Wednesday, 1 July 2009
Order of Business (Resumed)
Senators Leyden, Norris, Ó Murchú and Hannigan all expressed their abhorrence at what is happening in the Middle East and I will certainly endeavour to allocate a small portion of time prior to the recess to allow colleagues to make their views known and to support the Minister for Foreign Affairs who is doing an incredible job expressing the views of the Irish people and their abhorrence at what is happening in Gaza. I fully support the sentiments expressed this morning by Senators Leyden, Norris, Ó Murchú and Hannigan.
Senators Bradford and Keaveney welcomed the massive reduction in roaming charges for telephone calls and I also welcome it. It will help everyone.
Senator Walsh raised voluntary health insurance and gave an example with regard to seeking a reduction. Health legislation will be before the House next Tuesday and I strongly suggest that the quite correct views outlined to the House by the Senator can be taken at that time. With regard to legal fees, which I understand the Senator was discussing, I will consider it and come back to the House next week. Senator Prendergast raised and outlined to the House the cutting of services, particularly in Clonmel. The Senator can take this up with the Minister next Tuesday when the health legislation is before the House.
I fully support Senators' expressions of support for anything we can do for the tourism industry at this time. We all know and we can see that many people will holiday in Ireland this year and will not go abroad. This is to be welcomed in support of the home tourism industry. Please God we will have fine weather to let them enjoy their holiday in their home country and support those working in the tourism sector.
Senator Hannigan raised the matter of global funding for education and I will pass his views on to the Minister.
Senator Mary White called for a 24-hour service for child care and quoted the example of 414,000 calls to Childline with the highest percentage being received between 5 p.m. and 9 a.m. I fully support Senators Mary White and Fitzgerald in their call for us to do everything we can to support children.
Senator Donohoe raised the matter of income decline. I suppose that is something that is happening all over the world but I notice that consumer confidence in our country has increased for the first time in many months.
This is statistical information that has been supplied to us all and we must accept it in good faith.
Senator Regan raised local government charges and the Bill will go ahead as outlined. Senators Coffey, Buttimer and Healy Eames raised the unemployment figures. As we often stated in the House the biggest challenge facing the country is jobs, and competitiveness is the root of the evil. If we look at the graphs for the past 20 years, the one failure, if we had a failure, was the high cost of labour.
Whether we like it or not, the high costs of labour and energy have taken away our competitiveness and we must seriously examine this through social partnership. I applauded the social partnership achievements since 1987 when the country was last in a massive downturn. All of us on all sides of the House face a serious challenge in this area; if we can get Ireland back to be competitive, jobs will be created, but if we do not jobs will be very difficult to recreate. We all know that and I do not care what part of the country one is from. I sympathise with our friends in Cork and Waterford and with anyone who is losing a job. It is a dreadful thing to happen, particularly when there is a downturn with no outlet to go to the United States, Australia or the UK as our friends did during the previous two occasions when there was a downturn.
There is nothing as good as being able to get out of bed in the morning and have a job to go to and to do some work during the day. The spirit of the person is being challenged and I agree with the sentiments expressed on all sides of the House. I know colleagues are genuinely concerned for friends and relations who are losing their jobs through no fault of their own. I will discuss with the leaders of the groups having an all-day debate at the earliest possible time with not one but perhaps two or three Ministers present to see how to come up with some formula of proposals to assist the Government and the Minister who holds the portfolio.
Senator Boyle made quite correct remarks on the Broadcasting Bill. I compliment the Minister for accepting amendments and I compliment all colleagues for not dividing the House on the matters before them for their consideration yesterday.
Senator Healy Eames raised the matter of charging levies on parents with regard to school-going children. I certainly will make inquiries and come back to the Senator directly.
Order for Second Stage.
Bill entitled an Act to impose on the owners of certain residential properties liability for the payment of an annual charge in respect of each such property concerned to the local authority in whose area the residential property is situated, and to provide for related matters.
I am pleased to open the debate in the Seanad on the Local Government (Charges) Bill 2009. The purpose of the Bill is to give effect to the Government's budgetary decision to introduce an annual charge on non-principal private residences. The Bill sets the charge at a level of €200 and it will be payable, in the main, by owners of rental, holiday and vacant properties.
It represents a significant broadening of the revenue base of local authorities. The proceeds of the charge will be paid to, and retained by, local authorities, and it will apply in 2009 and subsequent years. This is the first time in more than 30 years that a new source of local funding has been made available to local authorities. This measure is significant because it recognises that local authorities should not be disproportionately dependent on central government funding and, to this extent, its importance outweighs the level of revenue which it will generate The existing revenue base of local authorities is narrow by international standards.
It is now generally accepted that our economy, especially our tax revenue, has been overly reliant on activity in the construction sector. The decline in the yield from transaction taxes such as stamp duty, capital gains tax and value added tax on property generally has been a major factor in the imbalance in our public finances which the Government has had to address. The correction has been sharp and painful and more needs to be done. The €200 charge on non-principal residences is one of the measures taken to close the gap between expenditure and revenue. However, it should be seen as more than simply a measure to raise additional revenue. It is a new form of revenue stream that will not be subject to the volatility associated with the transaction-based property taxes to which I referred earlier.
The Bill is a relatively short and straightforward legislative measure. Essentially, owners of non-principal private residences will be liable to pay to the city or county council in which a relevant property is located an annual charge of €200. Liability arises each year on a point in time basis. Ownership of a relevant residential property on a specified day, known in the Bill as a liability date, gives rise to the requirement to pay the charge. I intend to designate 31 July as the liability date for 2009. In subsequent years the liability date will be 31 March and this earlier date will fit better with the overall annual financial cycle of local authorities.
The charge can be viewed as a type of self-assessment measure because it is for the owners of residential property, in the first instance, to assess whether they are liable to pay the charge. Given the relatively modest level at which the charge is set, I consider it important to minimise the costs associated with its collection. Accordingly, city and county councils will not be required to issue bills or invoices to those persons who own property liable for the charge. None the less, the charge is a relatively simple and straightforward measure and is easy to understand and administer. I do not anticipate that those persons who are liable to pay it will be under any confusion on this point, and my Department and local authorities will mount an information campaign to advise people of their responsibilities in this regard. In addition to the normal sanctions involving a fine on conviction of an offence, the Bill incorporates a late payment fee which should act as a real incentive to pay the charge when it falls due.
From a drafting perspective, the Bill starts from a position where all residential property is liable for the charge. It goes on to exempt certain buildings and owners from this liability. To put it another way, it identifies what is not liable within the totality of residential buildings, rather than taking as a starting point buildings and owners that are liable.
By far the most important exemption relates to principal private residences. Owner-occupied residences account for some 70% of the entire housing stock. The more important of the other exemptions include property which is let directly or indirectly by local authorities or voluntary housing bodies for social housing, property that is the subject of shared ownership arrangements with local authorities and certain heritage properties. Other exemptions to the charge are provided for, including persons who, in the process of changing house, own two residential properties for a short period, residential properties owned by charities and certain discretionary trusts and a spouse having an interest in a property after a divorce or separation agreement but who does not reside there but the other spouse does.
Following publication of the Bill, the point was made to me that mobile homes are a special case and should not be subject to the €200 charge. There are arguments for and against requiring a charge to be paid in respect of these properties. Some mobile homes are sited in very desirable locations and are traded on the market for significant sums of money. However, on balance and on reflection, I am disposed to accept the arguments that most mobile homes are a relatively modest form of accommodation and that, in many cases, those who own them do not also own the land on which they are situated. I am therefore tabling an amendment to exempt mobile homes from the charge.
The Bill provides that the charge shall be paid to county and city councils with an estimated annual yield of some €40 million. However, census and other data suggest that there may be some 400,000 properties in the State liable for the charge. The annual potential yield therefore could be higher than estimated at present. Like any new taxation measure, however, knowledge of the actual yield will only come with experience of its operation in practice. Given the data sources available, it is likely that, initially at least, collection levels from rental properties, of which there are about 200,000, may be higher than from holiday homes and vacant residential properties.
For reasons of efficiency, the smaller urban authorities that are rating authorities - those that levy and collect commercial rates - will not be involved in this exercise. They will, however, receive a payment from their parent county council based on the yield from the charge related to properties located in the town area. Provision is also made for the costs of collection of these charges to be retained by the parent local authority. This ensures all local authorities who have revenue-raising powers will benefit from the introduction of the charge.
In the event of non-payment of a charge for which a person is liable by a certain date, a late payment fee of €20 will apply for each month or part of a month for which the charge remains unpaid. An unpaid charge and any associated late payment fee will be a charge against the property in respect of which the liability arises.
The rolled up amount of a late payment fee should not be underestimated and non-payment of a charge for a period of five years will result in a liability of almost €5,000 when account is taken both of the charges and the late payment fees. I want the message to go out clearly to those who are liable to pay the charge that it will be simpler and a lot less expensive to pay the charge when it falls due than to attempt to evade it, especially in terms of the resale of the property concerned. Local authorities will also have power to take prosecutions against owners who fail to discharge their liability to pay the charge. Prosecution will be by way of summary jurisdiction and a court may impose a fine of up to €2,000.
Where a property liable for the charge is sold, the Bill provides that the new owner of the property will be liable for unpaid charges and late payment fees, and that these will remain a charge against the property for a period of 12 years from the date that they were incurred. This should prove a strong incentive for a purchaser's solicitor to ensure that all outstanding charges are paid before a contract to sell the property is executed.
Local authorities can delegate functions to the Local Government Computer Services Board or the Local Government Management Services board, or both. In practice, the computer services board will design and operate a website facilitating electronic payment of the charge and a database to record payments. It is likely that local authorities will delegate functions to the local government computer services board with regard to overall operation and management of a website through which the charge can be paid and a database recording payment of the charge.
Provision is made for data exchange between local authorities and the Private Residential Tenancies Board, PRTB, the Electricity Supply Board and the Revenue Commissioners. This data should assist local authorities to identify properties liable for the charge. The PRTB holds data on rental properties and the ESB's systems can generate data on residential properties where a relatively low quantum of electricity is used, something which may indicate the possibility of a holiday or a vacant residential property. The Revenue Commissioners hold data on certain property transactions, such as stamp duty, VAT and capital gains taxes.
Payment will be accepted on behalf of any local authority through a website that has been designed and constructed by the Local Government Computer Services Board and which is broadly similar to the motor tax on-line system. The revenue accruing will be relayed automatically and at intervals to the bank account of the city or county council in whose area the property is situated. While payment will also be accepted locally in local authority offices, I ask those concerned to use the website for their own convenience. This will minimise costs associated with the administration and collection of the charge.
Senators will be aware of the significant role which the local government fund has played in the financing of local government since it was established in 1999. The fund is financed from a combination of an Exchequer contribution and the full proceeds of motor taxation. Total funding for 2009 amounts to some €1.46 billion, which represents approximately 30% of local authority current funding. The fund comprises an Exchequer contribution of €417 million and the proceeds of motor tax, which is projected at €1.04 billion this year. In addition, local authorities will retain the full proceeds of the new pension-related deduction, estimated at €80 million in 2009, and the Exchequer contribution to the fund has been reduced to take account of the deduction. The new pension related deduction has, therefore, a neutral impact on local authority finances in 2009.
Local authority current expenditure amounted to €1.8 billion in 1997. This year, current expenditure by local government will be in the order of €5 billion. Local authorities were advised of their 2009 general purpose grant allocations in October 2008, which indicated an average reduction of 6.4% over the corresponding 2008 allocations. The general purpose grant allocation from the fund to local authorities for 2009 amounts to €935 million. These allocations have been reviewed in light of the estimated income from motor tax in 2009 and the Exchequer contribution to the fund for 2009 as set out in the supplementary budget. This has necessitated a further reduction in individual allocations of 3% and I have notified local authorities on the matter. The €200 charge is estimated to provide some €40 million in income to local authorities. This will more than ameliorate the impact of the reduction of €30 million in general purpose grants to which I have referred.
A properly resourced local government sector is vital to local democracy. I take this opportunity, however, to refer briefly to another issue that is equally important to the well-being of the local government sector. As Senators will be aware, I have published a Green Paper on Local Government Reform and will publish a White Paper after the Government has had an opportunity to consider the report of the Commission on Taxation. The Green Paper addresses a number of issues, including, a proper balance of power at local levels between the managers and elected representatives, directly elected mayors, establishing town councils in towns that have displayed significant population growth, quality customer service and expenditure limits at local elections.
I refer briefly to my recent announcement that the first election for a mayor for Dublin with a regional mandate will be held during the summer of next year. The election of the Dublin mayor in 2010 will fulfil, one year ahead of target, a key commitment of the Government's programme. In introducing a directly elected Mayor for the region, the Government will be making the most significant change to local democratic leadership in Dublin since the foundation of our current system of local government in the 19th century. Dublin is both a city and a region. A strong, dynamic and sustainable capital is essential to the well-being of the whole nation, not just to the people of the city itself. Experience has shown that strong political leadership can bring a new dynamic to cities and their regions.
The mayor will be elected by the people of the city and the three surrounding Dublin county councils, that is, the area which constitutes the existing Dublin Regional Authority, and will have the powers to set strategic policy for the region, co-ordinate across institutional boundaries and ensure that local activity is in tune with a coherent set of strategic regional policies and plans. A strengthened Dublin Regional Authority, chaired by the mayor, will support and complement the mayor's activities. The introduction of a democratically accountable mayor for Dublin, a position which personifies local government and thereby forges a new connection with the public, will capture the imagination of the people of this city. Among the consequences will be improved strategic planning for the region, better services, greater integration and coherence, enhanced use of resources and stronger local democracy.
Quality customer service is another issue that is addressed in the Green Paper. The efficient and effective performance of local government is of real importance to our citizens and to the welfare of our local communities. In that context, the transforming public services agenda will build on the local government modernisation programme which has taken place over the past decade, but will also represent a step change in regard to progress in this area. The report on transforming public services recommends that local government structures should be drawn on to enhance public service delivery. The democratic legitimacy of elected councils is also recognised and should be maximised as a focus for consultation on the delivery of national services locally. The local government sector is a willing and able partner in this agenda and recognises that public sector transformation is an integral part of the solution to Ireland's current economic difficulties.
In this context, greater coherence and synergy between different levels of Government and the public service are fundamental to more efficient and effective operation. My Department and the local government sector are working closely together to advance broad public service initiatives for a more integrated public service which can achieve better value for money and enhanced customer service.
The Local Government (Charges) Bill is a fairly short and straightforward legislative instrument. The revenue stream to which it will give rise is significant, at €40 million annually, but could not be described as large in the context of overall local government spending. Nonetheless, its importance cannot be measured simply in these terms. The Bill establishes a new funding source for local authorities, one that is genuinely local in that it derives from revenue raised locally and that will be expended for local purposes. By broadening the revenue base of local authorities, it can properly be described as a ground-breaking initiative and I hope it will receive a general welcome for that reason. Arguably, it would serve the interests of local democracy still better if local authority members themselves determined, perhaps within certain limits, the level of the charge, as is the case in regard to commercial rates. There may be scope to devolve other aspects of the charge to local authorities also. These are issues that I may well revisit at a future date, and I would very much welcome the views of Senators in this respect.
I thank Senators for their co-operation in facilitating early consideration of the Bill and I commend it to the House.
I welcome the Minister and his officials to the House for the debate on the Bill. The Fine Gael Party in principle supports the general tenor and thrust of the Bill, in which the Minister proposes to broaden the revenue base for local authorities. It is a widely debated issue, not only in this Chamber and the Lower House but also in many local authority chambers throughout the country. Indeed, it has been the subject of many conferences and I know my colleague, Senator Glynn, has attended many conferences and has made contributions on the whole area of local government funding.
This Bill breaks new ground in providing a way in which local authorities can raise and broaden their revenue base. However, there are implications for the implementation of the Bill that need further analysis and clarification from the Minister. He briefly referred to the charges for mobile homes, which has already been widely debated by the public, including on public radio shows, as the Minister will know - one Senator referred this morning to this sudden Government U-turn on the mobile charge as "the Joe Duffy amendment". The U-turn is welcome. Many people have mobile homes in holiday parks which they do not own and they pay an annual charge for the use of that holiday park. While they may have owned the mobile home for decades, this new charge would have been additional and, therefore, the Government amendment to remove the section that applies a charge is welcome.
In a way, this amendment tells us that the Bill has been rushed, despite its general thrust having been announced in the budget of October 2008, where it was indicated that a €200 charge would apply to non-principal residences in this country. Why has there been a delay and why is the Bill suddenly going through all Stages in the House on one of the last sitting days of the session? If Opposition parties want to table amendments on Report Stage, we would be entitled to time to do so, which would mean the business of the Seanad would have to be rescheduled to facilitate the debate. Any reasonable person would acknowledge that this is not the best way to introduce legislation. The Minister needs to take account of this point and he should not try to rush legislation through the House in this manner.
