Paudie Coffey (Fine Gael) | Oireachtas source

I welcome the Minister of State and his officials to the Seanad to debate an important aspect of local government, namely, the sustainability of local government funding. It would be remiss of us not to put on record that this year we celebrated 120 years of the local government system in Ireland. Despite inadequacies and imperfections in the system, it has sustained itself over the that time and served the public quite well. We should acknowledge that while also recognising that reform and modernisation are required.

In Ireland, we have a funding model that is mainly centralised. The main power is that of the Minister to dissolve a local authority that does not discharge its duties under legislation. A local authority's main function is to pass an annual budget. Any public representative or democrat would oppose and hate to see the appointment of a commissioner in the place of an elected council. It would be a matter of last resort. It would be the last thing any of us would wish to see.

Having said that, budgets and draft budgets are mainly prepared by the CEO and council staff, with an input from the corporate policy groups of the council. One hears complaints that councillors do not have enough input into the draft budget but they have the final say. They have the power to prioritise expenditure within the local authority. Councillors need to exercise that power as best they can.

Often we hear calls for more autonomy and independence for local authorities. I remind the House, however, that with autonomy comes responsibility. That is where councillors can frame the budgets of their councils.

The main sources of income in the revenue accounts include commercial rates, housing rent, charges for goods and services, including for waste disposal or parking, and application fees. All these charges are set by the councils in their respective areas. The local property tax, which goes into the equalisation fund, is also a source of income. Coming from a rural area and rural local authority, we should retain the equalisation measures that are currently adhered to. I acknowledge the system is being reviewed. Some local authorities have a much greater ability to raise commercial rates than others. It is important that we maintain good public services in the local authorities that have less ability. That is where the equalisation fund comes into play in respect of local government funding. I ask the Minister of State to ensure this is retained as much as possible.

Capital funding comes from the Exchequer. I note what the Minister of State said in this regard, namely, that Government funding for local authorities has increased from 12% to 34%. This is a substantial increase in the provision of funding for local authorities. We must not forget our EU partners, who provide much needed funding for projects in the regions. Development levies are set by individual local authorities. Local authorities may borrow funds and they may obtain moneys from the sale of assets. There is quite a responsibility on them, therefore, in regard to funding and financial management. I am sure some local authorities are better than others at financial management. Local authorities have audit committees. Local government has an audit service constantly oversee financial management. Regarding performance, including in respect of the collection of rates and housing rent, is it possible to have readily accessible the performance levels of the local authorities? Where there are efficient collection rates, there will be efficient financial management. We must have this.

With regard to rates and valuations, I acknowledge the efforts to reform and modernise the commercial rating system through recent legislation. The Minister of State alluded to this. There is an opportunity for councils to introduce a rates alleviation scheme whereby they can reduce rates in areas within their jurisdictions to incentivise commercial activity. In 2020, I hope there will be some targeting through the commercial rating system in these areas. It is a statutory requirement of local authorities to levy rates on commercial properties.

There was a revaluation in Waterford a few years ago. It is a difficult time for businesses because there are always winners and losers. One will always hear about the losers but rarely about the winners, who see a vast reduction in their rates when a revaluation is carried out. Revaluation is carried out by what is a quasi-judicial independent office, the Valuation Office. After that, it lies with the elected members of the council to decide what the annual rate on valuation is in terms of the annual budget.

I am coming now to some recent controversies surrounding the revaluation of some utilities. Two or three years ago, there was a revaluation of telecommunications infrastructure. That left deficits in some local authority areas. This year, there has been a revaluation of the Irish Water asset infrastructure in local authority areas. That is having a very real impact on local authorities, especially those in Dublin and Waterford. Many local authorities saw an increase in their income from the valuations and the rates applied to Irish Water infrastructure. Unfortunately, in Waterford, there was a reduction of almost €3.5 million. That has created problem for the local authority, which has limited capability due to its relatively low rates base. Dublin also experienced significant reductions. To be fair and as anybody will acknowledge, local authorities in our capital city have a much more significant ability to raise finances from commercial rates.

Although it is said in Waterford and elsewhere that the cut is Government imposed, it is not. I acknowledge the efforts of the Government to support the Waterford local authority. A few years ago, when a large deficit was created after the amalgamation of local authorities, more than €3.5 million was provided to help harmonise the rates when the city and county local authorities were amalgamated. The rates at that time were harmonised to the lower rate, matching the then Dungarvan Town Council rate. Businesses in the city and across the county had their rates reduced but we do not hear that acknowledged publicly. Responsible politicians of all parties and none should acknowledge that. I have not heard it said anywhere in the public domain. There were reductions. We need to have responsible budgets and we need to assist businesses because, over the years, they have been expected to carry the can to fund local government.

I acknowledge the additional contribution by the Government of €2 million this year to assist Waterford City and County Council in adopting its budget. This is a significant additional contribution that other local authorities did not get. The Minister of State is meeting a delegation of councillors from Waterford who are seeking more money to try to close the gap. I wish him well in the talks. Having said that, I acknowledge the Fine Gael councillors in Waterford who lobbied significantly for the additional €2 million that was secured. Now it falls to the council to prioritise its expenditure, examine its budget options and pass a budget that is fair and balanced. I believe there is the ability within the council to do so. When it came knocking on the door of the Government looking for assistance, it received significant assistance, and that should be acknowledged.

There will always be challenges in passing an annual budget and in trying to provide greater public services at local level. The demand is increasing all the time but that is where the balance has to be struck. We elect councillors to strike that balance and to use their mandate to pass a budget, not to hand over responsibility to any bureaucrats or commissioners. I would hate to see that happening.I call on all councillors in the country to take up the challenge, do what is best for the people who elected them, which I know they will, and pass the budget, which is their primary function.