Paschal Mooney (Fianna Fail)
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On the section, my understanding was, although I am open to correction, that an attempt was made some years ago to ring-fence the money derived from motor tax for the local government fund. I am assuming that because this transfer of ¤150 million is being introduced in legislation, the precedent set in the past is now being broken. Will the Minister of State correct me if I am wrong about that? The Minister of State referred to a maximum of ¤150 million and I am wondering if that means the Government cannot breach that figure without introducing amending legislation.

Denis Landy (Labour)
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I support the generality of what Senator Mooney has just said because I also have grave concerns about this issue. I raised the matter of the local government fund earlier, to which the Minister of State did not respond when summing up. Perhaps he will address my concerns now. There is a certain point at which local government cannot function in terms of the amount of money it needs. We have now gone below the ¤1 billion point. While I accept wholeheartedly that we have to find funding and cut expenditure because of the commitments we have made, I would like the Minister of State to give some assurance that local government can continue to function. For it carry out its many functions, as elaborated upon by Senator O'Neill, local government requires adequate funding. As I have said, we have gone below the ¤1 billion mark. I speak to officials from my own local authority every day. In fact, I spoke to the county secretary this morning about an issue related to the funding of local government. Will the Minister of State, in the context of what Senator Mooney has said, give the House some assurance that we are not going to see a continual extraction of funds from local government? If that continues, local government will cease to function. In dealing with this legislation today we are looking at taking some money out of the motor taxation fund. In the broader scheme of things, however, local government is a very important element of our democracy and we must ensure it can continue to operate. I ask the Minister of State to respond.

Fergus O'Dowd (Louth, Fine Gael)
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In response to Senator Mooney, this is not the first year that funding has been taken from motor tax income and used to service the national debt. That was done last year as well, with an amount of ¤46 million. This year, the maximum that can be taken is ¤150 million. This will only happen in the last quarter of the year when all of the issues will be examined and the balance that is deemed to be needed will be passed. It is important to stress that the limit of ¤150 million cannot be exceeded and, indeed, it may not necessarily be reached. I hope that is helpful to Senator Mooney. The sum of ¤150 million is essentially a ceiling on what could be transferred when the accounts are examined towards the end of the year.

Paschal Mooney (Fianna Fail)
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It may not be that amount. Is that correct?

Fergus O'Dowd (Louth, Fine Gael)
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Yes. It may not be that amount but it absolutely cannot exceed the ¤150 million limit. In response to Senator Landy, the Government decided to introduce the local property tax this year. When one talks about funding local government, the critical issue is the powers given to elected members of local government. I spent 27 years in local government as an elected representative.

Like the Senators I am well versed in the powers and efficiencies of local government. An important plus in the property tax legislation is that locally elected councillors will be in a position to increase or decrease the budget by up to 15% from 2016 onwards. The provision will be a big issue next year during the local elections and councillors will have to prove how well they will manage the accounts for councils. The provision will give more powers, responsibility and authority to elected members. It will not simply be a matter of asking the county manger to do this, that and the other. He or she will inform a councillor that he or she has the power to grant approval. The provision will grant more authority to local representatives and give an opportunity for more efficiency. Local representatives will be in charge of what is happening. I have no doubt the next local election will dwell on efficient, responsible and accountable local government. Obviously the successful councillors will also have persuaded the electorate that they are the best.

The Bill will ensure the local government fund will benefit to the tune of ¤960 million. The sum will not cover everything we would like to do. I am aware of the needs of communities and the provision is the best that we can do at this time, given the very difficult position that we are in.

I know that in Senator Landy's county of Tipperary the Government has decided to create new efficiencies. The merger of Tipperary North Riding and Tipperary South Riding council councils will result in a more efficient, streamlined and effective council. Costs will also be significantly reduced along with the number of councillors. The legislation will mean local government will be more accountable and I hope that will mean more efficient. Mergers are happening elsewhere such as in counties Limerick and Waterford.

Paschal Mooney (Fianna Fail)
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I find the Government's policy on local government finance contradictory. On the one hand, the Minister of State said there is ¤960 million. I ask him please to correct me if I am wrong about the following. Legislation was introduced some years ago to ring-fence that amount of money which meant the Government could not touch it. I am inclined to believe that happened. Otherwise he would not be tabling a section to permit the transfer of funds from the local government fund.