I wish to address some of the measures contained in the Bill. To broaden the revenue base for local authorities is certainly a welcome element and is the main thrust of the Bill. It is estimated it will yield in excess of €40 million per annum for local authorities, although this will vary from one local authority area to another. Obviously, much building has taken place in the commuter belt around Dublin and the local authorities in that area stand to gain much more than those in other areas, where there is not as many second residences. Some areas will, therefore, have a slight imbalance with regard to fund raising.
In addition, it needs to be acknowledged that this is not additional funding for local authorities. As the Minister said, he has cut local authority general purpose grants by almost 10% in this year's allocation compared to the allocation for 2008. The Bill is really trying to fill the gap caused by huge deficits in local authority budgets and we are not sure it will succeed because we do not know the full amount of income that will be yielded from this source. Many issues remain to be examined in the coming months and years to ensure local authorities are properly funded. The Bill will not answer all the questions, although it will go some way towards doing that.
With regard to administration, most of the Opposition amendments which will be discussed later focus on the administration and collection of these charges by local authorities, which are already overstretched with regard to their mandate to carry out many obligations under the various Local Government Acts. Local authorities are pressed in their effort to deliver services on the ground and this is an additional workload we are asking them to take on. I am not sure if the means by which local authorities will collect this charge has been fully thought out. While the Minister stated that an online system will be used and an effort will be made to centralise the collection system, enforcement and the administration of the system will require resources.
Fine Gael makes the reasonable request that the Minister consider a role for the Revenue Commissioners in the collection of this charge as they have the best resources and ICT systems to analyse and ensure its full and proper collection. It is a new area for local authorities to step into. I understand they are involved in the motor tax system but this system is quite different and, as it concerns property ownership and the many legal issues around that, it is more complex. Fine Gael believes the Revenue Commissioners could play a greater role in regard to the collection system, although we will come back to this point at a later stage.
We also have concerns with regard to exemptions. For example, the HSE might have contracted with private landlords for emergency accommodation or otherwise, or local authorities might have contracted accommodation through the rental accommodation scheme. If my understanding is correct, these accommodations are exempt although they are similar. The question that arises is what is deemed to be the difference between one house which is in the RAS and another on the opposite terrace. Although it is the same type of house with the same builder, one house will be charged while the house in the RAS will not be charged. We need clarification on this because, if it is the case, it seems quite unfair that just because a private landlord enters a contract with a local authority for long-term accommodation, he should be exempted while a person living across the road is not.
I referred briefly to the implications for local authority resources. The motor tax system is working very well, which I have always acknowledged in the House. It is an excellent system that should be expanded to more areas if at all possible. In this case, the Minister is proposing such an expansion but I have some concerns. The Minister referred to the Private Residential Tenancies Board, which gives rise to a serious issue. The PRTB was before the joint committee yesterday and we heard horrifying evidence of how its business operates. It seems to be one of the main planks of information and data exchange that the Minister is depending on for this scheme but, if that is what it is, I assure the Minister it is a very shaky and vulnerable plank.
Did the Minister know there is over €10 million sitting in the bank accounts of the PRTB that has not yet transferred to local authorities, to which it should have transferred long ago to assist them in inspections and enforcement? The PRTB claims this is not its fault and that it is carrying out the registrations and collecting the money. When questioned by Opposition committee members, it quite squarely blamed the Department and the Minister. It was claimed that the local authorities are not drawing down this money and that there is a role for the Department and the Minister in ensuring this will happen. For every registration of private rented accommodation, €70 is collected. Four sevenths of this is retained by the PRTB and three sevenths is meant to go to local authorities. In the current economic climate, it is a disgrace if €10 million is sitting in a bank account of a State body that has not been moved to where it should have gone. I draw the Minister's attention to this issue.
With regard to ICT systems, the PRTB is dealing with all registrations manually. It is all hard paperwork because, the board claims, legislation does not allow it to use an online system similar to the motor tax system. This means it must employ more than the core 40 staff. It employes a further 25 agency staff to manually input every registration of a private accommodation and the system has resulted in a significant backlog. There is no information technology system to manage the registration database or to case manage all the registrations and this is causing significant backlogs and disarray in the board.
Dispute resolution takes between 12 to 18 months but in its corporate plan the board set down a target of between five and six months for dealing with disputes. This is totally inefficient and unacceptable and any reasonable person would agree with me. It is taking almost three times longer than it should to deal with disputes related to private rented accommodation, largely due to inefficiencies and excessive bureaucracy within the structure. I was informed that adjudicators in disputed cases are paid more than €600 per day, which is amazing. Up to now they have been dealing only with one case per day but now they are being asked to deal with more than three cases per day. A sum of €600 per day paid by the Private Residential Tenancies Board, PRTB, is a very good payment for any individual for the completion of such work. There is no on-line payment system or IT system within the PRTB and I am unsure how the Minister intends to share data with the board as set out in the Bill. The board is struggling to deal manually with much of the workload as it stands. A great deal of attention is required in this area.
The Minister referred to data sharing between the Revenue Commissioners and the Department of Social and Family Affairs, especially the sharing of personal public service numbers. The Oireachtas Joint Committee on the Environment, Heritage and Local Government, of which I am a member, examined the idea of sharing PPSNs as part of an effort to update the electoral registration system. There are issues with the Data Protection Act and sharing certain personal information. Clarification is required in this area if the Minister expects to acquire information from those Departments for the purposes of this Bill. This could be a problem which the Minister and his officials have not foreseen.
The Minister also referred to the ESB and electricity usage. I worked in the ESB and there are data protection issues with regard to any information on accounts or usage it issues to any third party. This is also an issue and it would not only involve the ESB. There are several other suppliers in the electricity industry, including Bord Gáis Éireann, Airtricity and many others, but they are not mentioned anywhere in the Bill. Such organisations keep account of electricity supply issues. While the principle of data sharing contained in the Bill is good, the matter has not been fully thought out. The PRTB is a disaster at present yet it is one of the main planks of the Bill with regard to sharing information and support for local authorities in this area.
I refer to the implications on the tourism industry. Fine Gael welcomes that this charge will not be applied to mobile homes. However, there are many areas where there are holiday homes owned by small businesses or tourism companies. Such firms have considerable concerns because they already pay rates to local authorities for these homes and they will now be asked to pay an additional charge of €200 per home. These homes are not owned by individuals but by small tourism companies. If the charge were levied the companies would pass it on to the holidaymaker, automatically increasing the cost of holidaying in Ireland. This has negative implications for tourism in Ireland. We are trying to promote holidaying at home and to create incentives for people to holiday in Ireland. The Minister should examine this area and he may be able to clarify the matter later.
Another area requiring clarification relates to exemptions. If a person owns a house and provides it to his or her parent, it can attract mortgage interest relief because there is no revenue income from such a house. By the same principle is it not reasonable to call for such a house to qualify for an exemption to the charge as well? The Revenue may grant mortgage interest relief if it can be demonstrated with evidence that a son or daughter provides a house for a parent from which there is no rental income. This is part of the reason the Revenue Commissioners provides a better collection system. It is reasonable to request that such houses would not be subject to the charge also and I seek clarification on this matter.
The Minister called for the views of Senators with regard to whether councillors or local elected representatives should determine the charge within certain limits. I would welcome such a measure because we must give autonomy to local authorities and real power to elected local representatives. We have recently emerged from local elections in which excellent councillors have been elected throughout the country. They have the ability and capability to run their local authorities if the correct funding is provided. The Minister could allocate power to set the charge in this area and I welcome any further moves to give more autonomy to local elected representatives.
Ba mhaith liom fáilte a chur roimh an tAire go dtí an Teach. I welcome the Bill which gives effect to a budgetary measure announced by the Government last October. Any legislation or measure which devolves the power to local authority members to raise additional finance by way of reserve function is welcome. I have long advocated this measure and I have not changed my mind on the matter. Many local authority members, local authorities and associated organisations, including my nominating body, the Association of Municipal Authorities of Ireland, the Association of County and City Councils and the Local Authority Members Association have long advocated devolving more power to local authority members and local government. However, it must be borne in mind if one is dependent on the Minister to allocate more money, one is depending on a broken stick because the Minister has much to do with money. I say as much with due respect to the Minister, Deputy Gormley. If local government is to be able to stand alone then it must stand on its own two feet in so far as it is possible.
We have seen the erosion of the funding base of local authorities throughout the years. I recall the early 1970s, during which the coalition of the Labour Party and Fine Gael started the abolition of rates, followed by the Fianna Fáil Government of 1977 which abolished them totally, an outrageous and bad decision all around for which we are still paying. This is the first real opportunity for local authorities to raise money apart from the Local Government (Financial Provisions)(No. 2) Act 1983 which introduced local charges. This is another way for local authorities and local authority members to get money to spend on functions. The Local Government (Charges) Bill 2009 has been introduced to give legal effect to the measures in the budget. The €200 charge will apply to the owners of residential rental property, holiday homes and vacant properties unless the vacant property is newly constructed but unsold. Let us pause here for a moment. I do not regard the Minister's decision to row back on the charge for mobile homes as a U-turn. Any legislation published will always be subject to scrutiny. This is one of the reasons legislation is first published and the process then involves five stages to ensure mistakes are identified and corrected. Perhaps the mistake this time is a mistake with a small "m" or a large "M". It depends from where one is coming.
One of my pet aversions is derelict properties. If one travels down the main street of any town or city one will see properties vacant for the longest time. When a local authority applies pressure under the Derelict Sites Act, lo and behold a planning application is made. Is such a planning application given effect in many cases? The answer is "No". I welcome this measure. In the case of vacant properties which have been allowed to become derelict by their owners a fine of €200 is not sufficient. These properties are a blight and an eyesore on the streetscapes of many villages, towns and cities and it is wrong that this is allowed happen. This provision is a small step forward in resolving that problem but in my view the measure should be stronger. I suggest there should be stronger legislative measures to eliminate this type of disregard practised by many property owners in our towns, cities and villages and even in the countryside.
The law is the law, whether we like it or not. It should be mandatory for property owners to register, just as we are all obliged to pay car tax in the motor taxation offices or any other service charges payable in the finance office of the relevant local authority. I do not see any reason why this cannot be done. This provision will give members more money to spend under reserved functions.
I refer to the Minister's contribution in which he states, "For reasons of efficiency, the smaller urban authorities that are rating authorities - those that levy and collect commercial rates - will not be involved in this exercise." I say to the Minister that they should be. I could cite many examples of small town councils but I will not name them as I would leave out too many. It was the very same when the policing committees were initiated and it was decided that town councils were not to be involved. I remind the Minister that most crime is committed in towns and cities. The Minister show row back on his decision and he should devolve to the town councils that are rating authorities the power to collect this levy.
I refer, for example, to Bray which has a larger population than at least two counties. Tralee has a 12-seat town council as has Dundalk. Does the Minister propose that these towns will not be involved in this process? I consider that to be wrong and I ask the Minister to look again at this proposal with a view to correcting it.
The Minister referred in his speech to the Green Paper and I welcome his statement:
The Green Paper addressed a number of issues, including a proper balance of power at local levels between the managers and elected representatives, directly elected mayors, establishing town councils in towns that have displayed significant population growth, quality customer service and expenditure limits at local elections.
In my view the creation of new town councils is a must. While the non-rating town councils might not have a lot of powers - I ask the Minister to address this point in whatever way he can - nevertheless, they have an elected voice, an elected forum and they identify many issues that need to be identified. Some Members of this House would say that town councils should be abolished. If this is the case, it is amazing and we have come a long way. We fought hard for democracy and now there are people in elected positions advocating its abolition. This is hard to credit but it is true.
The Minister will be aware that many county councillors work full-time as councillors because it is a full-time job. Not only county borough councillors but also even some town councillors work full-time. In one local electoral area of County Westmeath, one councillor out of five works full-time in another job and all the others work full-time as councillors because they realise and appreciate that it takes all of their time and not just part of it. In that context, I feel obliged to relate to the Minister the concerns of councillors. In this time of shortage and recession we all know that everybody has to do his or her bit but many councillors depend on their income from the local authority. I ask the Minister to stay his hand from being too hard on them with regard to their income and training seminars and I make no apology for saying so. Local government membership is ever-evolving and the knowledge required is also ever-evolving. The real learning process for any representative is the interaction with other locally elected members. The only means of doing this is by attending training seminars.
I welcome this measure which has been long awaited and I hope it will be successful for the Minister. I ask him to reconsider the decision not to include the rating town councils in this process as there are very practical reasons they should be included. From my knowledge of small local authorities and urban authorities, they are extremely efficient and they do a marvellous job.
Cuirim fáilte roimh an Aire. Ba mhaith liom fáilte a chur roimh an mBille. Seo ceist atá tógtha agam sa Seanad go minic. Táim ag déanamh gur thóg mé an cheist trí uair ó deineadh na fógraí sa cháinaisnéis dheireanach anuraidh. Ach roimhe seo, bhí sé tógtha agam ag iarraidh ar an Aire Airgeadais Bille mar seo a chur chun tosaigh. Os as Tír Chonaill i nDún na nGall mé, tá a fhios agam go bhfuil an comhairle contae ansin iontach gníomhúil ag iarraidh go dtugfar isteach an levy seo. Tá siad ag obair chuige sin ar feadh go leor blianta. Tá a fhios agam go raibh mall air go dtí seo, cé gur dúradh san Indecon report i 1992 go mbeadh a leithéid de rud ann. I welcome this Bill and I commend the Minister for bringing it forward. I have raised the issue on many occasions in the House since the announcement was made in the budget that the Bill should be brought forward. I was dissatisfied that it had taken so long to bring this legislation before the House.
I refer the Minister to the legislative programme for the Seanad this week which is absolutely crazy. We have gone through weeks with no legislation and instead have had statements on this, that and the other, and we are now rushing through with nine pieces of legislation this week. This does not make any sense but that is a debate for another day. This Bill is good legislation although I would like to see it amended. I will discuss amendments on Committee Stage and I will raise some of them with the Minister today.
I raised this issue before the Government ever made the announcement because I have strong views on the matter. Holiday homes in particular should pay a rate towards the contribution made to them by local authorities such as the provision of water, roads, sewerage and all the other amenities they use. I raised this issue with the Minister for Finance and he was not disposed at the time but I am pleased that the Minister and his Department have seen the need to introduce this charge. One of the key areas of concern to me was that local authorities would be able to retain the revenue collected within their administrative area. When I raised this matter in the House as a matter on the Adjournment it was clear that this was not the first option which would be considered. I am glad the Minister has decided on the right course of action for which he is to be commended.
I am pleased the Minister will introduce an amendment to exempt caravans as that makes sense.
Regarding some of the other issues in the Bill, as a Donegal Senator, and probably from a selfish point of view, I have raised on a number of occasions the amount of money Donegal could accrue from this scheme. Last year I calculated that just over 23,000 properties in Donegal would come under this scheme. We have the highest number of holiday homes in the country, at 8,275, and that is the ones that are built. Planning permission has been granted for approximately another 1,000 that have not yet been constructed. We have the sixth highest number of occupied rental properties in the State, at 4,232, and 10,768 non-principal private residences, or second houses, which is the largest number in the State after the cities of Cork, Dublin and Galway. That is a total of over 23,000, which would bring in €4.655 million to the local authority if all those properties were levied.
In the budget it was announced that €40 million would be accrued from this levy. I thought that was a lazy calculation because I presume what was looked at were the rental properties in the State and that figure was multiplied by €200, but it did not take account of the vacant houses and holiday homes. I am glad the Oireachtas Library and Research Service has confirmed the figures I was using, which is that it would bring in over €90 million if all properties were levied and €4.6 million for Donegal County Council. That will go some way to meeting the needs of the county.
The Minister will be aware that many people were made redundant in Donegal County Council. We are facing major challenges and I am very disappointed that a Government decision did not come from the Cabinet yesterday on the €1 million bill from the council to deal with the flooding that occurred in Gweedore. That is a separate issue which I, my colleague, Senator Ó Domhnaill, and others will continue to raise in trying to ensure that money is forthcoming.
I want to make a number of points about the advertising campaign. The Minister said that the date set is 31 July. I presumed it would be September or a later date because 30 days is a short period of time. I am not sure if the computer programme has been built. Are there plans afoot to have the advertising campaign rolled out? How will that advertising campaign be rolled out? In particular I would like information on where that advertising campaign will be rolled out. I gave the Minister statistics in terms of Donegal. Many of the holiday homes in Donegal are owned by people who reside in the Six Counties. Will there be a concentrated focus on advertising in that area to bring to people's attention that this levy is now in place?
