John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I tabled this matter due to the level of uncertainty regarding the setting of commercial rates following the announcement of the abolition of town councils and the amalgamation of certain local authorities. I started by submitting a parliamentary question, in which I asked the Department to list all of the country's annual rates on valuations, ARVs. There are extraordinary differences between some commercial rate levels, even within the same county. For example, Donegal County Council's ARV is almost €70 whereas Buncrana Town Council's is approximately €44. Can businesses in Buncrana expect their commercial rate levels to increase to county council levels? The same situation obtains in my home town, in that Dungarvan has an ARV of €60 whereas Waterford County Council has an ARV of €70. The administration in Dungarvan is well-run and efficient and has been able to keep commercial rates at a reasonable level for many years. Businesses in my home town are asking me whether they will be penalised for that efficiency.

I have also raised this matter at the Committee of Public Accounts. The response I received was that the rates would be harmonised at the lower level where possible. That is fair enough, but we need clarity. The Minister has indicated his intention to move towards the lower rate.

Businesses are generally facing trouble, in what I would call a triple whammy. There may be an increase in commercial rates due to local government reform; many businesses pay commercial variable rates, which seemingly increase every few months and are reaching dangerous levels; and the Valuation Office is revaluing businesses and commercial premises. It has done so in Dublin and Limerick and is now doing so in Waterford. Many businesses will have different valuation rates applied to their properties. If they have extended, some will find themselves facing larger bills.

Before the last election, Fine Gael's policy was not to increase commercial rates. We also instructed councillors on various authorities to freeze commercial rates in order to restore competitiveness and help businesses through the recession. We must be conscious of our policy and acknowledge what has happened since, that is, the worsening of the recession.

Generally speaking, it comes down to, for example, the cost to a business in a town council area such as Dungarvan. If the businesses lose the town council, they will therefore lose representation. Given that they are losing, it would not be proper to ask them to pay anything extra. The slogan in America in the 1750s and 1760s was “No taxation without representation”. We must be careful. If we are taking representation from people, we cannot ask them for more money for the privilege. That might be a mistake. I hope the Minister will provide clarity on the issue. My question to him is simple. Will businesses in town council areas such as Dungarvan or businesses in local authority areas that are to be amalgamated see an increase in their commercial rates due to local government reform?

Phil Hogan (Carlow-Kilkenny, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank Deputy Deasy for the opportunity to set out the position on local government reform in the context of rates and the difficulties small businesses currently endure, and also the need to provide clarity on the matters raised.

The action programme for effective local government, Putting People First, which was published on 16 October 2012, sets out Government decisions on a range of measures relating to local government structures, functions, funding, governance and operational matters. Chapter 6 of the programme sets out policy decisions to replace town councils with a new comprehensive model of municipal governance based around principal towns to strengthen local government within counties and address weaknesses and anomalies in the current system. Key features of the new arrangements are also detailed, including governance, civic roles and an indicative listing of reserved functions of elected members at municipal district level.

Implementation of the reform programme is proceeding on a number of fronts. The local electoral area boundary committee has been reviewing local electoral boundaries, having regard to the results of census 2011 and the policy decisions announced in the action programme. The committee is to report no later than 31 May 2013 and its recommendations will provide the basis for the configuration and membership of the new municipal districts. The action programme for effective local government indicates that in the context of reorganisation of local governance structures, the proposed new municipal districts will provide an opportunity to achieve a more coherent approach to rates and charges on a county-wide basis, having regard to funding requirements and the need to support employment and business competitiveness.

The programme proposes rates harmonisation to cater for differences between annual rates on valuation, ARV, of towns and counties. My approach to rates harmonisation will seek to ensure harmonisation does not lead to any increase in commercial rates in any county. Accordingly, I assure Deputy Deasy that the purpose of savings that will arise from the merger of the two local authorities in Waterford is to reduce the cost of providing services to businesses and consumers. The levying of commercial rates, which Deputy Deasy is aware will be a matter for councillors elected after the next local elections, is a reserved function of councils. There should be no increase in commercial rates in Dungarvan arising from the merger of both local authorities. If it is the will of the councillors to do otherwise, that will run contrary to my policy.

John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Minister has answered the question. Clarity was required on the issue and the Minister has provided it. He has made it clear what will happen in the case of Dungarvan or any town council. This is a also big issue in Cork and throughout the country. Because of local government reform, the abolition of town councils and the amalgamation of various local authorities, the rumour mill has led to suggestions that the commercial rates of businesses will increase because of the local government reform initiative. The Minister has made it very clear that will not be the case and that the reform initiative will not lead to a commercial rates hike. That is good news. I appreciate the Minister’s response.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As Deputy Deasy is aware, as Opposition spokesperson on the environment in 2009 – sometimes queried by members of my own party – I initiated a process to persuade local councillors to freeze or reduce commercial rates. That is the rationale behind the local government reform initiative. At a time when small businesses and commercial ratepayers generally are carrying the can, in particular in rural constituencies, in terms of providing the necessary funding for the provision of services, it is not acceptable in the context of the difficulties SMEs are going through and given the Government’s policy to promote employment opportunities through SMEs, that we would implement a policy that would place an additional rates burden on businesses. That is not what is intended by local government reform.

Even though variations exist in the annual rates on valuation within counties – Dungarvan and Waterford are a case in point – what is intended in the merger of the two authorities in Waterford as part of the new municipal district concept is that there would be harmonisation of rates to the lower level within each county. That is the pro-employment, pro-efficiency agenda I wish to pursue with local government reform. Already we are in the process of saving €500 million. That money is now available within the local government system due to shared services, better procurement and a reduction of 8,000 employed in the local government sector. The savings must be passed on to consumers and businesses alike to ensure they are competitive and that they are assisted in these difficult times, when the disposable income of individuals is not as great as it should be, to provide the necessary footfall for businesses on high streets and main streets and also to provide disposable income for purchases that are necessary for those SMEs. I agree with Deputy Deasy’s sentiments. I also agree with what he said about Dungarvan specifically. I will work to achieve that objective.

John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the Minister.