Tuesday, 1 July 2014
Topical Issue Debate
Local Authority Funding
As the Minister of State is aware, next year local authorities will receive 80% of the local property tax raised in their area, most of which will be raised in Dublin. It is estimated that Dublin City Council will receive about €60 million from a yield of €80 million from property tax in the city area alone. That is ten times more than will be paid in Louth, where approximately €8 million will be paid in property tax. Dublin will get €2.6 million from the Local Government Fund, while Louth will get €8 million. This can hardly be considered as fair.
Of the €80 million to be raised, some €60 million of the Dublin City Council home owners' tax will subsidise local authorities that do not raise enough in their own areas. I have no problem with a centralised fund and an equalisation mechanism, as long as all counties are treated similarly, equally and fairly. To date, however, the four Dublin local authorities have not been treated thus. There has been great discrimination against the four Dublin local authority areas.
There has been much media speculation that grants paid to councils, and especially the four city authorities, will be slashed. Given the fact that we will pay so much property tax, an amount of money will be kept within those authorities. The Government will then slash local grants, taking with one hand and giving nothing back. Approximately €52 million is paid from the Department of the Environment, Community and Local Government to Dublin City Council alone, not to mention the three other Dublin local authorities. That pays for house building programmes, adaptation grants and homelessness subsidies. In the middle of a housing crisis we cannot reduce any money to the homeless sector or for house building within the Dublin area.
If the Minister of State is still in that position next week or if he is elevated to a more senior position-----
We are in the midst of a housing crisis and it would be lunacy to continue this discrimination. Dublin is at the heart of it. I expect a high standard from the Minister of State, who should defend Dublin and ensure the city gets its fair share.
I am concerned by reports that central funding to local authorities in the Dublin area could be reduced. This is particularly worrying as we are currently in the teeth of a housing crisis in which individuals and families are being thrust into homelessness daily. Currently, local authorities in Dublin, including my own area of Fingal, need increased funding to tackle this crisis. The crisis is significantly a Dublin problem although some rural areas are also affected.
Insufficient funding is available for essential urgent housing adaptation based on assessed medical needs. Any reduction in central funding would equate to Dubliners being punished for paying property tax. My own area of Fingal contributed €18.4 million in local property tax last year and had the second highest compliance rate of any local authority in the country last year, with 94.6% of households paying the charge. This high compliance rate is partly due to the recognition by people that their local services are under financial strain and require further funding. It should not result in reduced central funding.
Fingal and the other Dublin councils already receive much lower per capitafunding from central government than other councils around the country. Fingal council, and especially its newly constituted operations department, is working hard to do more with less. It is trying to get more open spaces maintained with fewer personnel, as well as constructing paths and fixing potholes to improve roads and pedestrian safety.
The money taken in by the local property tax is not a bonanza, as is being reported in some parts of the media. It is money that should go to people on housing adaptation lists, to get stalled community centre projects off the ground, and to invest in tackling the housing and homelessness crisis. This money will not cure all the challenges facing local government - far from it. It will only moderately relieve the strain placed on local authorities.
I have to beat the same drum as my colleagues, and particularly Deputy Ryan, because like him I represent a developing county. That means we have much greater need of financial input into local authorities. I represent a county that has consistently received the least per capitashare from the Local Government Fund. I think €500,000 was the figure for last year. Dubliners are paying much more local property tax than people in rural areas. I appreciate, however, that the figures for County Kildare and the Minister of State's area of County Louth would be a bit higher than other rural areas.
The fact that we in Dublin are paying so much more in property tax should not lead to a discriminatory situation whereby we lose out on grants. As my colleagues have said, we urgently need money, particularly for housing and to combat homelessness. In my own county, 50 people are waiting for emergency accommodation. Most of them are living in hotels, so we cannot afford to lose out on central government grants. I therefore urge the Minister of State to look after our needs in that regard and not punish us because our people are paying more in property tax than others. There are other ways to address disparities in collecting local property tax, which could be considered if that path is to be examined.
During the bubble period, when the State was overly reliant on stamp duty and VAT as a source of income, people in Dublin and the commuter belt contributed disproportionately to the coffers of the State. It would be extremely unfair if they emerge from that situation to a new one in which they are doubly punished because of property prices in Dublin and the local property charge.
Council services benefit the most vulnerable and poorest in our society, whether through housing, sheltered accommodation, libraries, parks or playgrounds. All of the essential services that councils provide benefit the poorest and most vulnerable, who have the greatest need for public services. The suggestion that central government grants to Dublin City Council or any of the other Dublin councils could be affected because of receipts from the local property tax is patently unfair. Given the historical context of what happened during the bubble period, the bankrupt nature of the funding mechanism and the fact that Dubliners were unfairly treated during that period, to disadvantage those living in the Dublin region by cutting central government funds is doubly unfair. Dublin has a higher proportion of marginalised and disadvantaged communities who depend on council services for their very survival. I ask the Minister of State, Deputy O'Dowd, to ensure they are not cut off from central government.
I thank the Deputies for raising this important matter which I am taking on behalf of my colleague, the Minister for the Environment, Community and Local Government.
In recent months there has been extensive discussion of the issue of local property tax, LPT, and how local retention of that tax might impact on local authorities in the future. It is a complex issue that will need much consideration as the Estimates process for 2015 progresses. The Departments of Public Expenditure and Reform, Finance, Transport, Tourism and Sport and the Environment, Community and Local Government have been examining the implications of local retention and variation of local property tax in recent months. They have considered a wide range of issues, including the implications of 80% local retention of LPT, the new power that local authorities have, with effect from today, to vary the basic rate of LPT by up to 15% and how those policies might potentially impact on the overall Exchequer financial position and the financial positions of individual local authorities.
