Phil Hogan (Carlow-Kilkenny, Fine Gael)

I welcome the opportunity to discuss local government reform and I thank Senators for finding time for this matter on today's schedule of business. I make clear at the outset that I will not announce details of a reform programme today for two very good reasons, namely, proposals, other than those already announced, have not yet been decided and it would be pointless, and disrespectful, if I were to march in here and simply inform the House that various decisions had been made. I suggest that we use the time available to allow Senators to put forward well-informed, practical proposals to improve the local government system. Since most of them are elected by local authority members, there could hardly be a more suitable opportunity for the Seanad to show that it can make a substantial contribution to policy formulation.

I may not be in a position to announce details today but I can help to set the context of the debate by addressing some fundamental issues on local government and local government reform, the rationale for it and what we hope to achieve. I have heard questions recently in the context of proposals for local government funding along the lines of "What are local authorities for?" and "Why do we need a local government tier?" I would expect robust, realistic and insightful answers on this from the Members of a House that is partly a product of local government. I wish to share some thoughts on these fundamental questions - our vision for local government, the direction it should take, the principles we are following in considering changes, the reforms needed to achieve the objectives of local government and the main components I envisage in respect of the reform programme.

There is no doubt that some functions are better performed through central or regional organisations for reasons of scale, resources, expertise or those of a strategic nature. This is why certain environmental and infrastructural responsibilities have moved to national agencies over the years. Such a move is now proposed in the area of water. In theory, the services that local authorities currently provide could perhaps be delivered by staff employed by central organisations. However, the bulk of local authority services are genuinely local in character and there is nothing to suggest that they could be delivered more effectively by centralised agencies. On the contrary, locally-based decision making is good for local and central government. It enables better consideration to be given to local needs and priorities and can lead to improved performance and initiative by virtue of fostering a greater sense of local ownership, commitment, responsibility and accountability. Moreover, delegation to local level relieves central government of unnecessary involvement in local affairs. This enables it to focus on national issues, as well as avoiding the sort of duplication that can arise where centralised management is obliged to supervise local delivery.

Local authorities are not just service providers. They have a mandate to promote the welfare of communities and support national objectives. A local tier of public representation is considered an essential feature of most, if not all, democracies and in Ireland it has specific constitutional status. It is logical that this elective representational element of local government should be combined with, and exercise oversight of, the service delivery aspect. To achieve the objectives of good local government - as distinct from local administration - two key characteristics must be present: effective and accountable democratic representation; and operational efficiency and value for money in the local authority functions of service provision, regulation and development. The overall strategic aim of local government reform must be to enhance both of these elements. They are not incompatible: in fact, both are essential. To achieve the objectives of good local government, the system must promote effectiveness, accountability and efficiency through its structures, organisation, functions, operations and financial arrangements. These key elements will be addressed. The policy proposals I intend to bring to Government shortly will, in particular, feature two main strands of reform, namely, strengthening local government structures - generally at regional, county and sub-county levels - and expansion of the role of local government.

The core element of the local government system is the county or the city and we have already taken decisions to strengthen this key component by way of unification of local government structures in Limerick and Tipperary and consideration of the position in Waterford. The forthcoming submission to Government will build on these developments and outline proposals for the other levels in order to achieve a stronger, more cohesive and efficient overall system that will be well equipped to address future challenges and take on new roles. Without devaluing the work of the members and staff of town councils, we must honestly acknowledge that the sub-county level has become an increasingly marginalised element of the local government system, with problems of weakness, duplication and inconsistency. Some previous proposals for sub-county reform have been somewhat crude and lacking in imagination. Equally, defenders of the status quo have tended to keep their heads in the sand. I intend to propose changes which, if accepted by Government, can produce a modern, comprehensive and meaningful system of municipal governance within each county that will be based on principles of subsidiarity, democratic accountability and operational cohesiveness.

Compared with town authorities, regional structures are relatively new to the Irish local government landscape but they have not, to date, made a significant impact. There are many reasons for this including the lack of regional identity, difficulty in determining areas that make sense for different purposes, vagueness of role and a lack of clarity and rigour surrounding concepts such as regional policy. In recent times the regional planning guidelines process has become increasingly effective. The evidence of success in this context encourages me to try to build on this and make a further effort to develop a meaningful and effective regional component in the Irish local government system. The reform proposals to Government will, therefore, incorporate what will, in effect, be a relaunch of the regional dimension. This will involve rationalisation of structures, updating and clarification of functions and a focus on robust strategic planning in which all relevant agencies and authorities will be required to participate fully in the development of strategies and in ensuring that these are carried through and implemented in all sectors and areas.

An effective funding system, related to a local funding base and incorporating local decision making and accountability, is regarded worldwide as a crucial element of good local government. With less than half of local government funding for current services in Ireland coming from local funding sources and most capital funding coming from central funds, there is a democratic deficit in the relationship between responsibility for local service planning and delivery and the provision of the associated funds. All major reviews and assessment of local government reform over many years have pointed to the need to widen the local funding base through mechanisms which would provide discretion to locally elected representatives while making them more responsible and accountable for overall funding provision.

