Paudie Coffey (Fine Gael) | Oireachtas source

I welcome the Minister of State and his officials to the House for the Second Stage debate on very important legislation. I will comment on some of the contributions made by previous Senators.I agree that we should have a wider debate in this House about local government funding and the issues surrounding it. With the demand for more services for citizens and more powers for local authority members comes more responsibility in respect of raising finances, be it through the collection of commercial rates or local property tax, to improve amenities and services. We already saw the controversies that ravaged this country over the past years when water charges were introduced to try to improve water services. We saw the resistance. It is all fine to have the debates and demands for improvement of services, but we must have responsible debate and responsible proposals as to raising the finances to fund them. I certainly have experienced strong resistance where we have tried to improve services in this country through raising property taxes or water charges. If we want more services, we have to know how we are going to fund them.

The Minister made reference to the Poor Relief (Ireland) Act of 1838. In 2013, I brought forward a Private Members' Bill to amend that Act. At that time, where a commercial property transfer was happening and rates were still outstanding, the bill for the rates did not transfer with the tenant or the person who was responsible but stayed with the property. I am glad that my Bill influenced the Local Government Reform Bill 2014 to address that anomaly. It is important that we continually evaluate and improve the system of collecting rates to reflect a modern society and the needs and demands of our local authorities and the people they serve. There is always room for improvement. Some Members outlined inconsistencies in the collection of commercial rates. In a fair system, we need a consistent method of collection of rates. I am sure that, like me, the Minister and Members have had businesses come to them complaining about the high cost of commercial rates. When people are not paying their dues in commercial rates, the charge will fall elsewhere. It is important that we have a fair and efficient system of collecting rates. This legislation is going some way to addressing that. Local authority performance is something we need to continually measure and monitor. The Minister and his officials have continuous engagement with local authorities in that respect. Where local authorities are lacking, this needs to be addressed. Commercial rates are just one significant element of the funding mechanisms for local authorities, which are needed to deliver essential services such as amenities, open spaces and public lighting. It is essential that we modernise the legislation, some of which goes back to the 19th century.

On how the rates system works, the Valuation Office is responsible for implementing and maintaining the rating system. It is quasijudicial. It is independent, almost, of any political policy or interference, which needs to be recognised. A few years ago, Waterford went through the revaluation process. It can be a highly stressful time for businesses. As we know and as others are learning, there are winners and losers in the revaluation process. We always hear about the losers but we rarely hear about the winners. Some commercial properties see a hike in their commercial rates but there are many others whose rates are reduced. It has to balance out. We seldom if ever hear about the winners in those circumstances. We need a more transparent way of showing when a valuation happens to avoid controversy. It is in the best interests of public service to show how the funding is being used that is collected through commercial rates and where it is being spent within the respective local authority areas. There is room for improvement here. On local authorities selling to their ratepayers, these are the people who are funding them. Rather than just going with the hand out and collecting the money, which is their responsibility as a local authority, I believe there is a responsibility on local authorities to show ratepayers and citizens how their money is being spent. It can be done through a simple system. It is done in other jurisdictions and we should look to introduce it here in a better way. For a system to be successful, it has to be fair and equitable. I know the Bill is attempting to achieve that. It has to be transparent but it also has to be sustainable. If people are not paying, for whatever reason, it certainly will not become sustainable. It goes against the grain of good will and the good principle of people paying their rates for better services in the communities in which they do business and indeed reside.

It is the responsibility and reserve function of local authority members to set the annual rate and valuations at their annual budgetary meetings. Often, as we all know in this House, those meetings can be a place of hot debate where priorities are set and funding is then required to meet those priorities. Sometimes this may require an increase in the commercial rates and sometimes it may not mean that. It is down to elected members to set the priorities in their respective local authorities and then set their annual rate and valuation which is used in the formula to collect money from the businesses that operate in those areas.

There was mention of an allowance in the legislation for a waiver scheme. That is a positive step but I would guard against its abuse. For political popularity reasons, I would be afraid that some groups in councils which I will not name might look for waivers left, right and centre. I do not think that is the intent of the provision. It is more for policy objectives within the council. For example, it might be applied in order to incentivise new businesses in an area of decline, which would be most appropriate. I would be interested to hear more detail about how we can target the provision to ensure that local authorities are using it for the correct reasons, not for political purposes to gain popularity by bringing in waivers for the sake of it but rather introducing them to target areas in decline and to stimulate economic regeneration and development. The Minister of State might be able to address that at a later stage.

We need consistency in revaluation through the Valuation Office. We need a balance to be struck, for example, on whether to collect rates on vacant properties. Some people feel it is unfair if the owner of the property is struggling to get a business in and the local authority is still trying to collect the rates. Others would argue that if there is not an incentive for them to get a business in, it will remain vacant. There is a bit of a stick and carrot approach and a bit of balance to be struck in that area. Some politicians have said that they wish for the local property tax to be retained in the area in which it is collected. I have a concern around that. The principle of equalisation needs to be upheld in terms of funding of local authorities. We have places like Dublin doing extremely well and creating an economic vortex where businesses are strong and financially viable. Then we have other regions where businesses are struggling and the rate collection is not as high. Weaker regions and local authorities need assistance from stronger areas. I ask the Minister of State to take that into account. We need to be careful. It is all very well to say we will change the funding in local government systems here but we need to be careful that we do not make the weak any weaker than they currently are.