announcement on it at this stage, but we are working on proposals to supplement existing local government staff in certain areas. However, it is a difficult time financially for local government and the country; therefore, anything we do to enhance staff numbers in local government will have to take this into account.