For local authorities, 2014 and 2015 will be particularly challenging years given that they are undergoing the most fundamental structural changes since the foundation of the State, as well as a significant restructuring in respect of water services and completely changed funding and service delivery models. These changes to the local government funding model will need to be carefully managed. The Departments concerned are actively considering the issues arising from these changes and, following consideration by the Government, local authorities will be advised of the outcome.
In terms of local retention of local property tax, the Government has indicated its intention to move to 80% retention of the tax from 2015. A decision to allow local authorities to retain 80% of LPT locally and the power to vary LPT rates will facilitate further implementation of the local government reform programme, a core element of which involves greater devolution to the local government sector through supporting enhanced local decision-making on spending priorities.
The Minister fully recognises that it is necessary for Government to provide funding certainty for local authorities as early as possible if they are to be able to meet their budgetary obligations and consider the question of whether to vary LPT for 2015 by the end of September 2014. There is a need to recognise that the LPT base outside of the cities and main commuter zones is narrower and there will be a requirement to equalise the income position of those local authorities to ensure an acceptable standard of service delivery is maintained throughout the country. The issue of LPT allocations, both from local retention rates and from any subsequent income provided to local authorities to equalise distribution across the State are matters for the Department of the Environment, Community and Local Government. The Minister considers that is essential to resolve them at the earliest opportunity and he will continue to work with Government colleagues to ensure that information in respect of these decisions is available to local authorities to facilitate their budgetary timeframe.
The provision of other central government grants to local authorities will be considered, as normal, as part of the Estimates process. The Minister and Ministers of State at the Department of the Environment, Community and Local Government will engage with the Minister for Public Expenditure and Reform in this regard, particularly in respect of funding for housing matters, which is currently a significant source of funding for local authorities from central government. The matter of overall housing grant allocations for 2015 is, of course, inextricably linked with the new social housing strategy which is currently being developed by the Minister of State with responsibility for housing and planning, Deputy Jan O'Sullivan, and which is expected to be finalised by the end of September. The level of central government grant funding to be provided to local authorities from other Departments is a matter for those Departments and for the Minister for Public Expenditure and Reform.
This is not a debate; I am replying to the Minister of State. Do not try to rip off Dublin. Since 2013, home values in the Dublin area have nearly doubled. This is another problem that needs to be addressed. The shortage of housing in the Dublin area has driven prices up. Dublin residents and householders cannot be punished for this. Local councillors need to be given the power to vary the local property tax by 15% or else the rates should be frozen at 2013 valuations until the market settles. I ask for those issues to be considered and addressed. I will be watching carefully because the Minister of State will probably be promoted, and I will be saying the same thing to my own party colleagues. I will not stand for Dublin being ripped off. Let us be clear on that.
We need to increase our supports for local government to help it meet the challenges our citizens face every day, from run of the mill problems to the extraordinary challenge of not having a stable roof over one's head. We need to invest rather than reduce. We have a crisis of housing and our local authorities are on the front line. Any diminution in funding through central grants will weaken our chances of beating that crisis, and Dublin councils must not be treated less favourably than other councils.
It is unacceptable for Dublin to be discriminated against. I agree with Deputy Kevin Humphreys in regard to future property taxes in Dublin in the context of changing house prices. This raises the question of how property tax is calculated. There are ways of making a fairer calculation across the country. Being from the county that has always gotten the least from the Local Government Fund, I will be watching developments closely to ensure we are not deprived of funding, particularly in regard to the housing crisis.
Last year, Dublin City Council scraped its budget through and last minute proposals from city management in regard to cutting homelessness services and adaptation grants for the disabled and potential increases of 14% in local authority rents were avoided because of an intervention from the Government. Without ongoing and sustainable intervention by the Government, the services that protect the most vulnerable in Dublin will not survive. This is a matter of equality and social solidarity.
It is important to underpin the essential services of housing, community infrastructure, library services, etc., with sustainable funding. This should come from the local property tax, which I support, and also from the central government to ensure such services can continue in future without a threat hanging over them from year to year.
The facts are simple. I have clearly stated, and I repeat, that regardless of where people live, 80% of the funding will be spent where it is raised. That is the Deputies' Government and mine, their Ministers and mine, which are committed to this goal. We are also committed to the financial certainty that we all want, whether it is in Dublin, Drogheda, Cork, Kerry, Limerick or Tipperary. We must run a country and we must ensure that can be done fairly, with all our communities getting the funding to which they are entitled and a fair proportion of what is paid.
The housing issue is significant in Dublin and the Minister of State with responsibility for housing, Deputy Jan O'Sullivan, who is a member of Labour, has very strongly put forward all the proposals which should be supported by all of us to improve housing, particularly in Dublin. Funding must be used to put back into living use the houses which are boarded up around the city and country in order to meet those needs. One of the biggest issues for Dublin is its water supply and we must spend €500 million over the next three or four years to ensure Dublin has the water supply it deserves and to which it is entitled.
We are not ripping off anybody but ensuring that there is fair and equitable distribution of funding. Everybody will get 80% of what they pay in and the balance will go to some counties or areas which do not have the funding to maintain basic services. The Minister, Deputy Hogan, is firmly of the view that certainty is important in this significant time, and he will continue to work with Government colleagues to ensure the necessary budgetary information is available. Grant allocations from central government are a matter for the Estimates and the Minister for the Environment, Community and Local Government, along with other Ministers, will continue to engage with the Minister for Public Expenditure and Reform, Deputy Howlin, in this regard.
All of us agree that 80% of the funding should be spent where it is raised and there should be fairness and equity across the country. I hope the needs of Dublin will be met from the funding, as it should be.