James Bannon (Fine Gael)

I welcome the Minister of State to the House and thank him for introducing this Bill. Fine Gael supports his efforts in principle but with some reservations. The Bill has implications for stealth taxes and reductions in local authority funding, hallmarks of this Government for the last nine years. We have concerns about the legislation and about local government in general. I hope, however, the Bill will be passed quickly.

Business improvement districts are working partnerships formed between business, rate payers, property owners, tenants, residents and local authorities — hopefully everyone will come on board. The group sets up a designated fund to improve the local area and attract business. Our towns and villages should look attractive. County Longford holds the record for the tidiest villages in Europe — Ardagh, Newtowncashel, Abbeyshrule and Legan have all played their part. There is great competition within the county for the honours each year. Ardagh came third in the European Tidy Towns competition. It is a village I would encourage everyone to visit. All of Longford's towns and villages are very attractive and people should come to them when they get the opportunity. The local authority, which is Fine Gael-led, has done a huge amount of work to achieve this. I congratulate both Paddy Belton and Alan Mitchell, who will be mayors of the county and the town from Friday.

It is a shame this Bill has taken so long to come before us. Make haste slowly is the Government's motto unless legislation is of benefit to it, in which case it is railroaded through with undue haste. As far back as August 2001, The Irish Times reported that legislation was being drafted by the Department of the Environment, Heritage and Local Government to set up new public private partnerships to provide cleaner, greener and safer streets in designated urban areas. It reported that the idea of establishing BIDS in Ireland was inspired by the success of similar schemes in New York, notably in Times Square, where one sleazy part of the town was transformed over ten years by concerted area-based management. Senior executives of the Dublin City Centre Business Association, accompanied by the then Dublin Corporation finance officer, Michael Redmond, and representatives of the Dublin Civic Trust, visited New York to see the results and to talk to Times Square BID teams.

The explanatory memorandum to the Bill states that there are more than 400 BID schemes in operation in Canada and the USA and that European countries are also becoming involved. It is not a unique idea but I am glad the Government has finally moved on it.

Section 3 provides for the amendment of sections 97(3) and (4) of the principal Act. The amendment provides that BID money received by a rating authority is not paid into or out of the local funds. Section 129(e) sets out provisions on public input into a BID proposal and section 129(g) sets out the procedures to be followed leading up to a ratepayers' plebiscite to determine the level of support for a bid proposal. While I have no problem with these three provisions, I would like the Minister of State to address them in light of the dreadful state of local government finances.

Local authorities are underfunded and urgently need democratic accountability at local level. We cannot look at this Bill in isolation, it is published against the background of a lack of funding for local government. There are huge numbers of group water and sewerage schemes waiting to be approved by the Department of the Environment, Heritage and Local Government. It is important those schemes get off the ground as soon as possible because they are vital infrastructure if towns and villages are to develop. Housing developments are being built with septic tanks so we need schemes to be put in place.

The Minister of State may cite statistics about record levels of funding but he will omit the fact that local authorities must do much more with the money than was the case previously. It now costs more for local authorities to do things they have always done. Under the Local Government Act, extra staff were taken on. Counties with populations of 40,000 have the same tier of administration as a local authority in Dublin responsible for 250,000 people. The taxpayer must pay for these extra staff. Sometimes I wonder whether there is sufficient work in these local authorities for four or five directors. The population should dictate the numbers.

We need business improvement districts because councils do not have the money to improve business districts on their own using current resources. The Chambers of Commerce of Ireland has been vocal on the need for reform. It has pointed out that local government charges cost business over €2 billion per year, with over €1 billion of this raised by commercial rates. The Chambers of Commerce of Ireland on numerous occasions met with the Local Authority Members Association — LAMA — the organisation of which I was a former secretary, to point out the high cost to business of rates, etc. The Chambers of Commerce of Ireland seemingly supports the Bill's programme.

Due to inadequate funding by the Exchequer, local authorities depend on commercial rates. This compels them to promote the development of rateable properties over a healthy mix of residential and commercial development. This, in turn, is driving property prices in urban areas and pushing residential development further from the centres to poorly served and remote locations. The results of this are obvious. Schools are closing and constituents are losing Deputies due to the ageing population. In the recent reform of the constituencies, counties were divided up and one would wonder is this fair. While towns such as Leixlip, Lucan and Gorey are underserviced by schools, infrastructure and amenities, they have grim commuting patterns.

As director of elections last year in the Meath constituency in the Duleek-Stamullen area, I met a considerable number of people who moved from Dublin in the previous four or five years and bought houses more cheaply than they would have in the city but who found there were no schools for their children. They had to send their children back into the city schools. Those people were frustrated and depressed that facilities were not put in place. Infrastructure such as sporting facilities, schools and churches should be included in any new major housing development to accommodate the increasing population in those areas.

In the Border region companies from the North are winning local authority and Government contracts for which their Southern counterparts cannot compete due to a range of charges they are being forced to carry that do not apply in Northern Ireland. Northern semi-state bodies which are winning the contracts are, in turn, employing subcontractors from this State. This is a bit rich. People are becoming fed up with such scenarios where the parent contracting company is in Northern Ireland and people in Southern Ireland are expected to carry out the work at a greatly reduced cost while the contracting company creams off the major profits. This is a matter which needs to be looked at. In the not too distant future, I see a situation where the Government will bring forward legislation to guarantee a certain amount of jobs in the State for Irish-based citizens and that day is not too far away.

It is not only businesses which are suffering. The position of those trying to buy new homes is no better. According to the Department's figures, the total collected in development levies has ballooned from €57 million in 1997 to €215 million in 2003, and it is even higher now. In Galway city, for example, the total take more than doubled over that period to almost €6 million, while in Cork city the total take, which stood at €766,000 in 1997, ballooned to a figure almost ten times that amount in 2003 — a staggering €7.5 million. This occurred despite the fact that the Department's guidelines state that the development contribution should not be set at an excessively high level and that local authorities should be mindful of the policies adopted by other authorities in their immediate area as a major divergence in the level of contribution may be difficult to defend in the future. There is equalisation for counties which have a low rate base, such as my county of Longford.

My party calls for an open and rational debate in the context of considerable increases in development charges, management fees and business rates. The Government continues to hide behind the recent review of local government funding which, unsurprisingly, arrived too late to act upon prior to the next general election. Rather than doing that, I would appreciate the Minister of State taking the opportunity at the end of today's debate to give us his own views on the way forward in this area.

Fine Gael is somewhat concerned that areas outside each BID, which are excluded from benefiting from this extra funding, risk exclusions under this legislation. As local authorities strive to boost central business districts with the extra funding, I seek assurances from the Minister of State that other areas will not be left behind.

This leads me to the issue of plebiscites envisaged in the Bill. I should begin by saying that Fine Gael welcomes this concept. There is no better way to get people involved in local democracy than by getting them to make their own decisions. Indeed, local government should offer a perfect model for direct consultation. It is for this reason that Fine Gael voted in favour of directly elected mayors at our recent Ard-Fheis. The Government may be afraid of the people's verdict but we are not. In fact, the roll-out of business improvement districts would benefit from a strong directly elected mayor.