Senator Coffey raised the other problem, namely, who should collect the money? I believe it should be the local authorities but that calls into question difficulties being experienced by local authorities. I spoke to someone in the manager's office earlier today who said that people are being moved left, right and centre. People are now doing two jobs and covering many bases because of the difficulties being experienced by local authorities in laying off temporary workers. There is a recruitment ban in place but the local authority may need to recruit somebody to oversee the collection of these charges. That is something that must be dealt with by the Minister's Department to allow local authorities recruit somebody on a permanent basis from the moneys they collect. I cannot see how they can do it under their current complement and it would be wrong, because it is a big job in terms of following up on these charges, that no one person would be responsible for it. From my experience in Donegal and listening to members of local authorities in other counties, I am aware there is no more meat on the bones, so to speak, in local authorities. They are pared down to the bone and we must ensure they have that staff complement to assist them in the collection of these charges.
I have a number of concerns about the exemptions in the Bill, which I will outline. For example, many people have houses with built on granny flats, as they are known, to house an elderly parent. Under this legislation owners of houses with built on self-contained flats, which are usually sons or daughters, must pay €200. That is wrong and I would like to see that exempt.
To give another example, in my area of Donegal 10,000 people have lost their jobs in the past year but there has always been a tradition of people working away from home. Under this legislation somebody who owns a house in Gweedore, The Rosses or wherever and is married with children but who works five days a week in the construction industry in Dublin or Galway must pay €200 on the family home where his wife and children live. I see some people are nodding their heads but on my reading of the legislation if one is the owner of the property one is subject to this charge, unless one resides in that property. If there is co-ownership the charge is divided equally between the two co-owners. I refer to an owner living away from home and it is not his or her main residence. If he or she is working in Phibsboro, Cabra or wherever and renting a property five or six days a week while his home lays empty, he or she is subject to that charge. If that is not the case I would welcome that but I suspect it is the case.
I also have a problem with the family home issue. There is a deep attachment in rural Ireland to the family home. It is the house where the siblings were born. The mother and father have passed away and the family home is left usually to all the children. The home is not occupied or used but there is an attachment to it on the part of the family members. One can see them throughout rural Ireland. They are kept in good order but no one no longer resides in them. I am concerned that the family home would be subject to this charge as well. We need to examine the provision of an exemption to ensure that family homes, if they are not used as a holiday home or for rental purposes, are not levied with this charge. We all know the small houses in rural Ireland. They have electricity connected to them. Nobody lives in them but the sons and daughters paint the houses and keep them in good order because they have an emotional attachment to them. If they are levied €200 per year over the next 20 years, those family members will have to make a choice and I do not want to see them knock down these houses because they are part of the fabric of rural Ireland. There must be some provision we can put into the legislation to ensure that anomaly is dealt with.
The other issue concerns elderly persons living on their own who move to a nursing home as a result of a long-term illness and their houses are then subject to this levy. We must consider bringing forward an amendment to deal with that issue because if the owner of the house is in a nursing home on a permanent basis he or she is subject to this levy.
I commend the Minister on bringing forward his own amendment on the carbons issue.
I will seek to bring forward another amendment, and I am glad the Minister mentioned it in his contribution because it is a missed opportunity. I believe that local authorities should set this rate. It is within the Minister's gift and it is proper that initially the Government sets the rate at €200, but we should give local authorities the power to decide the rate from now on, and we should do that now. There should not be a need to come back, as the Minister announced, to re-examine this issue. We allow local authorities decide the rates for small and medium enterprises, corner shops, barbers, restaurants and multinational companies, and we should trust them enough to allow them to set the rate, whether it is increases or decreases, on holiday homes, second homes and rental properties. If that power was given to them it would be welcomed by local authorities throughout the State. I hope to hear from the Minister that he is disposed to that idea, although perhaps not now. Is there something we can write into the legislation that would allow the Minister to do that by way of ministerial order? There should be a stronger commitment to doing that.
I welcome the legislation, which will help struggling local authorities. There will be many challenges in terms of collecting the rates. It will be easier to collect from the rental sector but challenges will be faced in terms of the holiday home and the vacant house sector, and we will need to keep a close eye on that. I am also concerned about the cost of collecting the charges. A review mechanism should be built into the legislation to ensure that local authorities do not spend 25% of the income from charges on administration. Best practice should be shared among local authorities. Collection methods will vary because the types of dwellings will vary in different areas.
I thank the Minister for the legislation. I will bring forward amendments on Committee Stage.
Any move to increase the local government funding base is to be welcomed. We await the report of the Commission on Taxation as to how this might be done on a more long-term basis. This is a modest charge but it will help make the local government funding base more diffuse and diverse. It also gives it a property element, which the Irish taxation system has lacked.
May I cite the example of our nearest jurisdiction? My wife and daughter are engaged in further education in Coventry, where they live in rented accommodation.
I did not send them to Coventry, although I have been sent there by them on several occasions.
They have received a council tax demand from the local authority. They are resident but they do not own a property, are not UK nationals and do not have independent income. Nevertheless, the council tax demand is £1,300 each for local government services. When one compares and contrasts the local government funding systems in the two neighbouring jurisdictions, one sees that local government in Ireland has been a poor relation, both in funding and compared to other local government systems. On that basis, there should be a more generous welcome for this legislation and fewer demands for the types of qualifications which have been mentioned on certain radio programmes and by Members during the debate to date.
To own one property in Ireland requires a level of wealth, to own two requires a level of wealth to which many in this country cannot aspire. In his opening contribution, the Minister stated that 70% of Irish residences are primary domestic residences. Much of the remaining 30% consists of rental properties which are designed to earn an income for their owners. The number of people who own a second house and use it for a purpose other than income or as a primary domestic residence is small.
I do not accept the qualifications cited regarding people whose work takes them elsewhere and whose families could almost be said to live in two jurisdictions. There is other legislation on joint ownership of the family home and this is adequately covered by the exemptions to couples in divorce and separation agreements, which the Minister mentioned in his opening contribution. This has been thought through. Second Stage debate is an opportunity to seek clarification and to consider suitable amendments. The Minister is in the process of introducing an amendment on mobile homes, which are a different type of second residence. They can be moved and are smaller than other second homes. Even in accepting those arguments, other questions have been unleashed regarding other more fixed holiday-type home arrangements for which special exemptions are already being sought. I am thinking of chalets and the like. Lines must be drawn. A fixed building which is a secondary residence should be covered by the legislation. The charge is set at a very modest level.
The Minister also referred to local government reform and the imminent publication of a White Paper when the Government has considered the report of the Commission on Taxation. There has been speculation about what the commission might recommend regarding wider local government finance. I would not like to see a return to the old system of imposing rates on domestic residences and built property. Rates were a negative tax because they discouraged local economic activity. Householders who improved their homes, putting money into a local economy by employing local people, were penalised for doing so by being given a higher rateable valuation and having to pay more to the local authority. The essence of local government reform lies in site value taxation, which is more constant than property prices. We know how inconstant property prices have been in the past 20 years. When the report of the Commission on Taxation is published, there should be a debate on this issue. To return to what did not work in the past would not be in the interest of the country or of local government.
The Minister also welcomed the bringing forward by one year of the direct election of a mayor of Dublin. This will be one of the most significant reforms in the history of local government. I would like to see this measure followed by the extension of the concept to other metropolitan areas such as Cork, Limerick and Waterford, perhaps in time for the next local elections. As and when the election of the mayor of Dublin is seen to be a success I hope that will happen. To encourage the direct election of mayors to large metropolitan centres and to the dozen or so large towns which have a population of more than 7,500, we should hold local referendums to ask the people in those areas if they want a directly elected mayor or to achieve town council status. These are the ideas which we should discuss when the White Paper on local government is published.
The Minister also detailed the effects of changes in Government spending on local government. Like many Members, I am not aware of the content of the report of an bord snip nua or how it will impact on local government. It is clear that while excellent public services are delivered through our local authorities, the need to examine where money is being used applies as much to local authorities as to any Department or State agency. The straitened circumstances in which the country finds itself afford an opportunity to reform local government in more ways than one. We can consider new structures, new powers for elected members and new offices, such as the elected mayor of Dublin. We must examine how local government services can be introduced most efficiently and local government's ability to do so through independent and separate funding, such as that contained in the Bill. That is why we should welcome the Bill. I fully endorse its being put to the House.
I welcome the Minister. I am glad to hear his commitment to holding mayoral elections in Dublin next year, a year ahead of schedule. I look forward to elections in other city and town councils and the introduction of new town councils and urban district councils as soon as possible.
If the proposed charge is a new source of local government funding and not merely a replacement of existing Government funding it may be a step forward. I am glad the Government no longer proposes to apply the charge to mobile homes - the Labour Party had tabled an amendment to that effect. Having spent many holidays in mobile homes, I see this as a sign that the Government appreciates that mobile homes are not owned by the rich but by ordinary people who cannot afford an expensive second home. Mobile homes fill a gap in the market and it would not be right to include them in the legislation. I am glad the Government will not impose the charge on them.
I am concerned that self-catering homes are included. I have received much correspondence from people involved in the self-catering holiday industry, who are very concerned by this charge. The chairperson of the Irish Self-Catering Federation, Ms Helen Cousins, says that exempting registered and listed self-catering homes would cost the Government less than €2 million per annum. That is a very small amount compared to the estimated income from the tourism industry. The self-catering sector is worth almost €1 billion to the Irish economy. In addition, a constituent of mine from Laytown has pointed out that if registered and listed self-catering homes are not exempt, the local authority charge might mean that many self-catering operators will not be able to continue in business. Driving anybody out of business is a retrograde step. I urge the Minister to re-examine the issue of taxing self-catering properties. The Oireachtas Library and Research Service offers the information that one company has 750 self-catering properties in Ireland. This company alone will face an annual charge of €150,000 with the introduction of this levy. It will undoubtedly have a significant impact and could lead to a reduction in employment.
I agree with Senator Pearse Doherty's comments about rural homes and family homes in the countryside which have been kept, perhaps vacant, for many years. If elderly parents or grandparents die, people might not wish to sell these houses. They might not fetch a great deal on the open market anyway but they have a value in terms of the links people have to their family home. We should try to find a way to ensure these homes are not subject to this tax.
The €200 charge will be applied equally to all properties, regardless of their value. It is similar to a poll tax. Senator Dan Boyle mentioned that his relations in the UK are paying approximately €1,600 per annum in charges, but the charges in the UK vary according to the size and value of the property. I am not sure it is fair that somebody who owns a cottage in Annagassan or Clogher Head in County Louth, for example, should pay €200 while somebody who owns a second home worth €8 million or €10 million in Dalkey or Glenageary pays the same amount. There are equity issues here. Should there not be some sliding scale?
Payment of the levy can be made over the Internet or in local authority offices. Can Fingal County Council offices accept payment for a property in County Donegal or must somebody who does not wish to pay on-line go to the office in Donegal? Can they make the payment by post? Clarification about the payment mechanism would be helpful. I also have questions about tax issues in respect of the levy. Will the Minister confirm if businesses that operate self-catering homes or a rental scheme be able to get tax back when they pay the levy? Will they be able to claim this charge against their operating costs?
The Government is expecting to use the electoral register to help administer the levy. Everybody is aware of the problems this might cause. The electoral register in many counties leaves much to be desired. This will be compounded by the fact that additional work will be generated in local authorities. There is a recruitment ban in many local authorities so I am concerned about the impact this additional charge will have in terms of the administrative burden.
Research which we have seen suggests a significant amount of money will be raised by the charge. There are potentially 500,000 properties that will be subject to the charge. In Meath, it is estimated there will be an increase of €2 million in revenue and in Louth the increase is also estimated to be €2 million. How will that money be spent? It is important that this should be seen as additional revenue. It should not mean the Government will reduce payments to local authorities equivalent to what the authorities will gain from this tax. The revenue should be hypothecated towards, for example, the roads fund, which has been cut back in many councils and has suffered due to lack of funding. Sums of the €2 million to €3 million per annum would significantly assist the condition of local roads. What advice and guidance will the Minister give to local authorities regarding how this money should be spent? Will it just be put into a general operating costs pot or will it be hypothecated towards specific expenditure items?
The main issue is that we ensure the revenue generated as a result of this Bill will be seen as new revenue for local authorities, not as an excuse to cut back central funds provided by the Government to the authorities. The Labour Party will table amendments to the Bill. We are glad the Minister accepted our amendment relating to the charge on mobile homes but we will table a further amendment to provide that married couples who have separated or entered into an agreement to separate will also be exempt from the charge.
I welcome the Minister of State to this discussion on the Local Government (Charges) Bill. Members have offered their views on the legislation and the generic view appears to be that everybody welcomes the Bill. It is an important Bill, particularly for local authorities that have large numbers of second homes. A table provided by the Oireachtas Library and Research Service indicates where the largest numbers of second homes are located. Obviously, Dublin has the largest number while Donegal is third on the list, with between 22,500 and 23,000 second homes. They would yield, as Senator Pearse Doherty mentioned, over €4.5 million. That is a substantial amount of money coming into the revenue base of a local authority.
This is the first property tax, if one can call it that, to be imposed in Ireland since 1978, when local authority rates were abolished. I generally welcome the legislation. When I was a member of the local authority in Donegal in 2004 and 2005 I sought the introduction of a charge on holiday homes. It was one of the recommendations in the Indecon report on local government financing. I was delighted the Government reacted to that report in the budget last October with its announcement of the €200 levy on second homes.
To clarify the figures being used, it appears the Department's estimate of €40 million income from the levy is based on figures from the Private Residential Tenancies Board. It does not take account of the census 2006 figures. Data compiled by the Oireachtas Library and Research Service suggest there are 487,000 properties eligible for payment under the Bill, which would generate substantially more than €40 million. It could be double that amount. Perhaps we will be given clarification of the figures.
There has been discussion of exemptions under the legislation. I wholeheartedly support the exemption for mobile homes proposed by the Minister. While I have not said anything publicly to date on the matter, in recent days I have been in consultation with mobile home site owners and the owners of mobile homes. In Donegal, families own mobile home sites and rent them to individuals who own mobile homes. It was unclear whether the mobile home owner or the site owner would pay the €200.
I received information from mobile home owners concerning the value of a mobile home. Depending on the standard, it costs €30,000 to €40,000 to buy a mobile home whereas a holiday home will cost perhaps ten times that amount. There can be no comparison between paying €200 for a mobile home and paying the same for a holiday home. The depreciation of a mobile home is even more rapid than that of a car, and regarding holiday homes in general, the price of property tends to increase rather than fall. I am glad the Minister is bringing forward the exemption. I know it will be welcomed across the board.
I wish to refer to the other exemptions. I agree with other speakers regarding the self-catering sector. Those involved tend to pay a registration fee of approximately €200 for their property to Fáilte Ireland and are now being asked to pay an additional €200 per year. Some of the self-catering businesses act as businesses, filing their returns to the Revenue Commissioners and these also pay commercial rates for their properties. When a self-catering operation pays commercial rates perhaps there should be a mechanism whereby it does not have to pay this fee which is, effectively, a double charge.
The Minister referred to situations in which an exemption can be made for certain heritage properties. I am not sure what is the definition of a heritage property. A number of individuals have been in touch with me who have what they describe as heritage properties, namely, properties with thatched roofs. Perhaps nobody lives in the properties but the cost of their upkeep is quite substantial. I ask the Minister to consider whether properties of this nature might be included under the category of heritage properties so they could be deemed exempt. I am sure there are only some dozens of such properties around the country. The postcard picture of Ireland in the United States always depicted as the thatched cottage and we should not attack it by imposing this charge. I spoke to two such property owners in County Donegal today who said that if the charge were imposed they would probably knock down the property which, in any case, is almost valueless. The only value is in the thatched roof and there is a grant available from the Department towards that. We should be careful not to attack that very important piece of heritage and should protect it.
Another issue to which I wish to refer is that of collection and administration of this charge. According to the legislation, this will be a matter for the local authorities and the Bill emphasises that collection and enforcement will come from the local authorities. I welcome that because it is probably more beneficial to have the collection locally. We must ensure there is liaison between the Department and the local authorities so that there is a collaborative response in terms of whether additional resources are required.. Perhaps the additional resources may come from the actual revenue stream but this should be teased out with the Department.
I do not agree with using the electoral register as a basis for collecting moneys or gaining access to information on properties until such time as the electoral register is linked to the PPS numbers. At such a time it can be guaranteed.
I come from a Border county where there is an issue regarding the collection of moneys from individuals resident in the North of Ireland who have holiday homes in Border counties. How will we ensure there is a legislative footing to collect those moneys? It is important this should happen because if we do not have such a legislative mechanism, there will be a kick-back from people who live in this State. I am sure this was thought out prior to the drafting of the legislation.
I welcome the Minister to the House and am glad of the opportunity to speak about this Bill. Some questions have been raised regarding the electoral register used for the recent elections. The situation was a disgrace. A number of years ago when he was Minister, Deputy Dick Roche, spent a considerable sum of money nationally on compiling and updating the register but it has fallen back again. There is an opportunity here for local authorities to integrate this into a revenue-collecting mechanism and use it as a way of upgrading the local electoral register.
