Thursday, 27 November 2008
Local Government Funding
Cuirim fáilte roimh an Aire Stáit. The matter I raise in this debate is the need for the Minister for the Environment, Heritage and Local Government to address the financial crisis that is being experienced in my home county by Donegal County Council, which has led to the announcement by union representatives, which has been confirmed, that 238 employees of the council are to be made redundant in the forthcoming months.
In conjunction with this, I request the Minister to outline an issue I raised in the Seanad a few weeks ago, namely, the levy that was introduced in this year's budget on all non-principal places of residence. Has the €200 to be collected from properties subject to that levy already been included in the allocation made to the council in this year's local government fund?
The reason I ask these questions is the Minister may not be aware of the decision taken by Donegal County Council and confirmed to the members on Monday this week. Some 71 fixed-term employees of the council have been notified that their contracts will not be renewed as of 31 December. The council has indicated to another 49 employees that their contracts will not be renewed at the end of March and 118 further employees on fixed-term contracts have been informed that it is unlikely their contracts will be renewed when they expire. That is a total of 238 employees who will potentially not be working with the council over the next couple of months.
This will have serious effects. There is a direct effect on the individuals concerned who are losing their council jobs. We are deeply concerned by this. The redundancies also have an overall effect in Donegal. Last night I had the opportunity to talk about the unemployment problems in the county and about the fact that we are losing employment at a rate of 100 jobs per week. That is far in excess of what is happening in other counties.
Those job losses will also have a serious effect on the services provided by Donegal County Council. I am not sure if the Minister for the Environment, Heritage and Local Government is aware of the implications of this. The loss of 238 staff from the local authority will have major implications of which a Green Party Minister should be aware. For example, my information is that the jobs of a number of the litter wardens who operate in Donegal County Council will no longer exist. There will be nobody doing that type of work. All five sections of the council will be seriously affected. Some sections will be limited to skeleton staff and, no doubt, there will be serious implications for the service that can be provided.
With regard to the €200 levy on holiday homes, rental accommodation and non-principal places of residence, I raised this issue a number of weeks ago and was told by the Minister with direct responsibility for it that the likelihood was that there would be an equalisation process and it would be unfair for the local authority to retain the funds. I disagree with that. It is wrong and it robs Donegal County Council of much needed funding.
Let us look, for example, at the three categories to which the levy would apply, holiday homes, rental properties and vacant properties. In the case of holiday homes, Donegal County Council has the highest number of holiday homes — nearly a quarter of all holiday homes — in the State. With regard to rental properties, we have the sixth largest number of rental properties in the State and the fourth largest number of vacant houses. The total number of premises subject to the levy in Donegal would bring in a total sum of approximately €4.6 million annually.
The notion of putting this sum into a central fund and distributing it evenly or via some equality measure to all other councils is wrong because it does not take on board the fact that Donegal County Council does not have the rates base other counties have, particularly those with cities or large urban areas, or those located on the east coast that have seen the benefits of the Celtic tiger over the past decade. It also does not take into consideration the financial situation in Donegal County Council.
As bad as the equalisation process would be, the indication from the county manager to the council meeting last Monday was that he understands from the Department that the levy that was to be collected and distributed to the council is already included in the local government fund. If that is the case, this will further deepen the financial crisis within Donegal County Council. I seek clarification on both of those issues.
I am responding to this adjournment motion on behalf of the Minister for the Environment, Heritage and Local Government.
General purpose grants from the local government fund are structured to bring about equalisation, over time so that each authority will have sufficient resources, either from central grants or from its local income base, to provide an acceptable level of day-to-day services to its customers. For the purposes of allocations, a range of factors is taken into account, including each local authority's expenditure on, and income from, each service; the overall amount of funding available for distribution; and the need to provide each local authority with a reasonable allocation towards achieving an acceptable level of services for its customers.
Donegal County Council's general purpose grant allocation for 2009 is €41,475,164. General purpose grants to Donegal County Council have increased by 218% since 1997, which the House will agree is a significant increase. All local authorities have been informed that they should prepare their estimates for 2009 on the basis of the general purpose grants already notified to them. These allocations take account of projected income from the €200 charge on non-principal private residences.
It is for each local authority to determine its own spending priorities in the context of the annual budgetary process, having regard to locally identified needs. I am satisfied that the level of funding provided through general purpose grants makes a significant contribution towards enabling all local authorities to provide a reasonable level of services to the public.
In budget 2009, the Minister for Finance announced the Government's intention to introduce a charge of €200 on all non-principal private residences with the exception of properties as yet unsold. Liability for the charge will fall on the owners of the properties concerned and a revenue yield of €40 million is estimated for next year.
When Senator Doherty raised the issue of the charge on non-principal private residences in this House recently, my colleague, the Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Finneran, made the point that the revenue base of local authorities is relatively narrow. This is the reason, together with the wider economic difficulties Ireland faces, the Government decided to introduce a €200 annual charge on all non-principal private residences effective from next year.
Legislation to give effect to the charge is being prepared in the Minister's Department at present. This will spell out the detailed manner in which the charge will operate, including the deployment of the revenue accruing from it.
While all local authorities have been made aware of overall Government policy on payroll control, under section 159 of the Local Government Act 2001, the staffing requirement in each local authority area is a matter for the relevant manager, who is required to make such staffing and organisational arrangements as may be necessary for the purposes of carrying out the functions of the local authorities for which he or she is responsible.
I welcome the Minister of State's reply. However, what is happening is crazy. The Minister of State has confirmed the €200 charge has been already incorporated into the funding given to Donegal County Council. This means the nominal 6% reduction in this year's allocation to Donegal County Council is closer to being a reduction of 12% or 13%. As the Minister of State pointed out, €4.6 million could be accrued by Donegal County Council under this charge. This is not an extension of Donegal County Council's rates base but simply is a way to bring more money into central government and to dish it out. This levy has in no way supported any local authority. I believe it was an abuse to announce in the budget that a measure was being introduced to assist local authorities when, on the one hand, the Government gave them money through this charge, while on the other, it removed it from them.
The Minister of State should ask the Minister to clarify what he considers to be relevant provisions. What does he consider an acceptable minimal level of services to be provided to local authorities? Does he believe it acceptable that no refuse collectors or litter wardens exist in wide areas of County Donegal or that there are not enough planners or staff to process housing claims for disability benefits?
I cannot believe this is the decision that has been taken regarding the council. The Government cannot wash its hands of the fact that 238 people will be made redundant because of the cutbacks inflicted on this local authority.