Tony Killeen (Clare, Fianna Fail)

Gabhaim buíochas don Seanadóir Ó Dochartaigh as ucht an ábhar tábhachtach seo a ardú. First, I will outline the level of support the Government provides to local authorities. The introduction of the local government fund in 1999 has been successful to date. The fund is ring-fenced for local government purposes. In 2007, a total of approximately €948 million in general purpose grants was provided to local authorities from the local government fund.

General purpose grants are the contribution the Department makes to local authorities to meet the gap between the cost to them of providing an acceptable level of day-to-day services and the income they obtain from other sources. The amount provided this year represents an increase of 8% over the amount provided in 2006 and is 180% above the amount provided in 1997. In other words, these grants have almost trebled in this time and are five times greater than inflation in the period. They contribute approximately one-fifth of local authorities' current expenditure requirements in 2007.

This increase in general purpose funding is a clear signal of the Government's commitment to the local government sector and recognition of the importance it attaches to local democracy. The local government fund also provides significant funding to local authorities for the improvement and maintenance of non-national roads. In 2007, total grants of €607.5 million have been allocated to local authorities for non-national roads. These grants have increased by almost 9% over the level provided in 2006 and by 180% on 1997 levels.

The increase in general purpose and non-national road grant allocations are well ahead of inflation and by any yardstick represent significant strides in placing local authority financing on a firm footing. The increases in support provided to local authorities from the fund in recent years have limited the direct financial contribution required from local sources from rates and charges.

In 1993, rates contributed approximately 17% of the total income of local authorities. Today, the figure is closer to 12.5%. When local authorities adopted their budgets for 2007 at the end of last year, my Department specifically requested that local authorities should exercise restraint in setting any increases in commercial rates and local charges for the year to support competitiveness in the economy and to protect the interests of communities.

The response to this request was positive and, to a large degree, local authorities exercised significant restraint with increases generally of a lower order than in previous years. Limerick City Council in its 2007 budget adopted a reduction of 1% in its annual rate on valuation. This was on top of the decrease of 0.5% in 2006. The annual rate on valuation for Dún Laoghaire-Rathdown County Council and Nenagh Town Council were not increased in 2007.

In addition to grants from the local government fund, the Exchequer provides significantly increased funding to local authorities towards infrastructure provision in areas such as roads, housing, water and waste water services. In the past decade, the substantial level of resources provided to local authorities through central funding and the fruits of economic success have resulted in a trebling in local authority expenditure. This has enabled local authorities to take a leading role in the development of economic and social life in this country. Equally, local authorities must ensure full value for money for the resources invested and seek the maximum efficiency across their operations. Much has been achieved in recent years on the efficiency and value for money agenda, including new financial management systems and annual service indicator reports.

However, we must look to the future and, to borrow a phrase, a lot has been done but there is more to do. The Government is fully committed to the pursuit of further efficiency in local government and we want to see full value for every buck spent. We work in partnership with local authorities to build on progress in this area and to develop the efficiency and value for money agenda further. In partnership with local authorities, we will implement a new costing system for the local government sector and strengthened audit committees will be established in city and county councils. These initiatives will provide local authorities with further tools in the drive for increased efficiency in their operations.

The funding available to local authorities from local sources increased rapidly in recent years as a result of the sensible economic policies pursued by the Government. Rates income from the greatly strengthened commercial base supported by the Government's successful economic policies continues to provide significant buoyancy in funding to local authorities. Local authorities need to have adequate funds at their disposal to provide their customers with quality services and to meet the demands for additional services which an increasing population and an expanding economy require.

I will seek to maximise the funding available to local authorities through the local government fund in 2008 and I am confident that this extra funding, together with the funding local authorities receive from existing local sources, will enable local government to continue to deliver an acceptable level of service to the households, communities and businesses they serve. In the circumstances, there are no plans to introduce a levy on holiday homes along the lines suggested by Senator Doherty.