A number of issues were raised concerning the status of people who may live two or three days a week at home and three or four away in Dublin, Cork, Galway, or wherever. The Minister has not been clear and specific on this point in the Bill. He should spell it out.
What will be the position of derelict houses? There are a considerable number of these without sanitary facilities or electricity. Nobody lives in them but they are houses and are part and parcel of the fabric of rural Ireland. Before Committee Stage, I wish to know the position in respect of such houses. In many cases, they are and can be used as a tool to get planning permission for a house in a rural area. Nobody will demolish them overnight but we would like to know the situation. Severe fines are being put in place for the non-payment of the annual €200 and it is very important the Minister should spell out this matter.
Some counties will benefit enormously from the collection of these revenues and more will not. What will be the position regarding those counties that will not benefit so greatly? My own county, Mayo, will benefit by perhaps €4 or €4.5 million. Does this mean that the rate support grant as we know it, which has diminished over recent years, will decrease further to allow for the moneys collected by this charge? The Minister should tell the House. From my reading of the Bill and from the language used by the Minister, it would seem that will be the case because otherwise those counties that will not benefit will be at a disadvantage.
I am surprised about the mechanisms to be put in place for the collection of the charges.. Every local authority has revenue collectors who know their local areas. In some cases they collect water and refuse charges and commercial rates. There are local authorities that collect planning fees and enforce road closings. In many cases, the revenue collectors collect all these charges and the councils have all the data regarding planning permissions granted and those refused. Builders must issue commencement notices to local authorities when they start buildings and the local authorities have all the relevant information. I am amazed a local authority which has revenue collectors in local areas cannot provide a mechanism for collecting this money.
The Minister alluded to the directly elected mayor. It seems that in a very short space of time we will have a directly elected mayor for the greater Dublin region. There is now a newly elected lord mayor of Dublin and I am sure that mayor will stay in place for the next five years. However, judging by what the Minister said in the House today, the new directly elected mayor for the greater Dublin region will be a glorified mayor of the Dublin regional authority. We need further legislation on this matter as soon as possible.
I thank my colleague for sharing time. I welcome the opportunity to comment on the Bill. The legislation is like a little trip switch because it allows us, if the Cathaoirleach will excuse the pun, to shed light on the broader local government debate and the issues facing local government.
In 1999, a constitutional amendment was passed to provide constitutional recognition of local government. It seemed like a major step forward at the time, but lip service has been paid to local government since. That has been the case for the past 30 years or so since the 1977 political decision to remove rates from domestic properties. In a sense, all political parties have failed to bell the cat in terms of local government reform and funding.
The Bill is viewed as a positive step. According to the Minister, it will broaden local authorities' revenue base. He stated: "This is the first time in more than 30 years that a new source of local funding has been made available to local authorities." As I told the Minister, this is probably incorrect as a decision was made four or five years ago whereby development charges on individual house constructions in rural and urban areas would be directly paid to local government. It was the first significant source of funding. Unfortunately, as soon as this type of funding was introduced, the Government cut back significantly on the grant for local authorities. It robbed Peter to pay Paul. If we are all fair - as Senators, we have close contact with local government - we must recognise the reality that new sources of funding are urgently required to provide for the future development and expansion of local government.
A fee of €200 per house cannot be sensibly opposed, but the question is for how long will the fee be at that level as all sorts of hard cases and exemptions will be sought. In principle, a tiny property tax is being introduced via the back door. The broader debate that is required on the issue of property tax might stem from the Commission on Taxation's report. I welcome the fee in so far as it will give some funding to local government and as long as we are guaranteed that it will be additional funding and that this direct injection of €40 million or €50 million will not be met by a reduction in the Government grant.
In the short time available to me, I express my interest in the Minister's statement regarding a directly elected mayor for Dublin. He seems to view the project as his personal input into the direction that local government will take. Where directly elected mayors are concerned, there are pluses and minuses. That the mayor of any town or city would have the appropriate powers and funding is of most importance. We must wait to see what the Minister will do in respect of the powers of Dublin's directly elected mayor before casting our final judgment. Where Dublin will lead, the other cities and larger counties will be expected to follow.
If we want real local government, it will need new powers, including the power to raise revenue and set local taxes. This is a difficult debate, but it must be tackled. The Bill opens a small door for us in that regard. I look forward to Committee Stage as a few issues must be teased out. In so far as the Bill gives local authorities some income discretion, it is welcome. From the largest county to the smallest town, every local authority is in grave financial crisis. They need new sources of financial input and the Bill may provide one. Some weeks ago, hotel bed taxes were mentioned in the Chamber. These seem to be the norm in a number of European countries. All this will serve to provide a broad agenda for future discussion. I have no fundamental issue with the Bill, but we will ask questions on Committee Stage and later regarding the funding of local government.
I welcome the Minister of State, Deputy Áine Brady, to the House and congratulate her on her exemplary ministerial work to date. I wish her continued success.
I will not welcome any Bill that imposes a tax, but it is a necessary evil at this time and is inventive in terms of taxation. It is basically a voluntary declaration, which is always risky, given that people are not known to indicate voluntarily that they are liable for a charge. The fee is €200, but some people will be caught for €600 per year. It is important that people are aware that if they do not pay the initial charge, they will be liable for the charges on an ongoing basis.
The Bill does not provide for freezing of the charge. Section 14 will allow the Minister to propose an increase in the House. I welcome my colleague, the Minister of State, Deputy Michael Finneran, to the House and wish him continued success in the Department. I am glad he is present for the debate on this section because I would like to discuss a few matters that relate to his portfolio. I request that the charges be held at a particular rate for as long as possible. We do not want to impose more charges and costs on the public.
On the renting of properties - this is the responsibility of the Minister of State, Deputy Finneran - under the Housing (Standards for Rented Houses) Regulations, local councils make greater demands of people who have registered as owning rental properties, although not everyone has registered, than they do of the Minister and the councils themselves. I know of a property that is in excellent condition, but Roscommon County Council has decided that the landlord must cut the grass. I do not know whether the Minister is liable for cutting the grass of the Department or local councils are liable for cutting the grass of rented council houses. I do not think they are. It is a nanny state that would impose such a requirement. It is pathetic, to say the least, and it contravenes a certain article, although I do not know which one.
The landlords who have declared their properties and registered under the Residential Tenancies Act 2004 have had their houses inspected. Senator Coffey referred to the money being held by the Private Residential Tenancies Board. Seemingly, councils have many members of staff who have nothing to do other than examine those properties, which is fine, but councils are imposing requirements on the landlords of properties that are of better quality than the properties being rented out by those same councils, yet they do not impose those requirements on themselves. They should get their house in order before making others liable. Surely a tenant should be liable to cut the grass around his or her house. It is a small point, but I wanted to make it.
There should be a "sale of the century" of local authority houses. Such a scheme was introduced in the 1980s, which was very attractive. The council should dispose of as many properties as possible under the best possible deal and in that way responsibility for maintenance of houses would lie with the owners rather than the councils. As the Minister of State and I know from our experience on Roscommon County Council, house maintenance was always a problem and it was very difficult to find the staff to do so. I suggest that such a scheme be introduced.
I ask the Minister of State to influence the Minister, Deputy Gormley, regarding councillors' attendance at seminars and conferences, as referred to by Senator Glynn. Through the Minister of State and his officials, I appeal to the Minister in this regard. The allowance given by various councils has been reduced due to cutbacks. It allows councillors to attend seminars of great importance. As a former councillor of 22 years, I learned more from going to conferences than I did at any council meeting. I had the opportunity to meet other councillors and to learn of what was occurring in their local authority areas. The Minister's proposal to review this allowance is small and petty in the context of the hard working, committed and dedicated people who devote their time and energy to the betterment of their electoral areas.
I will circulate to my council voters information on the best selection of conferences and seminars - I am dealing with those for July 2009 at present. The list includes the seminar on the management, protection and development of public lands and buildings, which is a very useful seminar, the inaugural Percy French summer school, which will be held in Castlecoote in Roscommon and which, I am sure, the Minister will attend, is also a very useful exercise.
I have just one other point. A seminar on planning and building energy regulations will be held. All these seminars, including one on the economy, what went wrong and how to fix it, are very useful. I ask the Minister of State, Deputy Finneran, to use his influence with the Minister, Deputy Gormley, in respect of this matter.
It would be counter-productive and would affect the education of councillors, especially those who were only recently elected for the first time, if they were prevented from attending educational and other seminars. These seminars can be extremely beneficial, from both a tourism and economic point of view, to the areas in which they are held, particularly if they are not normally hosted in such areas.
I am glad the Minister of State, Deputy Finneran, who is a very practical man, is present. In light of his great experience of local authorities and the fact that he previously served as president of the Local Authority Members Association, he is in a strong position to encourage the Minister to leave responsibility for making decisions regarding seminars and the charges relating thereto with local authority members and their executive bodies. I would be satisfied with such an approach.
I welcome the Minister of State. I listened with interest to the contribution of the Minister, Deputy Gormley, and I note he intends the charge to relate not just to rental and holiday homes but also to vacant properties. That is a good development because it will provide an incentive for the charge to be passed on.
It is critical the Minister should make clear that the most important exemption relates to principal private residences and that this is not a full-scale property tax. Such a tax appears to be on the Government's agenda and if that is the case, so be it. However, the Minister should beware of recreating the old-style rating system which employed a measurement system involving square or cubic footage. I must declare an interest in respect of this matter. People such as I who renovated slum properties in the inner city because of their heritage value would be taxed out of existence were such a system to come into place. A number of members of the North Great George's Street Preservation Society have already stated that if such a system were introduced, it would sound the death knell in respect of everything the society has done. If the Government is contemplating the introduction of a residential property tax in respect of people's homes, it should be aware it may have a negative impact such as that which I have outlined.
Those who drafted the Bill were careful to take cognisance of the situation of people who, because they are moving house, may for a short period possess two residential homes. Such people will be exempted, which is perfectly appropriate. I also welcome the position with regard to people in the aftermath of a divorce. It is interesting that the Minister has yielded to the lobby in respect of mobile homes. This move may well be appropriate.
I commend Senator Boyle on making clear his respect for the House. Although the Senator was invited to appear on a very popular and important radio programme yesterday, he did not do so because he is of the view that the House is the correct forum in which to discuss this issue. I have no doubt the Senator put forward an effective case in respect of the legislation during his contribution.
That Minister indicated that, having been advised of the difficulty in respect of mobile homes, he is preparing an amendment. That amendment has not yet been presented to the House. We will all examine it with interest when it emerges. I heard a number of people state on radio that while they possess what are classified as mobile homes, these type of homes are quite static, have steps built up to their entryways, are connected to sewerage and water systems, etc. Therefore, questions arise in this regard.
Had a decision been made to tax mobile homes, it would have been intriguing to discover whether the Traveller community would have come within the remit of the legislation. There is a case to be put to the effect that some very wealthy Travellers might very well be able to afford to pay such a tax. I say this as a great admirer of the Traveller community. I just received a copy of a wonderful magazine, Voice of the Traveller, and I wish to state that all Travellers can be very proud of the contribution their community has made.
I welcome that the Minister has reconsidered the position with regard to mobile homes. I received representations from a person who is a graduate in the area of tourism and economics who informed me he bought a second-hand mobile home in a beautiful seaside area of County Wicklow. He did so because he wanted his children to be able to live in a safe and healthy environment while on their holidays and also, rather patriotically, because he wanted the family to holiday at home in Ireland. Such behaviour has important environmental and economic aspects because families who take this route do not travel abroad, their carbon footprints are subsequently reduced and they contribute to the local economy by purchasing mobile homes, a large number of which are manufactured in this country. In addition, families who holiday here in their mobile homes contribute to local economies by frequenting shops, accessing services etc. The individual to whom I spoke made an interesting calculation to the effect that tens of millions of euro have been gained as a result of the purchase of mobile homes. If a disincentive is introduced to the equation, such gains would be lost.
Senator Norris would bring great esteem to that office. I welcome the Minister of State. I also welcome the concept behind the Bill and I understand what the Government is trying to achieve. However, I am concerned with regard to the tourism business. I have experience of the latter because my father built Red Island holiday camp in 1947. What was interesting about it was that the 500 guests who stayed there each week travelled over from England. Irish people only took holidays in two places in 1947, namely, they stayed with their relatives on farms in the countryside or they stayed in what were called holiday homes. The latter were usually wooden structures located on or adjacent to the beach. Such holiday homes were extremely popular and common and it was difficult to regard them as second residences. In the interim, extremely substantial holiday homes have been constructed. We are not, therefore, referring to the type of structures that existed in 1947.
As already stated, however, a concern exists with regard to the tourism business. In light of the fact that Irish people who possess second holiday homes might be placed at a disadvantaged and almost encouraged to go elsewhere as a result of the imposition of the charge, we must ensure a balance is maintained. The criterion for applying a charge in respect of these homes is that they appear to be fixed to the ground. Senator Norris stated that the amendment has not yet been published. However, I have a copy of it and it refers to "part of a building" and "a structure or erection of any kind and of any materials, or any part of that structure or erection ... but does not include a vehicle or mobile home". Will the Minister of State indicate what is meant by the term "mobile home"? If it refers to something that is capable of being moved or attached to a vehicle, that is fine. If a mobile home is fixed to the ground, will its owner be liable for this particular tax?
There is a need to broaden the tax base. The Commission on Taxation is due to report at the end of July and is widely expected to recommend the introduction of some form of property tax on principal residences. Will the tax we are discussing at present raise anywhere in the region of the €40 million to which reference has been made? Perhaps the Minister of State will indicate from where that figure originates. Reference has been made to some 200,000 holiday homes but I understand this figure may also include mobile homes.
Like Senator Norris and others, I have been approached by people who are extremely concerned with regard to the reference to mobile homes. Will the tax be applied in respect of mobile homes which have become fixed to the ground? If the answer is in the affirmative, will this represent a temptation for people to unfix such homes from the ground to ensure they avoid the tax?
I welcome what the Minister for the Environment, Heritage and Local Government is trying to achieve. However, I must sound a note of caution with regard to the effect this might have on the tourism industry in this country, especially in the context of people wishing to holiday at home.
I welcome the Minister of State. It is important to provide additional funding for local authorities. They are somewhat cash-strapped and that is why I welcome this aspect of the Bill. Nobody welcomes a new tax of any sort. A friend, Michael Pat Murphy Jr., who died rather untimely, advocated as a young Independent councillor the imposition of a levy or tax on second or holiday homes. In my area, south-west Cork, there are many such homes. His point was that it would generate extra revenue for the local authority. If this tax had been imposed during the past ten or 12 years of boom when there was unprecedented wealth in the country the pain would be much less acute because money was flowing freely and so on. The sum of €200 seems small but I have no doubt that over the next few years it will be increased.
I am glad to note the exemptions. In nearly every village and town there are scores or even hundreds of unoccupied houses in housing estates but the houses that cannot be sold are exempt. I hope that in their interpretation of what is a habitable dwelling the local authority or agencies concerned will take a practical or pragmatic view and deem a house in disrepair to be uninhabitable. I do not want to see the old situation that prevailed when I was a young lad in the 1960s and earlier whereby a person who had a second house would knock the chimney off the house to avoid rates because if there was no fireplace the rates were not imposed. Some relatively good houses were turned into houses for pigs or cattle. I hope the people in charge today will take a more pragmatic view.
I hope that administrative costs do not outweigh the benefit of the tax imposed. A sum of €200 is small in this day and age for anybody who is fortunate enough to have a second home. There is a fear that the next budget may include some form of property tax. I do not want to see administrative difficulties. I had an experience with the Private Residential Tenancies Board, PRTB, which made me think that the administrative difficulties nearly outweighed the cost of registering. The board is a good system. Not so long ago a daughter of mine was in college and her landlord had several properties in a city that I will not name and insisted that she pay the rent in cash. I objected to this. The conditions in the flat were atrocious. I would like to see better quality rental properties in Dublin, Cork or Galway, that provide basic facilities. There should not be wallpaper falling off the walls because of the damp and lack of heating and atrocious sanitary facilities. The time has come when anybody who has any kind of property should be registered. Does the Minister of State know if any survey has been done to establish how many student or rental properties around the State are registered? Probably up to 40% are not registered with the PRTB.
I did not intend to contribute but wanted to mention those few points. I welcome the Minister of State and congratulate him on the work he is doing. I hope this levy will be of benefit to the local authorities because they badly need a few extra euro in their kitties.