I will bring forward proposals later this year for a more comprehensive and equitable valuation-based property tax to replace the household charge which is aimed at providing a stable and sustainable source of funding, with increased local financial responsibility. Given the local nature of property, the link between community location and service demand and provision and the potential to provide for local discretion and accountability, a property tax is uniquely appropriate as the principal source of sustainable funding for local government. The introduction of a property tax will deal conclusively with this essential element of local government reform. It is clear that greater financial independence and responsibility are essential to the development of a stronger, more efficient, mature, accountable and self-reliant system of local government whose relationship with national Government will no longer be characterised primarily by dependency, lobbying and centralised control.

The operational element of local government is being addressed, particularly through the implementation of the local government efficiency review recommendations. This is proceeding under the aegis of an implementation group, with the focus initially on prioritised implementation by the local government sector in areas which offer significant potential for early savings such as procurement, ICT, HR and shared services. The implementation group's interim report will be completed shortly, with the incorporation of specific information on savings and delivery times. Significant efficiencies are also being achieved through implementation of the Croke Park agreement in the local government sector which has, for example, seen a reduction of more than 7,500 staff since 2008.

A further major determinant of an effective system of local government is the nature and extent of its powers and functions. Local government in Ireland has a much narrower focus of functions than in most states. This statement has been repeated so often that it is in danger of being taken for granted as something naturally Irish - like damp weather or good hurling. I do not think it makes any sense to have a system of 124 local and regional authorities, almost 1,700 elected councillors and more than 29,000 staff performing a relatively limited range of functions and excluded from many decisions affecting their areas and the delivery of various public services locally which in most countries are core functions of the local government system. If we are to retain a system of local government - I think I have demonstrated that there is a compelling rationale for this - it cannot possibly be sensible to continue under-utilising its potential to the degree that successive Governments have allowed for decades. What is more, we simply cannot afford to do so in the economic circumstances visited on us.

The failure to capitalise fully on the potential of local government is something I am determined to begin to address, but I recognise it will take time to turn things around. Previous devolution programmes were unrealistically ambitious and did not start from the right place. I acknowledge that local government in Ireland has a credibility problem and inherent weaknesses. For example, how could a structural framework set down in the 19th century be expected to support efficient operations in the 21st century? How could a funding base that has been undermined significantly since the late 1970s promote mature, self-reliant local government? This is why we are front-loading structural and financial reform and operational efficiency measures.

I also want to begin the process of strengthening and widening the functions of local government by bringing forward specific proposals for additional local authority responsibilities. In the short term I see scope for widening the role of local authorities from three sources, in particular: an enhanced and more explicit role in economic development and enterprise support; involvement in community and local development, particularly in the context of the alignment of local and community development with the local government system; and the identification of specific functions capable of devolution from central level to local government in the short term.

While a more far-reaching extension of the local government role into the type of areas within its remit in many other countries such as transport, education and the police is likely to be a relatively long-term project, the programme for Government contains a clear commitment to the devolution of much greater decision-making powers to local level. In this context, I have asked all Government colleagues to undertake a serious examination of the functions and services of Departments and related agencies to identify matters responsibility for which could potentially be devolved to local government. Proposals emerging from this initiative will be reflected in the forthcoming submission to the Government. Responsibility for the delivery of most services within the Department's remit already rests with local authorities and various requirements for specific approval have been dispensed with or relaxed during the years. However, an examination is being carried out to identify any possible remaining potential for further delegation of responsibility to local level.

Economic issues must be at the top of the agenda not only because of the scale of the economic challenges that face us but also because progress on all objectives across our society depends critically on economic success. I believe the capacity for local government to promote economic development is significant and this is also reflected in the programme for Government. Most local authorities already play a substantial role, alongside national and regional agencies, in economic development and promoting or marketing their areas as locations for tourism, investment and enterprise. Their planning and infrastructure functions have a significant influence on economic development and every business in an area inevitably has dealings with its local authority. There is a need to define a clearer, more explicit and consistent role for local government in economic development and enterprise promotion. An important element of the reform policies I will bring to the Government shortly will be proposals for all local authorities to perform an enhanced economic role building on current best practice, working with relevant national agencies, linked with other relevant local authority functions, and taking account of other current developments, particularly the process to align local government and local development.

I am very keen to build on the role played by local government in local and community development, which incorporates economic and social elements. I recognise the value to communities of the work of local development bodies; they bring important qualities to the development of urban and rural areas. I am convinced these qualities can be combined more effectively with the resources and the democratic mandate of local government to ensure the greatest possible level of efficiency and effectiveness in the various publicly funded local development programmes. A steering group is examining the alignment between local government and the various local development programmes and I will have its final report soon. The aim will be to achieve the best possible customer service and value for money in local development programmes, with a focus on ensuring effective front-line services for those who need them most.

The policy proposals I hope to bring to the Government will, in tandem with other work that is proceeding, add up to a wide-ranging programme of reform dealing with the core issues of local government structures, functions, funding and operations. As implementation of these proposals proceeds, further aspects of the system will be looked at such as governance, ethics, local and central government relationships, civic leadership and public participation in local government. The overall outcome should be a local government system that is more responsible and self-reliant and performs a central role in the economic and social affairs of the nation, just as local government does in most European states.