Tuesday, 2 December 2014
Ceisteanna - Questions - Priority Questions
Local Authority Funding
80. To ask the Minister for Environment, Community and Local Government if he will provide by county a breakdown of the expected commercial rates bill on Irish Water assets that his Department is now liable for; if he discussed the issue with the County and City Management Association prior to the announcement; and if he will make a statement on the matter. [45937/14]
I wish to pass on my condolences to the family of Mr. Corrie, the gentleman who, unfortunately, was found deceased on our streets yesterday. I join the Archbishop and others in their request for a forum to be put together. By way of response, I commend the Minister on coming forward with a suggestion for Thursday. We might talk outside the Chamber to establish who exactly may be willing to attend such an event, which is essential.
The question relates to the issue of the €60 million that was not due to be paid by Irish Water to local authorities according to the Minister the week before last. How did the Department arrive at that figure? My information indicates that the only two counties that have had up-to-date valuations carried out at this time are Dublin and Waterford. While many other counties had not provided for income to be derived from this area in their forthcoming budgets, there was an understanding that income would accrue to them in future once valuations were complete.
It was alleged that €11 billion worth of assets in the form of networks, plant, machinery and so forth associated with Irish Water was transferred from local authorities, as against €60 million as an indicative figure. Is €60 million simply an indicative figure or as per my question? Can an indication be given as to the loss that may accrue to each local authority throughout the State? Can this be ascertained? Can alternatives be put in place to guarantee that the Local Government Fund will substitute those funds?
I assure Deputy Cowen that the local authorities will not be at a loss. There are three key elements to the Government's recent decision on water charges - we sought to make them more affordable, as everyone knows; we sought to provide certainty in respect of the charges; and we sought to put in place a more complete charging structure.
In making the charges more affordable, the Government carefully examined Irish Water's operational expenditure. Irish Water's allowed revenue, which was approved by the Commission for Energy Regulation, continues to apply save for the impact of a changed approach to commercial rates for water services infrastructure. Such rates were considered by the regulator to be an uncontrollable or pass-through cost for Irish Water. In other words, they go straight through. By introducing an exemption from rates for any land or infrastructure used for the provision of public water services, the pass-through cost will no longer form part of Irish Water's operational expenditure. Local authorities will not suffer any loss of revenue as my Department will pay equivalent amounts to each authority from the local government fund to replace the anticipated income from rates. The total budgeted amount for rates payments by Irish Water in 2015 is €59 million.
I will shortly bring forward legislation to give effect to the Government decision to provide an exemption from rates for water services infrastructure. While there was no prior engagement with the County and City Management Association or the Local Government Management Agency on this issue, my Department will be engaging with local authorities in relation to the process for payment of the compensating amounts in respect of the rates revenue foregone in 2015. That process is already under way.
While I welcome the Minister's response, I am at a loss at his statement that no local authority will be at a loss when no local authority outside Dublin and Waterford had established what revenue would accrue from the commercial rates to be paid by Irish Water. The Minister said there was no consultation or discussion with the management association on the proposal and the decision. I need further proof from the Department as to how the figure of €59 million was arrived at and how it breaks down across the country. I need to know into the future that local authorities can definitively be satisfied that there will be no loss to them in funding vis-à-visthe local government funding model over the coming years. No valuations were carried out and there was no indication of what the valuation was. There was no idea as to what the income stream would be. Therefore, how can the Minister quantify the sum and will he break down the €59 million across the 34 local authorities?
The Deputy can be fully assured definitively that local authorities will not be at a loss as part of this process. While there were no discussions within the timeframe with the LGMA or CCMA, discussions are ongoing on a continuous basis on all these issues anyway. There will be no effect on local authorities. The €59 million figure is believed to be the cost and it was arrived at through the analysis done with the Department and its discussions, which are ongoing as is always the case. I assure the Deputy that no local authority will be at a loss through this process. This is a pass-through cost and whatever pass-through amount per local authority is necessary will be the one that is given through. It will be supplemented and this mechanism is one we chose to put forward as part of the changes we brought through on water in the last couple of weeks. There is no intention in any way, shape or form to bring about any negative effect for local authorities. In relation to the breakdown of the €59 million, I will by all means share the figures with the Deputy when I have them to hand.
I find it very difficult to understand how a figure could be arrived at - specifically €59 million - by the Department when no valuations were carried out by 32 of the 34 local authorities. While it may be believed that the values applicable were such that the rates would only generate €59 million, we must see it on paper and contrast it across the different regions.
We are very confident about the analysis that was made and the €59 million figure. When there is a breakdown in 2015, we will be able to supply the figures, as will be required. The Deputy has raised this issue previously and I am aware of his concern in this regard, but I assure him that this process will not leave local authorities at a loss. That was never the intention and, as the Minister with responsibility for local government, it would not be in my interest for any such loss to arise. While the Deputy's concerns are noted, I assure him local authorities will not be at a loss.