Michael Finneran (Minister of State with special responsibility for Housing and Local Services, Department of Environment, Heritage and Local Government; Roscommon-South Leitrim, Fianna Fail)
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I thank Senators for their constructive and thoughtful contributions to the Bill. Rather than attempt to respond to each point on Second Stage I can do this in response to Senators' amendments on Committee Stage. I will respond, however, to a few points. Senator Leyden spoke about the sale of local authority properties. Later this afternoon I will be leading Report and Final Stages of the Housing (Miscellaneous Provisions) Bill 2008 in this House. I initiated the legislation here and it has been through the Dáil. There have been several attempts over the past 20 or 25 years to introduce a scheme for the sale of local authority flats and apartments. That will be introduced when this Bill is passed this afternoon. It gives people an opportunity to buy the flats or apartments they occupy or those they will occupy.
That Bill also includes a new provision called the incremental purchase scheme. For the first time people will be able to buy a council house on the day they enter it. I have always thought that instead of waiting three or five years to sell a council house to a tenant we should give that person the opportunity of becoming the owner on day one and give him or her responsibility for insurance and maintenance and so on. That will be introduced as a pilot scheme straightaway. The tenant purchase scheme administered through the local authority systems will continue.
Senator Norris spoke about heritage houses. There is an exemption in the legislation for those who are deemed exempt under the relevant legislation. He also spoke about mobile homes. There will be an amendment dealing with them. The Senator asked how this would affect the Travelling community. That would not arise because the mobile home is a Traveller's primary residence.
I take Senator Quinn's point about tourism which is a vital component of revenue. The more people holiday at home and use the facilities we have here the less money leaves the country and more comes into the Exchequer. He asked whether timber homes were different from mobile homes. Those on fixed foundations will be deemed to be homes. Anything that can be moved by crane or whatever will be deemed a mobile home.
Senator O'Donovan asked what deems a house habitable. Some of the greatest destruction in the 1950s and 1960s occurred when people removed not only chimneys but also roofs in order to avoid paying rates. The roofs of some fine buildings were removed allowing rain to damage the structure. I hope local authorities will take a practical view of this provision.
With regard to private rental accommodation, earlier in the year I brought forward new regulations on standards for rented houses. These apply to all private rental accommodation and most of them are now law. Those not yet in place require structural work to be completed. One part, which will take four years to implement, deals with my intention that bedsits in cities, particularly Dublin, will no longer be part of the housing structure. I could not introduce their exclusion immediately because too much cost was involved. I have provided for a four year lead-in period for people to carry out the important structural work involved.
The Bill is relatively direct, and straight forward legislative measures will apply, broadly speaking, to the owners of non-principal private residences. In my view, those of us fortunate enough to own a second property should not find the obligation to pay €200 per year towards services provided by local authorities unduly burdensome. The Bill is estimated to generate approximately €40 million annually for the local government sector. Its importance is not adequately reflected in the amount of revenue to which it will give rise, rather it represents a new genuinely local source of funding for local authorities and reduces their dependence on central Government. This is a very important principle which we should welcome.
It has been said that the ideal taxation measure is equitable, simple and flexible. The Local Government (Charges) Bill scores well under the criteria of simplicity and flexibility. It is simple and cost effective to administer and it will be simple to understand and comply with. It will generate revenue on a continuing basis and will not be subject to the volatility we have come to associate with transactions based on property taxes. In this sense, it has the flexibility to cope with the varying economic conditions while maintaining a stable yield. It must be acknowledged that the Bill does not include a valuation-based component, something which would make the system far more complex and difficult to administer and comply with. Against this, the amount of the charge is relatively modest at €200. At least it can hardly be described as inequitable given the amount of the charge involved.
I look forward to a high compliance rate with the obligation to pay the charge. This is in everybody's interest. The point was made that it is simple common sense to pay it when it falls due. Evasion will incur significant late payment fees which will have to be paid at some point. The longer the delay in paying the charge, the more expensive the late payment fees will become and the resale of the property is likely to prove exceptionally difficult if the charges and late payment fees are left outstanding.
I thank Senators for their contributions to the debate.
Amendments Nos. 2 and 2a are technical alternatives to amendment No. 1. Amendments Nos. 1, 2 and 2a will be discussed together. Is that agreed? Agreed.
Government amendment No. 1:
In page 3, to delete lines 18 to 29 and substitute the following:
" "building" includes—
(a) part of a building, and
(b) a structure or erection of any kind and of any materials, or any part of that structure or erection, but does not include a vehicle or a mobile home;".
I thank the Labour Party for tabling amendment No. 2 and Senator Pearse Doherty for tabling amendment No. 2a. While I accept the principles behind amendments Nos. 2 and 2a, I am satisfied amendment No. 1 achieves the same purpose but in a more definitive manner. Both amendments seek to exclude mobile homes from the scope of the new change to which the Bill generally gives effect. Amendments Nos. 2 and 2a simply delete all references to mobile homes from the definition of building in section 1.
Amendment No. 1 goes marginally further in that it achieves all that amendment Nos. 2 and 2a do, but goes on to state that vehicles and mobile homes are specifically excluded from the definition of building. To this extent, it is slightly more specific and definitive and is to be preferred for that reason. There are arguments for and against levying the €200 charge on mobile homes.
Clearly, most mobile homes are used as a type of holiday home and constitute a second residence for that reason. Some mobile homes are located in sought-after locations and command significant prices on the open market. Such mobile homes can be more valuable than some holiday homes and are made of bricks and mortar. Local authorities provide services including, in many cases, water and waste water facilities and road access to facilitate the use of mobile homes, just like all other second homes.
I acknowledge there are arguments against bringing mobile homes within the remit of the charge. The point was made to me when the Bill was published that usually mobile homes are less valuable than a standard holiday home. Furthermore, many mobile homes are located in caravan or camping parks where the owner of the mobile home does not own the land on which they are located. There is also the fact that the owners of mobile homes normally pay an annual charge to the owner of the caravan or camping park in circumstances where commercial rates are levied on the park. Arguably, the commercial rates are a contribution for the other services provided by the local authority and the owner of the mobile home should not be asked to pay twice for the same service.
These are the arguments that were put to me when the Bill was published. I have listened carefully to all these points and have decided, on balance, to exempt mobile homes from the charge. In taking this decision, I was mindful of the fact that the revenue forgone by local authorities will be relatively small in the context of the overall revenue to which the charge will give rise.
We support the Government amendment on mobile homes. However, some questions and queries were raised on Second Stage regarding the definition of mobile home. I presume a mobile home is a home that is mobile and is something with wheels on it, but in many cases mobile homes are installed in a semi-permanent manner on a foundation with access to services such as electricity, sewerage and water. Can the Minister clarify that mobile homes installed in such a way will not be subject to this local government charge?
This amendment provides certainty. We examined all the definitions. We examined the phrase "de-mountable" and other issues. The Senator is quite right. There are instances, which I referred to in my contribution, where there are so-called mobile homes where wheels, etc. have been removed. We are examining situations where mobile homes are in caravan parks and it is quite clear they are there with other mobile homes. Such parks are very often paying service charges. We have been as clear as we possibly can on this matter. The idea is that we give certainty. We are saying clearly that mobile homes are excluded and that is at the heart of what Senator Doherty and the Labour Party proposed.
I move amendment No. 3:
In page 4, to delete lines 20 to 24.
I will try to clarify our thinking on this. We are trying to be helpful with regard to the administration of the scheme and how moneys can be collected without putting a further burden on local authorities. Some Members suggested earlier they would prefer local authorities to collect the moneys. I understand that view, but that is only possible where the local authorities have the necessary resources and IT systems and all that goes with that. Unfortunately, as those of us with close connections with our local authorities realise, they are already overburdened by their workloads in this area and may not have the capacity to collect the moneys in the current circumstances. I have not seen anything in the Bill that provides extra capacity or resources to deal with the administration and collection of moneys in this scheme.
For that reason, Fine Gael has proposed these amendments. We identify the Revenue Commissioners as the appropriate authority or body to collect moneys. They already have the necessary capacity within their structures, both administrative IT support and otherwise, to properly and fully encompass all those who should pay this charge once implemented by law. That is the thinking behind our amendments. We did not put them forward to undermine the Bill but to strengthen the capacity to collect the funds that should accrue to local authorities. There is no ulterior motive behind them. We are being up-front on the matter.
Earlier, I outlined our concerns with regard to the Private Residential Tenancies Board's registration system. We are concerned about the backlog, the fact the system has not been updated and the fact the IT system is not up and running. I gather from reading the Bill that it is intended data and information will be shared between local authorities and bodies such as the PRTB. However, the PRTB's systems are not up to date and do not have the capacity for this. That is a further reason we suggest the Revenue Commissioners, who have the required infrastructure, are the appropriate authority to deal with the collection of these charges. If it is proven down the road that local authorities have the capacity and systems to do it, that will be acceptable. However, they do not have that capacity currently.
I thank Senator Coffey for his amendments and appreciate the sincerity of his motives. I acknowledge a number of the points made by Senator Glynn on the collection of moneys. He suggested town councils should be allowed to collect the moneys. The local authorities have assured us they have the capacity to collect the moneys and that they will distribute those moneys to the town councils appropriately. I am aware of the concerns expressed by Senator Coffey. The issue concerns the body or organisation within the public service that is best suited to administer the €200 charge. I assume Fine Gael's opposition to sections 9 to 11, inclusive, and section 15 follows on from the thrust of the amendments generally, which is to substitute the Revenue Commissioners for local authorities in administering the collection of the charge.
I fully accept that we must administer our public services as well as we can. I also accept the Revenue Commission is a very efficient organisation that has made major strides in recent years in facilitating compliant taxpayers to discharge their liabilities with the minimum of fuss and red tape. I have no doubt that had this function been assigned to the Revenue Commissioners, the organisation would have put in place effective management and arrangements to implement the charge. Equally, I am in no doubt that local authorities will do a very efficient job in carrying the legislation into effect.
The local authorities set up a project board after the 2009 budget to plan for the introduction of the charge. The Local Government Computer Services Board was asked to design a website, similar in concept to the motor tax on-line website, to accept Internet payments. This site will be up and running in time for the liability date of 31 July 2009. Other arrangements continue to be put in place in local authorities to facilitate the smooth and effective implementation of the new charge. I again encourage all concerned to use the website to discharge liabilities to pay the charge. This is in everybody's interest, especially those obliged to pay it. The website is efficient and user friendly and will make life easier and simpler for those who avail of it. For those who cannot or will not use this facility, local authorities will accept payments at their local offices.
There is also an inherent logic in paying the charge to local authorities given that these bodies will retain and deploy the revenue stream arising from it. This is a crucial point. Senators Coffey and Doherty said they would like to see the local authorities have more discretion on the matter because they are ideally suited to collecting the fee. In my meetings with the managers, they stressed that they wanted to do this job. As far as I am concerned, if they want to do it, they should be allowed do so. This is a major step forward for local authorities towards securing a genuinely local source of revenue that will reduce their dependence on central government funding, which is the thrust of the Green Paper and forthcoming White Paper.
I await with interest the report of the Commission on Taxation. Part of its terms of reference require the commission to consider options for the future funding of local government. I have every confidence the commission will do its work thoroughly. It will be very interesting to see what conclusions and recommendations it reaches. For now, the approach taken in the Bill that the proceeds of the charge will be collected and retained by local authorities makes sense for the reasons I have outlined. I am not, therefore, disposed to accept the amendments under discussion.
I am disappointed it has not been possible to accede to my request, but I suppose one does not get everything one wants. What guarantees are there in the Bill to ensure the moneys due to town councils will be passed on? Is there an appropriate statutory basis for this?
Section 15 will deal with this. It states clearly a county council shall make a payment each year to each town council within the county and such payment shall be calculated having regard to various matters. I do not want to go through the entire Bill but it is clear. Also, in discussions with the managers we made it clear we want to see the moneys distributed proportionately and fairly.
The reason I ask is that there seems to be an intention on the part of certain local authorities to take to themselves powers that would normally be devolved under law to the town councils. I am a strong defender of town councils, even though I come from a country area. However, I live in a town and see how effective town local government is. I exhort the Minister to use every opportunity he has to devolve more powers to town councils, not alone the rating authorities but also some of the former town commissions in sizeable towns such as Mullingar, Portlaoise, Greystones and Newbridge. These are large urban areas and should get what they are entitled to under the Act. If there is a statutory entitlement to the moneys, as suggested in section 15, there should be a statutory obligation on the county council to devolve the relevant portion of the charges normally due to it to the town councils within its administrative area.
I do not support Senator Coffey's amendments, although I know he addresses the same issues I raised in terms of the ability of the local authorities in their current configuration to collect this charge. On Second Stage, I made the point that local authorities may find it difficult to collect this charge bearing in mind it will be much easier to collect it for rental properties than for holiday homes, particularly if the owners are outside the jurisdiction.
If there is a need for employment of additional personnel, will this be granted by the Department or is there a mechanism in place given the embargo on public sector employment? I gave the figure of 8,000 holiday homes in Donegal. I am sure there will be a problem in terms of collection and the local authority may need to employ additional staff to do this. While it is not specified in the Bill, is the Minister disposed to this suggestion? It would alleviate some of my concerns.
The Minister referred to central administration and the website, which is a great idea, but it runs counter to what I want to see, namely, that local authorities would be able to raise their own funding. A standard flat rate is very easy to administer centrally and people should use the website to make their payment. The legislation allows for the reimbursement of town councils, which Senator Glynn raised, but there is also the issue of the expenses accrued by local authorities in the collection of the charge. In terms of the central administration of the website, how will the expenses incurred in collecting that money-----
To deal with the Senator's point, it would be wrong of me, as Minister, to give him a commitment that the local authorities will be allowed to employ more people - I cannot do that. In these very difficult economic circumstances local authorities are redeploying their staff in different ways to try to achieve efficiencies. Given that there is an incentive for them to raise this money, they will do everything they can to do that. I insisted that the money would be retained by local authorities and would not go into central Exchequer funding because that would immediately incentivise the local authorities to do this. We need to incentivise the local authorities and we need to regenerate local government in this country and not just have local administration. I see this as the initial step in that regard.
On the administration, section 13 states: "The expenses incurred by the Minister in the administration of this Act shall, to such extent as may be sanctioned by the Minister for Finance, be paid out of moneys provided by the Oireachtas." However, on the Senator's specific point, the Local Government Computer Services Board is the body which will administer this on behalf of local authorities and it will pay for this itself.
The Senator raises an interesting point, however. If we give discretion to local authorities to vary the rates as they see fit, there will of course be different rates for local authorities. This is fine and in other jurisdictions where there is real local government, one will find that rates vary from state to state. However, it raises difficulties in the administration, which is an issue for the local authorities to consider. As Senator Coffey noted, local councillors have been voted in and it is up to these elected representatives, not the management, to make these decisions. They have to take into account all the pros and cons, and consider what it costs to administer the system. There is no point in burdening themselves with red tape. They should try to make this as simple as possible to collect, which is the whole point of the legislation, so they can collect as much money as possible.
I re-emphasise Fine Gael's concerns. The Minister has confirmed he cannot give an undertaking that local authorities can take on additional staff to deal with this extra workload despite the burden it will create. The Bill states that the Department estimates that in excess of €40 million can be raised through this local authority charging system. However, the Oireachtas Library and Research Service produced a very interesting digest on this Bill, which is very helpful to Members, and according to its calculations the system could raise in excess of €97 million. There is a difference between the two figures.
We are concerned this issue has not been analysed thoroughly enough to identify that local authorities have the capacity to deal with this workload, which is the focus of the amendments. I have outlined the problems in the other areas where the Minister is hoping to get information and data. We heard evidence from the PRTB in committee yesterday that until mid-2010 at the earliest it will not have a suitable ICT system which would allow it to have a proper, managed registration system that can transfer information to local authorities and others. I keep emphasising this point because I can foresee problems if this Bill is implemented as proposed. We feel the Revenue Commissioners have the better capacity, systems and resources to deal with this. While I would rather see local authorities collect the charge, I am not convinced they have the capacity to do so. For that reason, we stand by our amendments.
I am sure the Minister and all of the 34 local authorities involved would be delighted if the outturn from this Bill is in the order stated by Senator Coffey, and I would be delighted for local government in its fullest sense, but the Minister must err on the side of caution. What may contribute to the nature of Senator Coffey's prognosis is the number of unregistered facilities. Given there is now a basis for having a charge on the type of residential units that are outlined in the Bill, it becomes financially beneficial to the local authorities covered under the Bill to ensure that all units are registered, so there is an incentive in that regard. If that is the case, perhaps the forecast of Senator Coffey would prove true but, as of now, the Minister, who is capable of speaking for himself, is basing his predictions on what is known to be the number of units throughout the country.
I am disappointed with the Minister's response. While I can understand why he cannot take a carte blanche approach to the employment of additional staff, I had hoped that in the future he might be disposed to particular requests if they arise.
