Thomas Byrne (Fianna Fail) | Oireachtas source

When I first encountered this Bill, it was with some surprise that I discovered it fell within the remit of the Department of Public Expenditure and Reform. It should be under the Department of Jobs, Enterprise and Innovation. The question of rates is central to the issue of jobs, especially given the fact that small and medium-sized enterprises, SMEs, are being crucified by rates. An employer in my constituency is paying more in rates than he is in rent. His landlord has been willing to reduce the rent to keep him in the premises, but no such leeway from the local authority is possible, statutorily or informally. It is a retrograde situation. The Bill contains little or nothing to help him or the many other business people who are being crucified by the rates system. On this basis and for other reasons that I will outline, Fianna Fáil will oppose the Bill.

Last summer, Fianna Fáil tabled the Valuation (Amendment) Bill 2012 in the Dáil. A key provision was an inability-to-pay clause. Many businesses cannot pay because they do not have enough income. It is a choice between local authorities, rent and staff. The business people themselves probably come last in their own considerations. The Bill before us will do nothing for them. It does not go far enough to alleviate the pressure on struggling SMEs. It does not include an inability-to-pay clause or a subsequent occupier clause.

That the self-assessment system will initially be limited will pose a problem. The Minister of State has proposed a pilot basis, but it has been written into the statute, which refers to one or more rating authorities. In this light, the Bill will be meaningless for thousands of struggling businesses.

Fine Gael and the Labour Party in government and in local authorities, predominantly since 2004, have failed to overhaul local government financing to give businesses a fighting chance of survival. Let us consider the differences in rates. Rates have not changed in my county of Meath since 2009 when Fine Gael and the Labour Party took over the running of the council. I will hand it to Donegal County Council, Drogheda Borough Council and North Tipperary County Council, which have reduced their rates the most.

It is still less than a 7% reduction in the annual rate of valuation of all councils. It is a retrograde process that is not helping business; it is one of the key problems faced by businesses at the moment.

This Bill has not introduced an inability to pay clause, which is a standard feature of the UK process and a key measure to help alleviate pressure on struggling businesses. It is a central demand of various business associations concerned in the vision they have for a reformed rate valuation process in Ireland. The self-assessment method in the Bill is highly limited, although self-assessment would be the fastest way to speed up the process. We already have self-assessment for the most important of civic duties, the payment of taxes, for self-employed and business people. This Bill does not appear to make self-assessment standard practice, as it will be used in one local authority initially. The law provides for one or more rating authority. Fianna Fáil has consistently called for self-assessment to be introduced across the country, as evidenced in our Bill from last summer, in order to speed up the process and help businesses which are bearing a disproportionate burden with regard to rates.

The Bill allows for the subcontracting of valuation procedures away from the Commissioner of Valuations. That may be a welcome step and I hope it will reduce costs. Nonetheless, questions remain about how much this would cost and what quality control procedures would be put in place to ensure speedy, effective and fair valuation procedures for businesses. This is similar to the septic tank inspection issue, as what kind of quality control procedures will exist when this type of very important work is outsourced with considerable economic consequences for business people?

The Bill does not include the removal of the subsequent occupier clause, which penalises businesses moving to premises where rates are owed by the previous occupier. This clause is hurting occupancy rates and discouraging new start-up companies. One judge wrote off a bill for a previous occupier but that is not standard practice. As a result, premises are kept empty. The system is unreal as these rates will never be paid. Who will take on these premises when rates are attaching to them? There is no point in the clause as it creates a vicious circle that will continue until an economic recovery returns at some stage. Removing that clause could help accelerate economic recovery, get businesses into empty shops and open our towns and villages once more.

The appeals mechanism is deeply flawed as the discretion of the tribunal will not provide a fair procedure. Representations have been made to the Minister in that regard. I am concerned about the work the tribunal will have and there are many examples of intermediate decision making within the public sector, including the social welfare system, where a person can have a review before an appeal. I am concerned that there will be an intolerable burden on the tribunal which will delay rectification of these matters for businesses and employment. We should keep bringing this issue back to jobs, as rates are a key part of that issue.

Businesses and small employers are bearing the burden of financing local government to an unsustainable degree. For their sake, the focus of the Government should be on reducing costs in local authorities. We should be considering every angle of local authority services, what is being provided and if there is duplication of services. Is there a cost to the process that is unnecessary but which is being paid by businesses? There has been no effort to examine the streamlining of costs in local government. I will not say too much about that as my colleague, Senator Barrett, will reference a number of reports in the area that are sitting on various desks.

Businesses need a break, and people are questioning what services local authorities are providing. I would not be too critical of Meath County Council but only two years ago I saw a photograph in the newspaper relating to the county council's climate change policy launch. I wondered if that was a fundamental function of a local authority or something that should be done. Perhaps it is provided for in statute and it is only doing its job. Nevertheless, the fundamental services of authorities relate to roads, water, planning, housing and related services. There are many other services hanging around local authorities and I wonder if they are needed or if the process could be different. Why should small businesses pay the bill for all that?

The point has been raised by interested parties about the discretion provided by section 22, which will become section 48 of the Act, to the Commissioner of Valuations. I understand the Minister may well be open to amendments in the area but that was not indicated in the Second Stage speech. The wording of the provision gives the Commissioner of Valuations unfettered discretion on the net annual value of properties, and although he or she may well have regard to subsequent subsections, he or she is not obliged to do so.

Everybody agrees that Ireland needs an accelerated valuation process to establish a rates system based on current economic property values. Local authorities must, in conjunction with the rating system, reflect the reality facing businesses across the country. Senator Gilroy has been involved with a swap with a parent in Waterford, and perhaps Ministers, civil servants or politicians should swap with small businesses and see how they are struggling. We have many small business owners in this House, and they know exactly what these struggles are. I wonder about people like us, employed by the public sector, and if we know the realities or are aware of the struggles. Do we know what it is like for a cheque to bounce because there were no funds in the bank that day? Do we know the embarrassment that businesses face because they want to pay their bills even when a cheque bounces? Perhaps these people must beg in order to keep staff employed. This is the struggle facing people but we do not seem to want to lessen the burden with this legislation.

Unfortunately, we will oppose this Bill and have set down a number of amendments. A substantial number would have to be accepted for us to agree with the passage of the Bill. The legislation does nothing to address the other problem which Fine Gael promised to tackle, namely, the rent review clauses. I know that issue has nothing to do with this Bill but it is a related matter. Not much has been done to tackle that issue but even less is being done with regard to rates. This is not indicative of a Government that is in touch with small businesses.