Seanad debates

Tuesday, 20 September 2011

5:00 pm

Photo of Deirdre CluneDeirdre Clune (Fine Gael)
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I thank the Cathaoirleach for the opportunity to raise this matter and I am glad the Minister is present to respond. I refer to the issue of development charges and the impact they could have on restricting economic development. The charges have been with us for a while and they have been a significant revenue source for local authorities. A review of the charge was carried out a few years ago when I was a member of Cork City Council. Our approach was to examine future development and what would be needed. We sought to strike a balance between existing development and proposed developments and contributions were made in an open and transparent manner and there was accountability at the time. However, circumstances have changed and these charges still attach as a condition of planning permission. In some cases, the charge is high and it is a disincentive to development.

Cork City Council still has the same charge while Cork and Limerick County Councils have reduced it in an effort to encourage economic development. I received an e-mail drawing my attention to a planning application granted in Cork earlier this month for a scheme on the docklands. The development comprised 61,000 sq. m. of office space and 18,000 sq. m. of business and technology space. It is a substantial proposal for which the development charge is €31 million but no financial institution will lend money on that basis. The reason I have raised this issue is to ascertain what plans the Minister and the Department have to ensure excessive development charges are reduced to encourage development. There must be a balance. If these developments go ahead, everybody employed in their construction will spend money and benefit the economy. Local authorities and county and city managers must examine the situation because it is not uniform throughout the country. In many cases there is a disincentive towards development.

I hope the Minister can also clarify something else for me. I understand that development contributions have been waived by local authorities for any loans and developments with which NAMA with has been associated. Is that true and who decides who should or should not pay?

Photo of Willie PenroseWillie Penrose (Minister of State with special responsibility for Housing and Planning, Department of Environment, Community and Local Government; Longford-Westmeath, Labour)
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I thank Senator Clune for raising this important issue.

The Senator will be well aware that a key objective of the programme for Government is to get people back to work. This is being reflected in policy and programme development across all Departments, agencies and local authorities and will continue as a key priority over the coming years. Local authorities, including in their role as planning authorities, are acutely aware of the contribution they must make to economic recovery, to employment creation and sustainment and in directly influencing investment decisions.

The statutory basis for the operation of the various development contribution schemes is set out in the Planning and Development Acts 2000 to 2010. The process set out under the Acts provides for a considerable degree of transparency in the making of development contribution schemes and a high level of public consultation. It is important to note in that regard that development contributions may only be levied in accordance with a development contribution scheme formally drawn up by the planning authority and approved by the elected members following a public consultation process. As well as having responsibility for the statutory planning code, my Department also provides the policy guidance framework for development contributions. This guidance is designed, inter alia, to assist planning authorities to achieve, through their development contribution schemes, a balance between the costs of the services provided and the need to support economic activity. At the same time, the guidance also makes clear that the adoption of development contribution schemes remains a reserved function.

Local authorities have witnessed a steep decline in revenues from these schemes and it is certain that income from development contributions will continue to be adversely impacted in the current economic climate. This reflects wider economic trends. It is important to acknowledge also that a number of local authorities have already responded to the very difficult economic circumstances that currently exist by amending their respective development contribution schemes to reduce the contribution rates, in particular for employment generating projects. For example, Louth County Council has halved its development contribution rates for expansions to authorised industrial and manufacturing operations, IDA or Enterprise Ireland supported manufacturing, international trade and financial services sector and businesses grant aided by the county enterprise board or other recognised local development agencies. The Department is also aware that, in some cases, the payment of development contributions has been phased by local authorities to reflect difficulties at a local level while also supporting economic activity.

The Department is preparing updated guidance for local authorities on the issue of development contributions which will require local authorities, inter alia, to consider the impact of development contributions on businesses and competitiveness generally in the development of their schemes. Authorities whose development contribution schemes have come up for renewal since the announcement of the Government's jobs initiative have been advised to consider providing reductions or exemptions in development contribution rates where these would help progress the jobs initiative. In particular, planning authorities have been advised to satisfy themselves that due consideration has been given to measures open to them to support new, or existing enterprises in their area by, for example, the deferral of payments, having regards to the overall funding position, contractual commitments entered into and the importance of projects funded through development contributions in supporting local employment.

I am confident that the new guidance will enable authorities to achieve the right balance into the future between generating the revenues required to provide the necessary infrastructure associated with new development and creating the right conditions to support economic activity and renewal. I will follow up on the question raised by Senator Clune on NAMA.

Photo of Deirdre CluneDeirdre Clune (Fine Gael)
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I am glad the Minister of State will follow up on that. He mentioned guidance and guidelines but will he inform local authorities directly that these are strict guidelines? The planning application to which I referred was granted earlier this month. The Minister of State has said that guidance was given to local authorities after the jobs initiative, but the local authority did not adhere to those guidelines.

Photo of Willie PenroseWillie Penrose (Minister of State with special responsibility for Housing and Planning, Department of Environment, Community and Local Government; Longford-Westmeath, Labour)
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The guidelines were there, but the updated guidance will be issued shortly to the local authority and, hopefully, that will clarify the issues.