On the amendment, the Minister's point with regard to the incentive for the local authority to collect its own rates is very important, which is why I do not agree with the Fine Gael amendment. Local authorities collect their own rates but in Donegal, for example, a huge amount of outstanding rates remain to be collected. As a member of a local authority, I was able to approach the county manager and his executives and inquire why the rates were not being collected. Local authority members would not have the opportunity to sit in front of a board of the Revenue Commissioners to inquire why it has not collected rates on their behalf. Accountability is at issue here and, God help us, there would be an outcry in Donegal if the Revenue Commissioners in Dublin began to collect the rates and Donegal was left at the end of the pile again. It is an executive function but at least there is some accountability and at budget time it is possible to discuss the matter with the manager, housing officials and the local team. This is why it is important to leave the incentive in place and ensure there is democratic accountability in the collection of these rates. I oppose the amendment although I understand that it comes from the same line of thought which I raised, that is, the concern that local authorities may not have the capacity to collect the rates if there is an insufficient number of staff and there is a need to employ additional people.
Senator Doherty has given some very coherent arguments against the amendment and I understand fully the thinking behind it. It is seen to improve the efficiency of the collection system but I assure the Senator that local authorities have assured me very clearly that they wish to collect the rates themselves. As Senator Doherty stated, a centralised collection system in Dublin would not go down especially well in local authority areas. Local authorities have the knowledge and the incentive to collect.
In many ways this is a work in progress, which is also one of the reasons we were prudent enough to give a conservative estimate of the amount of money that could be collected. I recognise the library service has come back on this and this morning Senator Doherty referred to a sum of €97 million. If a comparable sum were involved it would be fine and we would have exceeded our expectations. The Senator will appreciate that, as Minister, if I came to the House and stated that I expected to collect a certain amount, of which we fell short subsequently, the Opposition would have a field day. Therefore, it is better to err on the side of caution in these matters, which we have done. I have no doubt that as the local authorities improve their collection systems and as computerisation systems improve, they will become very efficient in the collection of the €200 charge.
Computer services are improving. This morning I launched a new system of e-planning for Dublin City Council. It is fantastic and it can do everything necessary for that process. One can enter objections with all documentation and all one requires is a credit card to do so. This will significantly cut down costs. In any revenue raising exercise the idea is to make the process efficient, increase competitiveness and cut down on costs and red tape. Most individuals are very computer literate now. Everyone logs on to the Ryanair website now to book a flight and there is no problem or difficulty. Likewise they will have no difficulty paying the €200 charge. They may not wish to pay it but the incentive is there for them to do so, of that there is no question.
I fully agree with the Minister's comments on information technology, IT, systems and that we should encourage all opportunities to improve efficiency and registration. I simply pointed out that local authorities will be very dependent on agencies such as the Private Residential Tenancies Board, PRTB, for its database of registered properties which are not principal residences. Despite the establishment of the board four years ago it still does not have an IT system, database or registration system and it will not have such a system for another two years. The relevant section of the Bill specifically states that local authorities will depend on such agencies for data exchange and interface. My point is that that system is not available at present and until such time as it is, the Fine Gael position is that the agency, Government body or arm with the necessary capacity, authority and infrastructure is the Revenue Commissioners. I fully understand the point made and I would prefer local authorities to collect the charge, but my genuine and sincere belief is that they do not have the capacity. They would run into untold problems in trying to collect it, there would be a great number of allegations of people not disclosing second properties and there would be too many referrals to the Private Residential Tenancies Board, which is already overburdened with substantial backlogs. The board would not be able to confirm whether people are registered because its lists are already so high and they must be manually input. This is a genuine concern on this side of the House.
I wish to clarify the matter for the Senator. I accept the PRTB system requires updating but it will work in transferring data, which is important. Any difficulties with that system would also apply to the Revenue Commissioners. I do not see how the amendment-----
The PRTB has a system, which requires updating, the Revenue Commissioners has a system and the local authorities have a system. This is the point. I do not understand how the amendment would deal with the matter in a conclusive and fully coherent way.
The PRTB is a problem but if the Revenue Commissioners does not have the information, it should have it and it is an offence if people do not declare a second property to the Revenue. There is a mechanism for penalties and everything else in that regard. The legislation puts the cart before the horse. We should get it right from the beginning and there is no point falling into these pitfalls now. We should try to get the legislation right, otherwise we may have to revert to the House later to deal with the loopholes.
I come down on the side of the local authorities for one simple reason. A local authority will grant planning permission - some constructions may be built without planning permission but these are the exception to the rule - and it is always a condition of planning to outline usage of the facility. Therefore, using this argument, the local authority is best placed to know exactly what is taking place. I am not saying they do or they would, but local knowledge will play a pivotal role in this matter and it will complement the legislation.
Let us consider the ideal situation - idealism is a wonderful concept but practicality and application are very different matters. As of now, I do not know of any better authority to administer the legislation than the local authority for the reasons given. The Revenue Commissioners is the same as every other entity in the country. It knows what it is told but if it is not aware of what is taking place it can do nothing about it. It is that simple.
The Dail Divided:
For the motion: 31 (Dan Boyle, Martin Brady, Larry Butler, Peter Callanan, John Carty, Donie Cassidy, Maria Corrigan, Mark Daly, Déirdre de Búrca, Pearse Doherty, John Ellis, Geraldine Feeney, Camillus Glynn, John Gerard Hanafin, Cecilia Keaveney, Terry Leyden, Marc MacSharry, David Norris, Francis O'Brien, Denis O'Donovan, Fiona O'Malley, Ned O'Sullivan, Brian Ó Domhnaill, Labhrás Ó Murchú, Ann Ormonde, Kieran Phelan, Feargal Quinn, Shane Ross, Jim Walsh, Mary White, Diarmuid Wilson)
Against the motion: 15 (Paul Bradford, Paddy Burke, Jerry Buttimer, Ciarán Cannon, Paudie Coffey, Paul Coghlan, Maurice Cummins, Frances Fitzgerald, Dominic Hannigan, Nicky McFadden, Joe O'Reilly, Phil Prendergast, Eugene Regan, Brendan Ryan, Liam Twomey)
Tellers: Tá, Senators Déirdre de Búrca and Diarmuid Wilson; Níl, Senators Paudie Coffey and Maurice Cummins.
Question declared carried.
I move amendment No. 3a:
In page 5, subsection (1), between lines 10 and 11, to insert the following:
"(i) a building which is occupied as a dwelling by a parent or both parents of the owner,
(j) a mobile home,
(k) a building which is the subject of a dispute in relation to probate for a period of five years or more.".
We propose this amendment to section 2 regarding the meaning of "residential property". In my Second Stage contribution I said this area needs clarification, and that is the reason we propose this amendment. If somebody is living in a granny flat beside an existing dwelling, according to the Bill that granny flat is considered to be a second dwelling and is possibly subject to the charge.
Also, if a family home transferred to a son or a daughter who may have got married and moved on but the house remains in their name, with the parent of that son or daughter remaining in the house, there would be no rental income from the house yet under the terms of the Bill that house would be liable for the charge. That is inconsistent with another area in Revenue in that where a house is inhabited by the parent of the owner and there is no income from that house, it qualifies for mortgage interest relief. The general principle should apply in this Bill as well where there is an acknowledgement that the parent is living in a house provided for by a son or a daughter, which is reasonable to expect in any circumstances. It is not an investment property nor is it rented out at any stage. Should the parent move on or whatever and the house was then used for rental purposes, I would have no problem with it coming back into the other category where a charge would be liable, but where the parent is still living in the house Fine Gael believes the charge should not be levied in that instance. There are many instances of parents living in accommodation provided by their children in good faith in recognition of the upbringing and care they received. It is not an investment and I would ask the Minister to consider the amendment favourably in that regard.
This is a relatively short Bill of which we are generally supportive because it will support local authorities in the work they do, but it could prove troublesome if issues such as this one are not fully thought out. What we do not want, as Senator Cummins said earlier, is to have to come back to this House with new Bills and new amendments in a relatively short period because of difficulties such as those I have pointed out.
In regard to mobile homes, which the Minister dealt with in his earlier amendment, Fine Gael asked that they not be considered a residence but a holiday home, which is what they are, and that they would not come under the category of the charge.
We also refer in our amendment to "a building which is the subject of a dispute in relation to probate for a period of five years or more". The reasoning behind that is that in many cases throughout the country disputes arise with regard to property in probate. Those disputes can run on for a number of years and we would consider it reasonable that until such disputes are resolved and there is a clear outcome as to the owner of the particular houses, they would be considered outside the category for charge. I would be interested to hear the Minister's views on that or if he has a better suggestion.
This amendment was rushed. To be honest, this legislation appears to be rushed. We would like more time to consider all sections fully and reflect on and propose amendments that can work. I would be happy to hear the Minister's views on the issues I have raised, specifically the one with regard to parents. He might clarify the position on granny flats which are individual dwellings. They have their own electricity accounts. The Minister will refer later to applying to the ESB and so on for information. They have all their own services and electricity and they are stand-alone. I would like clarification from the Minister that they will not be charged this levy. He might also deal with the question of exempting from the charge the houses where the parents of the owners live and from which there is no income.
I support the three paragraphs in Senator Coffey's amendment. I would like to ask the Minister a question. In some countries people live in barges on rivers or lakes, and quite a number of people in this country live in barges. In some cases they use them as second homes or whatever. What is the position on those? The Minister has qualified the position on some dwellings, including caravans in caravan parks, but he might qualify the position on barges.
I support Senator Coffey in regard to paragraph (k) of the amendment to section 2. He made the case where probate has taken place. Disputes over houses or properties that arise among family members can take a considerable time to settle. The fines the Minister has put in place are hefty and a situation might arise where the person who gets the home following settlement of a dispute could be liable for a considerable charge. The Minister has spelt out in the Bill that it is the person who buys the house who pays. The obligation should be on the person who sells the house to ensure the property is clean of debts and charges. For cases of dispute or where probate takes a considerable time, Senator Coffey's amendment is sensible. An exemption of at least five years should be allowed in the case of probate. I support Senator Coffey's amendment.
Will the Minister clarify the status of second homes following the enactment of the NAMA legislation? I know that legislation will not come to the House for some time but it I presume it will result in NAMA owing a significant number of finished, unfinished or partially finished housing estates, some of which may be let to third parties. If NAMA, as a corporate body, has ownership of such properties, will it come within the remit of the legislation? Will the legislation extend to banks which have repossessed houses? What will be the status of a financial institution which, having repossessed a house, enters into an arrangement to allow a family to remain in a house as tenants or tenant purchasers? Will such a bank be liable for the €200 charge?
I support Senator Coffey's amendment. The Senator said the amendment was rushed. I have placed amendments which are similarly rushed. The legislation clearly needs to be changed.
I have personal experience of people whose houses will be subject to the levy in circumstances which the spirit of the Bill never intended. Senator Coffey's amendment refers to a house owned by the son or daughter of the occupant. Such a house should not be subject to the levy. I do not believe it was the intention of the Bill to make such people pay €200.
In other situations a mother or father may have passed away, left a house to an eldest son and another sibling may continue to reside in the house. This is another anomaly. Such a house would also be subject to the levy. Several small issues need to be tidied up before the Bill is passed by the Seanad and Dáil. I hope the Minister is disposed to consider them. I support the amendment. I believe it may need to go a little further.
I suppose barges are at sea on occasion. Senator Bradford raised the prospect of the NAMA legislation. That legislation has not been published. This Bill states clearly that properties which are newly constructed but unsold are exempt. NAMA will be concerned with precisely those types of properties. They would not fall within the remit of the Bill. Nevertheless, I will take Senator Bradford's concerns to the Minister for Finance who is currently working on the NAMA legislation.
I thank Senator Coffey for his amendment which seeks an exemption from the charge for three instances. I also received the amendment quite late because Senator Coffey was also under pressure. I have had to look at the various categories he has outlined: property in which a parent of the owner resides, mobile homes, and properties which are the subject of probate difficulties. My amendment has dealt with the mobile home issue. No charge will apply to properties before probate has been taken out. When and if probate is finally granted, someone will own the dwelling and I can see no reason the normal provisions of the Bill should not apply.
It is a core principle of the Bill that owners of residential property are, in the normal course of events, liable for the charge. This will apply to owners of property irrespective of whether a family member lives in it. The colloquial expression for the instance to which Senator Doherty referred is "granny flat". Under normal circumstances, this would not be liable to the charge if it is part of the dwelling concerned. It is more difficult if the home is a stand-alone building. That is a different situation. A stand-alone building is liable.
What is the definition of a stand-alone building? In many cases, a second home may have its own electricity connection and the parent or sibling may pay his or her own ESB bill. Would such a home qualify as a stand-alone building even though it is part of an original dwelling?
There are several anomalies in the Bill. We are only scratching the surface. We need more time to consider the Bill. I hope we are not forced to complete Committee Stage later tonight or tomorrow afternoon. We need another week to digest the Bill and to examine the amendments which have been submitted by various parties. The Minister himself has mentioned that the Bill is rushed.
The Opposition also submitted them at the last minute because we received the Bill so late. That is another reason more time should be given to digest the Bill. It will be challenged every step of the way, not in the Houses but outside, where they are queuing up with their legal advisers ready to pounce on the Bill and pick out loopholes. It is important that we dot all the i's and cross all the t's before the Bill becomes law.
The Minister should spell out his intention more clearly. There are many cases in rural Ireland where a son or daughter applied for planning permission to build an extension so that two families can live under one roof but in two separate living quarters. The reason they do this is so the offspring can look after their parents. We have been advocating this for many years, so people can be kept out of hospitals and be looked after by their families. That policy has been promoted by everybody. In this case, there could be two separate electricity bills to ensure the pensioner gets their entitlement to free electricity, fuel and so forth. What the Minister has said leads me to believe that there would be a charge for the type of development where there are two houses within a single structure, with the parents living in one and a son or daughter with their family living in the other. The Minister should explain this in more detail.
The other issue is who will be the final arbiter. Will the county manager make the final decision as to whether it is just one house or two houses? Somebody has to decide whether the €200 fee applies. Who will be the final arbiter in these cases?
I believe we all have the same perspective on this Bill, although our interpretation of it might be different from the Minister's. Senator Coffey's amendment deals with parents and any house, not just a granny flat. Over 400,000 houses will be subject to this levy. A number of people will be in the situation of having a granny flat or where the son or daughter owns the house where the parents are living. It is not a huge number; it will not be in the tens of thousands. If this legislation passes and local authorities charge €200 on a granny flat or a family home in the possession of a son or daughter where the parents who might be in their 80s or 90s are residing, it will cause uproar in local areas.
There should be a simple amendment to the legislation. I have dealt with the granny flat issue in amendment No. 6b. I cannot see in the legislation where a granny flat, which is a self-contained flat adjoining the house, would be exempt from the levy. I agree with Senator Paddy Burke. These amendments might not be the best, given that all of this was rushed, but time should be allocated to examine some of the issues that have been raised. A number of exemptions are necessary. They will not change the spirit of the Bill but will clarify what everybody wants to achieve. They will also deal with the outrage that will occur in rural areas, particularly if county managers, under the letter of the law, start to impose these levies on houses to which it is neither my nor the Minister's intention that they should be applied.
I agree with the concept of the levy. However, I have listened to the debate and many problems appear to be arising. I received a telephone call last night during which the caller asked about the situation of a landlord who has a second house in which there are three or four flats. Does the landlord pay just one levy on the second house or is there a levy for every flat? I could not answer that question. There is much confusion about this. Senator Paddy Burke has raised some interesting points. It will create havoc in the local council area. I am curious to know how the county manager will implement it.
Having listened to Senators from all sides of the House, it is down to interpretation. We must be clear about how the legislation should be interpreted by those in authority, be it a county manager or the final arbitrator on whether a building is liable for this charge. The Minister's assessment is too vague. I can offer another example that is widespread throughout the country. Consider the cottage acre on which a family was reared. After securing planning permission for a house on the same cottage acre, the younger people in the family move into it and the entire property is transferred into that person's name. However, the parents still reside in the old dwelling. The charge will apply to that dwelling under the terms of this legislation. That is the issue.
I accept that the wording of the amendment might not be good enough or acceptable but if we could be given an undertaking in good faith from the Minister that he will address this area of exemption with wording from the Parliamentary Draftsman, I would accept that. Until we get such an undertaking, however, this is all that is available to protect the elderly parents in those dwellings who will be levied with the charge. It is unfair. In paragraph (j) the Minister has dealt with mobile homes, which is fine. Perhaps he would also clarify if the charge applies where the ownership of properties is in dispute.
This measure was announced in mid-October 2008 but the legislation is only before the House now. We are expected to pass it through all Stages today. This is rushing the analysis of the Bill. If we put time into it now, it will prevent problems down the road. Fine Gael is generally supportive of the principle of the Bill, but it is too vague and open to interpretation. There must be clearer definition in many areas. The time allocated for the various Stages will not allow us to analyse properly and digest even the information the Minister is providing. I ask the Minister to consider that. We will try to be helpful but the Minister must take our amendments seriously. Otherwise there will be many problems when the Bill is being implemented. In the case of the cottage acre and an old person living in the original house, they will be levied because of the person living at the back or the side of the house. The matter must be clarified further.
With regard to the exclusion of a building that forms part of a trading stock, in the current climate many builders are entering into short-term leases under lease to buy schemes, in the hope that in a few years the apartments or dwellings will be purchased. My reading of the Bill is that the levy applies to those short-term leases. What lease term would be excluded from the levy? I live in a town where the old colonial landlord still owns a considerable part of the town's residential area. People have their homes on long leases. What is the situation there? The leases could be 30, 50 or 100 years in some instances. In the case of apartments, the owners of the apartments do not hold the freehold. That is held by a management company. The apartment owners have a 999 year lease in most instances. How is the provision applied in that situation? Although the €200 is not a significant figure, if it were to increase it might be an impediment to builders participating in the innovative lease to buy concept, given the current difficulties in the construction sector.
With regard to the house on the cottage acre where the son or daughter gets planning permission and builds a house which becomes their normal residence, the old house is the normal residence of the parents so, clearly, the levy would not apply in that situation. That is my view. However, if the situation changes with the demise of the parent or parents and the house was rented, the situation might change. There is also the case of a house with a number of bed-sits. These are not self-contained units so they could not be described as apartments in the established sense. Invariably, they share services so I do not believe they come under the remit of the Bill. However, if they were self-contained units, that is, with cooking, shower and bathroom facilities, they would be liable to the levy.
Many thousands of people receive rent allowance from the HSE. To the best of my knowledge, they must know their landlords but because of the Data Protection Act are not obliged to inform local authorities about them. Is it intended to amend the Data Protection Act so this type of information might be shared by the various agencies? That was one of our reasons for tabling the amendment in the first place because under that Act the Revenue Commissioners are exempted from obtaining that type of information. That is another area that must be addressed in greater detail in this Bill. If he does not have the information, perhaps the Minister might get back to us on this matter. The whole area of data protection and the sharing of information concerning two landlords, whether the PRTB, the local authority, or whoever, must be addressed on Report Stage. Currently the HSE is not obliged to give landlords' names to local authorities.
I shall deal with Senator Cummins's last point. Section 11 deals with it clearly, stating:
Notwithstanding any enactment or rule of law, a relevant person shall, upon a request from a local authority, provide the local authority with information in the possession or control of the relevant person or its subsidiary as the local authority may reasonably require for the purpose of enabling the local authority perform its functions under this Act and a local authority shall, at such intervals as the Revenue Commissioners may specify, provide the Revenue Commissioners with such information obtained by the local authority pursuant to this Act.
We have dealt with that issue. There are others-----
That is stated very clearly in the legislation. It is dealt with in section 11, on data sharing and exchange, and is clear.
I must disagree with some of the comments made by Senator Coffey. I tried to be as clear as I could and we tried to offer clarity. The Senator raised the issue of the granny flat and I stated very clearly in my reply that it would not be liable for the charge if it is part of the dwelling in question.
I return to the other questions. Senator Ormonde raised a similar issue and I draw attention to section 2(2) of the legislation which states:
For the purpose of this Act, a bedroom forming part of a residential property that is let under a letting arrangement whereby the individual occupying that bedroom is entitled to share with any other individual any other accommodation, amenity or facility in the property, is not a residential property but the building of which it is a part, is.
That section deals with a situation in which a number of people are in a place together in separate rooms. However, if there are separate apartments, clearly those apartments are subject to the charge and again, that is very clear.
I appreciate that Senators have raised legitimate points. I wish to examine all of them and as we go through the various stages of the Bill, I shall continue to do so.
I forgot the issues raised by Senator Walsh. He raised a number of points about leasing arrangements. If a property is being leased it is subject to this charge and there is no question about that. Regardless of whether the arrangement is what the Senator referred to as a long-term lease or, as in some cases, a short-term lease, the property is still subject to this €200 charge.
Under this legislation, such people are subject to the €200 charge. That is the situation and I tried to make it as clear as possible.
I see other Senators indicating and I am happy to take questions or points.
The Senator referred to the final arbiter. Obviously, if there is a dispute the matter will go to the courts and the final arbiter in such cases will be the courts. Before that, it is a matter for the local authority.
I agree with the Minister. He is trying to be clear, giving Members as much clarity as he can with regard to our questions. However, this legislation does not allow him to provide us with any clarity and that is the issue.
Concerning the exemption of a bedroom which forms part of a building, that is specifically referred to in the legislation. However, the great majority of what we describe as granny flats consist of much more than a bedroom and usually contain a kitchenette or dining area and perhaps even a living room. My interpretation of the legislation is that once the accommodation occupied by an elderly relative, perhaps a mother or father, exceeds the definition of a simple bedroom, the owner is automatically liable for the charge. As Senator Coffey outlined, the person may be paying a separate ESB bill. If the Minister is making the argument that the building forms part of the main principal residence he must equally make the same argument in respect of apartments that are a component of a larger overall block of apartments.
Senator Glynn referred to "normal residence". If the elderly people occupying the cottage-house of which we spoke consider it to be their normal residence they would not be liable for the charge. As far as I can judge, the phrase "normal residence" does not occur anywhere in the legislation which simply states that the owner of a property, as defined, is liable to pay this charge and other than that is exempt from the charge if the property is occupied by the owner. If it is occupied by somebody other than the owner the charge automatically applies. Therefore, if I own two properties, one of which is my principal residence, the other the property next door where my parents live, I am liable for the charge. It is quite explicit and easily gleaned from the legislation.
In the case of leasehold and leases, is it the likes of Lord Lucan who must pay this charge or to whom does it apply? Ground rent is being paid for some of these dwellings. In this case, the person living in the house should not have to pay the €200 - Lord Lucan should pay it. I do not know how one finds out where he is. Does this throw the entire legislation up in arms?
I understand what the Minister said about the courts being the final arbiter. Will the county manager make the decision and say that the €200 must be collected, that the person will be followed for it and if there is a dispute that it will go to the courts? In those cases where there is a derogation concerning collection, is it the county manager who will make those decisions?
I shall do my best to find Lord Lucan's address for the Minister but I can see some difficulties down the road.
I return to a point I raised earlier. Unfortunately, I will not be present to discuss some of the other amendments because I have an essential appointment.
I realise the Minister has given clarification regarding the situation of granny flats. I have read the legislation and I know the granny flats in my area, which are self-contained flats adjoining an existing house. They are not an extension to a house creating additional rooms, perhaps a dining room, a bedroom or a kitchenette. It is not a matter of walking through one door into another couple of rooms. They abut but are separate flats. They are like houses in the country that used to be single but are now-----
People enter via a separate entrance and have their independence, but they are next door to their sons or daughters. This type of security is the beauty of the granny flat. From my reading of the legislation, granny flats are subject to the €200 fee. The Minister's interpretation of the matter we are discussing might relate to a number of additional rooms in a house to give a mother or father a quarter of the house. Obviously, such an arrangement would not be subject to the levy.
My amendment No. 6a deals with this issue effectively, but not with all of the other issues. It is not just a question of parents but about sons and daughters. There are many anomalies because nothing is black and white when it comes to housing, leaving houses to sons, daughters, brothers or sisters and different people residing in houses. The problem with the legislation is that we needed to define "ownership" as belonging to the owners of the house, which was the only possible definition. However, it means that we must deal with many anomalies, some of which we have not identified. I gave an example, but I could name people from my home town of Gweedore who leave home every Monday morning and return Saturday while renting houses in Dublin. Their homes will be subject to the levy because their houses-----
I heard the Senator make that point this morning, so I got information on it. It is not the case as laid out.
I would be more than happy to consider the legitimate questions being asked by the Senators and I do not want to proceed until they are happy with my answers. I will happily remain for as long as it takes to tease out the issues. With any legislation, there are issues that are not fully addressed, as Senator Doherty pointed out. However, I want to consider all of these issues as best we can.
Senator Doherty raised his point this morning, so I checked it out. The people in question would not be subject to the €200 charge. I want to be fair to Senators. If they believe that some of the points in the Bill are not as clear as they want them to be, I will go through each and every question asked to ensure they are 100% happy before we proceed. I will take as much time as is required.
I will put it another way. If it is what the Senators want, then I can take some time to provide them with long and deliberate answers to their questions before proceeding. I will happily co-operate.
My question on leases raised an important issue. Will the Minister examine it for Report Stage? Leases beyond a certain time limit are generally regarded by the occupants of premises as being tantamount to freeholds. It is only for technical reasons that they do not hold those freeholds. I suggest that the Minister consider a period of 21 or 35 years so that if someone has a lease of that duration, it would fall outside the scope of the levy. From the point of view of equality in the application of the levy, it is important that this matter be considered.
Will the Minister clarify another issue for me, although I believe I am probably clear on it? Recently, I answered someone's question and, in light of this debate, I want to ensure the answer was the right one. The issue in question is the meaning of "residential property", which the Bill defines as a building situated in the State that is "used, or suitable for use" as a dwelling. A person in the farming community built a house separate from the family home. The original farmhouse, probably unoccupied and unserviced by water or sanitary facilities, which would have been normal in the old days, would not be a suitable dwelling without major refurbishment and significant expenditure. I am assuming that "suitable for use" means that the building is suitable for use in its present condition. If it is not suitable for habitation without investment in, for example, sanitary facilities, refurbishments and repairs, it does not fall within the scope of the levy. Is my understanding correct? These buildings, such as old farmhouses, are unoccupied.
They might not be fully derelict, but it might not take much money to make them liveable accommodation. What is the position in this regard?
The explanatory memorandum states: "A 'dwelling' is defined as a building used, or suitable for use as, a separate dwelling whether or not certain facilities are shared." This definition must be removed from the memorandum if what the Minister has stated is-----
In which case it is a contradiction. Where two families live together and irrespective of whether they share facilities, the Minister stated they would not be liable in some cases. According to the memorandum, however, they are all liable.
Regarding a comment made by Senator Cannon, while I accept that the term "normal resident" is not contained in the legislation, section 4 states: "his or her sole or main residence". Reverting to the example of a house built by a son or daughter in a cottage garden, the old house is the main residence of the parent or parents while the new house is the main residence of the son, daughter or so on. When the parents pass on and the son, daughter or so on becomes the owner of the old residence, does that residence become liable for the charge? I believe this to be the point.
The Minister has offered to clarify many of the issues raised by Senators in good faith. We will not push the amendment on Committee Stage, but we reserve the right to resubmit it on Report Stage pending further clarification. An important matter is that of the granny flat. Even the ESB has separate meters for granny flats where they are annexes that used to be part of the original dwelling.
Senator Glynn has alluded to the issue that our amendment tries to address, albeit from a different perspective. A family farm, including the old dwelling, could be handed over to a son or daughter and he or she could build a new house on the farm, which occurs in 90% of cases. While the parent remains in the old farm dwelling, it is owned by the son or daughter. Under the legislation, it will be liable to the charge. We believe it should be exempted. Will the Minister clarify this matter? May I speak to section 2 or just to the amendment?
It does not. The Minister should take in good spirit the fact that we are trying to be helpful. We feel problems will come down the track if we cannot deal with these matters now. I and other Senators have tried to outline very practical and anecdotal areas where we foresee problems. We need clarity.
I will be more than happy to provide the clarification the Senator seeks. I appreciate his offer to decide on whether to table amendments for Report Stage pending the clarification he receives. However, we should distinguish between clarification and wanting to seek further exemptions, as the Senator does. I will give the Senator all the clarification he wants but it does not mean the legislation will necessarily change. It is important to bear this in mind. I want to be as co-operative as possible, not only with Senators on the Opposition side but also with those on this side who were seeking clarification. I intend to compile as comprehensive a list of answers as possible to all the points raised.
In order that we do not miss anything, I ask the Senator to go through the various points on which he seeks clarification, perhaps in the ante-room. I will obtain as comprehensive a reply as possible on all the issues and we can determine tomorrow how we can proceed. This is the fairest way to proceed and I hope it satisfies all the legitimate demands being made by the Senators.
That is not what Senator Coffey said. His offer, which makes sense, is that the amendment not be pressed but resubmitted on Report Stage pending the clarifications I give.
The Bill must be reprinted before we can proceed with Report Stage and, therefore, there will be a break between Committee Stage and Report Stage. If Committee Stage is not finished at 5 p.m., it will resume after 7 p.m. We are discussing amendment No. 3a.
Is the Minister in a position to confirm that an unoccupied farmhouse with no sanitation services and which would require a lot of money to refurbish will be outside the scope of the levy? That was my advice to a person. Under the interpretation of the-----
While I accept where the Minister is coming from and while we will try to co-operate as much as possible on this side of the House, it seems obvious that there is a clear requirement for a Schedule of interpretations, including definitions of buildings. Could this be considered?
What is the overall intent of this legislation? I do not believe it is to penalise people, predominantly those living in rural Ireland, who happen to have their elderly parents living in houses next to them. Is this what the Minister and his officials intended when they began drafting this Bill? There is a mechanism whereby we can exempt people in such circumstances from the charge. I do not believe for a moment the Minister believes we should proceed as the Bill proposes.
I would be concerned if the message went out from this session that this is an anti-elderly tax of some sort; that is not what it is. The intent is to ensure those who own second properties, who are largely reasonably well off, pay a levy.
In no way can this be considered a very onerous levy. The sum of €200 is quite modest. The reason behind it, which has been applauded on the Senator's side of the House, is to find a revenue stream for local authorities. We can all agree on that.
I will be very happy to accommodate Senators on the Opposition and Government sides by examining all the issues they raised. It is not just a case of my talking to my officials because I invite the various Senators who raised issues to submit to me their concerns in detail such that, by the time we reach Report Stage, they can be clarified and adequate answers can be provided. I am taking up the offer of Senator Coffey on this matter.
Senator Coffey has made very clear that his resubmission of amendments depends on the information he receives. I suggest that we go through the various amendments tabled on Committee Stage. There seem to be some concerns. I ask the Leader of the House whether the proposals I made are in order. If not, I should be let know.
I seek information because I have just re-entered the House. This has been a very interesting debate and many colleagues are very interested in this very important legislation. Is it proposed by the Minister that we adjourn Committee Stage until 7 p.m. to allow him and Senators to discuss in the ante-room their various concerns and continue with the other two Bills listed for consideration this afternoon?
I believed we had made some progress and that we were just about to make more by accepting the proposal made by Senator Coffey, that is, that we complete Committee Stage, after which there will be a meeting to go through the various concerns raised before we proceed to Report Stage. That was my clear understanding.
If there is progress involving the Minister and colleagues after Committee Stage, we can conclude the Bill by midnight or some such time. There is no guillotine. This House does not guillotine any Bill in any shape or form; that is the big advantage of being a Senator.
To clarify, we will proceed with Committee Stage. As I take it, Senator Coffey reserves the right to table amendments for Report Stage if he so wishes. There will be a break between Committee Stage and Report Stage. Is that agreed? Agreed.
Under section 2(1):
In this Act, "residential property" means a building situated in the State used, or suitable for use, as a dwelling, including any house, maisonette, flat or apartment (including a bedsit) but does not include—
. . .
(c) a building let by a Minister of the Government, a housing authority or the Health Service Executive established by the Health Act 2004.
My point applies equally to subsections (f) and (g). If the HSE engages a private landlord for emergency accommodation, will that landlord be exempt from this charge?
Does this apply also to a housing authority which has a contract with a private landlord for the rental accommodation scheme, RAS? This is a dual contract held by the local authority and the private landlord with the tenant. Will the Minister clarify whether such landlords are also exempt from the scheme?
It was clarified this morning that the owners of property in the RAS scheme are exempt. I was distracted and did not hear the Senator's other point.
I flagged this point on Second Stage this morning to give the Minister time to get further clarification if required. A terrace of privately owned houses on one side of a road might be part of RAS while the same type of house on the other side of the road, owned by the same or other landlords, might not be part of RAS. I cannot understand why those in RAS should be exempt. What is the rationale for that? They are investment properties. The only difference is that those landlords have a secure contract with the State, through the local authority, whereas those on the other side of the road have no security of contract but will be levied.
This needs to be clarified. It is an anomaly. The problems will not arise here but with the local authorities when people seek clarification. Solicitors will line up to challenge the rule. While the charge is only €200 that will be multiplied by the many thousands of houses we think will come under the scheme. There will be challenges if landlords on one side of a road are exempt because they are part of RAS while those on the other side are not. It is not fully thought through. I will be interested in the Minister's comments on that point.
I acknowledged this morning, and have just told the Senator again, that RAS is exempt. It is a fundamental part of how we accommodate people on our housing lists. It works extremely well. That is why they have got this exemption. We are not speaking now to an amendment. The Senator is seeking further information.
I am speaking on the section on an area in which I see a problem. There is nothing to stop the Minister amending that section in the remaining stages. I am pointing out an area in which I see a further anomaly and inequality. The Minister cannot simply disregard all the private landlords who are not part of RAS because they have supported many of the social housing initiatives when the local authorities and the State could not support people who required housing. We will charge the ones who are not in RAS while their peers across the road, who are in the scheme, will not be charged. Those landlords have taken on the same liabilities and made the same investments as the landlords who will be charged. The only difference is that those who have security of contract with the local authority will be exempt. There will be challenges and problems in this area. It will increase pressure on local authorities because landlords will try to force themselves into RAS and there will be accusations of favouritism in local authorities where housing officers decide who can be in RAS. This is not thought through. That is the reality I foresee based on my experience of dealing with local authorities. I bring this to the Minister's attention only to be helpful. We have not tabled an amendment on this point but I suggest that the Minister consider re-drafting it in some way. That is why I suggested a schedule of exemptions where any housing officer, county manager or director of service can see who is in the scheme because it is not very clear.
I agree with Senator Coffey on this point. If I was a landlord with two similar houses, one of which was in RAS and I was charged for the one that was not, it would be an anomaly. Lawyers will drive a coach and four through the provision. It is a recipe for disaster. The Minister has spoken several times about clarity but there is no clarity on this issue. It has not been fully thought through. I respect the Minister's comment that he is prepared to try to clarify several items with us but he will not be clarifying them with us but with the solicitors and others who will examine and drive a coach and four through this legislation because it is not thought out.
I cannot understand why landlords in RAS are exempt while others not in it will pay the tax for a similar property, perhaps in the same street for which they receive the same rent. There must be some kind of legal or constitutional bar against such legislation coming in. That will be challenged. People will try to get on RAS but they will probably not be allowed to do so. One or two people on a local authority deal with RAS. We spoke earlier about the need to employ more people to collect the money but we will need more people to deal with the RAS applications.
This legislation has not been fully thought out. We have been here for only an hour or 90 minutes but look at the number of problems we have found while thinking on our feet. What will happen in the cold light of day when barristers and everybody else look for anomalies and loopholes? We can complete Committee Stage now but we need a week or two to digest this because there is much more in this Bill than meets the eye. We are only scratching its surface. We are here to tease out any anomalies and loopholes there may be in it. That is our job and we do not want to be rushed. I am not suggesting the Minister is rushing it. The Leader told us we could have it finished by midnight which is preposterous. I ask that this be teased out and that we get the clarification the Minister has mentioned, but we need a great deal of clarification because the longer we go on, the more we need. Committee Stage is where these items should be clarified and that should be done now. With all due respect to the Minister, I respect the fact he is offering to try to clarify it outside the House but it should be done here. This is where clarification should be given; this is Committee Stage of a Bill going through the Houses of the Oireachtas and we should have all the clarification we need here and now.
With respect to the Senator, this is extremely clear. The situation is spelled out exactly in sections 2(f), 2(g) and 2(h). Senator Cummins is stating that it is unfair and that a builder could have houses in the RAS scheme on one side of the road and dwellings not in the RAS scheme on the other side of the road and he feels that this is an anomaly. It is not because it has been spelled out that there is an exception being made, with an exemption for those in the RAS scheme. We already dealt with a certain exemption that the Opposition sought with regard to mobile homes. Others seek other exemptions. It is the nature of legislation that when one examines it one will look for certain areas that are exempt and other areas that are part of the legislation and that is extremely clear. It is equally clear that Senator Cummins finds it unacceptable and that is a different point.
That is not the point I was making. Everything seems to be clear to the Minister but it is not clear to this side of the House. He is speaking about providing us with clarification on a number of items. I cannot see from where he is plucking out of the air that everything is clear when he must give us clarification.
The Dail Divided:
For the motion: 29 (Dan Boyle, Martin Brady, Larry Butler, Peter Callanan, John Carty, Donie Cassidy, Maria Corrigan, Mark Daly, Déirdre de Búrca, John Ellis, Geraldine Feeney, Camillus Glynn, John Gerard Hanafin, Cecilia Keaveney, Terry Leyden, Marc MacSharry, Francis O'Brien, Denis O'Donovan, Fiona O'Malley, Ned O'Sullivan, Brian Ó Domhnaill, Labhrás Ó Murchú, Ann Ormonde, Kieran Phelan, Feargal Quinn, Shane Ross, Jim Walsh, Mary White, Diarmuid Wilson)
Against the motion: 16 (Paul Bradford, Paddy Burke, Jerry Buttimer, Ciarán Cannon, Paudie Coffey, Paul Coghlan, Maurice Cummins, Paschal Donohoe, Frances Fitzgerald, Nicky McFadden, Rónán Mullen, Joe O'Reilly, Phil Prendergast, Eugene Regan, Brendan Ryan, Liam Twomey)
Tellers: Tá, Senators Déirdre de Búrca and Diarmuid Wilson; Níl, Senators Paudie Coffey and Maurice Cummins.
Question declared carried.
I do. I move amendment No. 6a:
In page 6, subsection (1), between lines 28 and 29, to insert the following:
"(c) in the case of a family home left vacant by a death or through its occupant(s) residing in a nursing home.".
I await the response of the Minister.
I thank the Senators for the amendment. I have some sympathy for the purpose underlying the Senator's amendment, but I am convinced there are good reasons it would cause some practical difficulties if I accepted it. In the first instance, it is not at all clear what is meant by a "family". One can take a narrow or wide view of how this might be construed. Once owners or co-owners become entitled to possession of a property and are entitled to receive the rental income which it would generate, then the co-owners are jointly and severally liable for the change, unless they can avail of one of the exemptions in the Bill.
Until such time as probate is taken out, the new owners will not become liable for the charge. When the new owners become entitled to possession they will also be entitled to rent out the property for some or all of the time and should be able to derive a sufficient income stream to more than cover the €200 required to defray the charge. As I understand it, the property concerned is normally let when someone needs to be accommodated in a nursing home and the rental income is used to meet, in part, the costs of the care accommodation. In the circumstances, therefore, I cannot accede to the proposed amendment.
I move amendment No. 8:
In page 7, subsection (4)(a)(iii), line 14, after "granted" to insert "or separation agreement entered into".
The Bill as it stands allows for a person to be exempt from the charge if a decree of divorce or judicial separation was granted in respect of that marriage on or before that date. Our amendment seeks to extend that provision so that if a couple has entered into a separation agreement the person would also be exempt. The separation agreement may not have gone through the courts and a legal separation may not have been yet granted. Our amendment seeks an exemption in the case of a separation agreement also. I would appreciate a comment from the Minister on whether he will consider allowing this amendment.
I thank the Senator for putting forward this amendment. Section 4 provides that where a decree of divorce or of judicial separation has been granted in respect of a marriage, a residential property in which a spouse retains an interest, but which is occupied by the other spouse as his or her sole or main residence, will not attract a liability for the charge in respect of the spouse who does not reside there. This provision is inserted to cater for the relatively common outcome of a divorce or separation agreement where one party continues to reside in the family home, but the other, although retaining a financial interest in the property, does not.
Amendment No. 8 appears to give the same status to a separation agreement as is given to a decree granted by a court. Although I have some sympathy for the objective of the amendment, I regret I cannot accede to it. The amendment does not define adequately what a separation agreement is, whether it applies in the case of a marriage or otherwise or, more generally, what standing it has in law. Neither is it clear whether either or both of the parties to the marriage had the benefit of legal advice in arriving at that agreement. It would not be known whether any element of duress was present in respect of one of the parties to the agreement when it was entered into.
The drafting of section 4(4) of the Bill is grounded in precedent. I refer the Senator to section 13 of the Finance (No. 2) Act 2000 which deals with broadly similar circumstances, but which confines itself to actual decrees of divorce and separation granted under the same statutes as referred to in section 4(4)(b). Bearing this in mind and taking account of the points I have made with regard to the uncertainty surrounding a separation agreement, I regret that I cannot accede to the amendment.
I do not have a copy of that Finance Act with me so I cannot comment on that point. I understand the Minister's argument to some degree. However, if at the time of paying the charge, a person lodged a copy of his or her separation agreement and subsequently when this was legalised returned to the local authority, would the Minister sanction a rebate for the fee paid? That would cover the issue of the legality of the agreement. Would the Minister accept that?
The Bill is very clear on this. If a person owns the property, he or she is liable for the charge. However, I will contact my colleague, the Minister for Justice, Equality and Law Reform, to advise him of the Senator's view on this matter as this branch of the law is primarily a matter for his Department to address. As I pointed out, the provision included in the Local Government (Charges) Bill follows precedent in other legislation. Depending on my colleague's advice, I would be happy to address the Senator's concerns in the future in a suitable legislative vehicle, if appropriate.
The legislation we are discussing is clear on the issue. If we are talking about the owner of the property, he or she is liable. It creates a nebulous situation where a county manager must decide on whether someone is liable for a fee on the basis of a piece of paper. I would prefer to have clarity on the issue.
I move amendment No. 8a:
In page 7, between lines 30 and 31, to insert the following subsection:
"(5) An individual who on a liability date is the owner of a residential property shall not in respect of that residential property be liable to pay the charge relating to it for that liability date if--
(a) the property in question is the only residential property owned by the individual,
(b) the individual resides, for the purposes of employment at a greater distance from the residential property that would deem it inappropriate for the individual to commute from his or her residential property to his or her place of work.".
I thank Senators Doherty and Cummins for bringing forward this amendment. I accept the Senators' point that it would not be reasonable to require someone to pay the €200 charge where they are away working for part of the time in circumstances where the remainder of their family resides in the family home. Senator Doherty made this same point this morning. I intend to issue guidance to local authorities following the enactment of the Bill. I intend to make it very clear to local authorities that someone who is temporarily away from home for the purposes of work should, nonetheless, be able to nominate the family home as their sole or main residence. I assume the Senator has a case in mind where someone is not permanently away from the family home.
In the circumstances as outlined by Senator Doherty, liability to pay the charge should not arise. I would caution, however, that if the person concerned owned another property which he or she used to live in at their place of work, he or she cannot avail of the exemption for a sole or main residence in respect of two different properties. I clarified this issue for Senator Doherty already and I hope this further explanation provides the clarification he requires.
A late payment charge of €20 has been proposed if a fee has not been paid within a month of the due date. Will there be further penalties for late payments if the payment is further delayed. Following enactment of the Bill, when must the €200 charge be paid. If payment is made late and people have not paid up within a week or a month of the payment date, when will the late payment charge apply? What provisions have been made with regard to the timing and order regarding late payment fees and fines?
Three dates must be borne in mind. The legislation will kick in on 31 July, and on 31 September the late payment scheme will commence. If a person has not paid by 31 October, the person will be liable for the late payment fee.
This section refers to the amendments dealing with the whole area of administration and collection of charges. Fine Gael believes the Revenue Commissioners have the infrastructure, capacity and IT systems to ensure a more efficient collection of the charges than can currently be administered owing to the problems with databases and administration within the PRTB and also the lack of resources that might be available to local authorities in the current environment. For that reason, we oppose the section.
While I have a lot of respect for Senator Coffey, I am one of those who believes implicitly in the concept of local autonomy. This is clearly an area where the local authority can shine. With all due respect to the Revenue Commissioners, they are far removed from the local scene, regardless of whether we believe it.
The entity that is best placed to collect these charges in the most efficient way possible is the local authority. We must bear in mind that in the case of the town council, there is something in it for the nine members if it is a rating authority, and there is definitely something in it for the county council. Therefore, they will make certain this system works. The more money available to the locally elected members, the more work they can get done for the people who elected them. I would side strongly with the Minister in this regard and I commend him on devolving power to the local authority, which is best placed to collect these charges owing to its local knowledge.
I see this as the beginning of a process. It is a broadening of the revenue-raising base for local authorities. We must have a certain trust in our local authorities. There are areas where they can be criticised but I would be very surprised if they did not rise to this challenge. They will rise to the challenge and they will go out there and collect for all they worth because they want to do so. They know we are living in difficult economic circumstances, they need to get their hands on every last cent available and I have no doubt they will do it. Regardless of whether we like it, money incentivises people. I have no doubt they will do an excellent job.
It will be a test and this is, if one likes, the first test. I intend to devolve more powers to the local authorities in the context of the forthcoming White Paper. I referred earlier to the office of the Dublin mayor which will also need to have fund-raising powers. I see this as the beginning of a new era for real local government in this country. That is why I have given the task to the local authorities.
This section refers specifically to data sharing and exchange. I have outlined my concerns and those of the Fine Gael Party with this element of the Bill given that, following its enactment, the local authority will have the authority to share information and data with relevant bodies. The Bill refers to the Private Residential Tenancies Board as a relevant body. I outlined earlier my concerns and those of the joint committee with regard to the operation of the PRTB. Ultimately, it is the State body charged with the important function of registration of rental accommodation in the private sector. With the information gleaned from the members of that board and the other bodies at yesterday's meeting of the joint committee, it is clear this board is not working in the most efficient manner possible. The opposite is the case.
I seek clarification from the Minister on this point. The committee meeting yesterday was told that more than €10 million which has been accumulated from private accommodation registrations by the PRTB is sitting in a bank account waiting to be transferred to local authorities. We spoke about empowering local authorities. Local authorities are empowered and have the obligation to inspect private rented accommodation and, where standards are not kept, they have enforcement powers in that regard. If €10 million is sitting in the PRTB bank account, and the Minister might enlighten me as to how long it has been there, it is a clear breakdown in how our State bodies should operate.
Local authorities are not getting the funding that has already been allocated and collected for them. As I said earlier, four sevenths of the €70 registration charge is retained by the PRTB for its own administration and running costs and three sevenths is ring-fenced and allocated for local authorities. This is an area that needs to be examined. Under the Bill, we will depend on the information coming from agencies such as the PRTB. The breakdowns are already happening and the required efficiencies are not in place. The PRTB has been in operation for more than four years and while one would always allow for teething and functional problems to work themselves out initially, after four years one would think they would not cause barriers to the functioning of the board. Has the Minister been notified that this amount of money is sitting in a bank account? What action does he and his Department intend to take in this regard?
A more serious problem with regard to the Bill concerns the data and information collected by the PRTB with regard to private rental accommodation. Local authorities will depend greatly on the initial set-up of that database of information. The Minister said earlier the PRTB has this information but the point is that it is processing it manually. When it was first set up, the PRTB had just eight staff but this has risen to 40 and it has taken on an additional 26 staff from agencies to manually go through the registration forms because the law precludes it from using the on-line system the Minister intends to use under this Bill. The PRTB cannot use a system similar to the motor tax system, where a person can register on-line, because it needs a change in legislation to allow it to do this.
Clearly, there is a lack of efficiency and certain areas need urgent attention. My concern is that there is already a backlog of people trying to register with the PRTB, yet we are now to require local authorities to contact the PRTB and to have them transfer information from it to them, which will add to existing problems.
I was amazed to find that after four years in existence, the PRTB does not have a modern IT system to manage its registration system and database and does not have an IT system to case manage the many disputes and complaints it receives. The earliest it can deliver such a system, I am told, is mid-2010 and a strategy for this was only adopted in October 2008. Therefore, it will take two years to deliver the computer system and by the time it matches up with the local authorities' system in an effort to support this collection system, there will be more backlogs and more problems in the operations of these two arms of the State.
It is a shame we have a State body in that predicament. If the Minister is looking for efficiencies, this is one area he could certainly try to improve. It is Fine Gael policy to try to wind down the PRTB and merge it with other bodies in an effort to make it more efficient and help it address the problems it is experiencing. The PRTB is taken up in dealing with dispute resolution of private rental accommodation cases which will often apply to the people on this register. It is taking up to 18 months to resolve disputes. In its corporate plan the board set a target of between five and six months such that the time it takes is three times that estimated for resolving disputes. The people appointed to adjudicate on disputes are selected from a panel. Until recently they dealt with only one case per day but they are now being asked to deal with three cases per day. I understand they are co-operating with this request which I consider a very good thing given that they receive more than €600 per day for their services. The PRTB and the way in which it functions-----
I have been asked by the Leader to clarify that No. 39, Private Members' motion 33 regarding measures aimed at reversing unemployment, should be taken at 5 p.m. and conclude not later than 7 p.m. and not at the conclusion of No. 3 as previously stated. I further call on the House to agree to an extension of 15 minutes to allow us to complete Committee Stage and push on Private Members' time by 15 minutes if it would be of assistance.
With all due respects I understand the request but I do not believe 15 minutes is enough time to complete Committee Stage. There are many important matters that Senators wish to highlight, including some I wish to highlight on Committee Stage and allowing 15 minutes will not facilitate this.