Some weeks ago the Minister for Transport, Tourism and Sport announced that he would provide an allocation, somewhat small admittedly, towards the maintenance of local roads. Earlier in the year I attended a committee meeting where the National Roads Authority stated its concern about a reduction in funding for ongoing road maintenance. Earlier today the Minister of State, Deputy O'Dowd, pointed out his distinguished record in local government but Senator Landy and I have also served in local government. I would hate to see a repeat of the situation that developed in the 1980s during the last economic recession. There was a severe reduction in funding for the roads network and it took almost 20 years of successive governments and successive Administrations to right that wrong. There was no money in the kitty then and we are in the same situation now.

The Government must have a vision of the future and it simply cannot make a decision to cut funding just because we have no money. All of the indications are that European Governments are moving away from austerity policies. The Italian Government is worse off than we are, relatively speaking, but it is talking about using money to invest in state projects, to develop infrastructure and whatever. I have seen the damage done by a severe reduction in funding for local authorities and that is why I have a severe difficulty with the same being done now. The Government needs money from wherever it can get it but it is a pity to seek assistance from local authorities again. On the other hand, the Minister of State spoke in glowing terms, and rightly so, that local government will be more efficient, have more powers and whatever after the next local election. Those powers will be of no help if local authorities have no money or their funding is reduced.

The Minister of State made the point that local authorities will be empowered but let me give an example of a contradiction. The local improvement schemes were vital, especially in rural Ireland. Some months ago it was announced that the scheme would be re-introduced, which was welcomed by all sides. It transpired, however, that local authorities could only introduce the scheme if they shifted money from another heading. There was no increase in funding.

Local government funding is vital for the fabric of society and I mean in that in the physical sense. As the money will be used primarily on the road network, can the Minister of State assure the House that the Government will not take its eyes off the ball despite all the fiscal pressures? I want him to give an assurance that the Government will find the money and resources elsewhere. Otherwise, the next generation for the next decade will face the same problem of having to take remedial action to repair the roads at perhaps double the cost, as happened in the mid to late 1990s and well into the 2000s.

Sean Barrett (Independent)
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I move amendment No. 1:

In page 13, between lines 1 and 2, to insert the following:?8. The Minister for Environment, Community and Local Government shall within six months publish an evaluation of the taxation of goods vehicles in paragraph 5 of the Schedule to the Act of 1952, as inserted by section 4, based on laden weight per axle to yield the equivalent revenues of taxation based on unladen weight per vehicle.?.

With regard to the six months stipulation, a lot of the research has been done so it would not be onerous. I would not impose such a burden on the Minister if it were so. An Foras Forbatha, an organisation well known to the Minister of State's officials, researched the matter a long while ago. An Foras Forbartha based its research on that done by the American Association of State Highway Officials, AASHO, in the United States and the road track costs studies in the United Kingdom. The research found that heavy goods vehicles account for about 15% of the capital cost of a road. One would not need as much sub-structure and one could have steeper hills and hollows if trucks did not use a road. The AASHO's study was based on old airport runways that were used for the mass transit of all sorts of vehicles. The findings proved that the surface would hardly ever wear out if a road was built properly and one just had cars on the road, which addresses the point made by Senator Landy.

The unladen weight system for heavy goods vehicles is out of date. Obviously the weight of a load has some impact. The number of axles is important because the weight compresses downwards. A small number of axles on a small piece of road will cause the potholes to which Senator Landy referred. Many axles will spread the weight over a wider area and will not cause potholes. The research showed that the problem is not juggernauts but the number of axles under a juggernaut. One of the UK studies showed that a 32 tonne vehicle with four axles only met 82% of its road user cost. If one adds a fifth axle with the same weight then it would not only meet its road allocated cost but also be 31% above it. Therefore, the savings are substantial.

My colleagues in the school of engineering also sent me some examples. They estimated that the permanent wear damage factor is reduced by 21% when one moves from five axles to six axles, there is 15% more carrying capacity and the road damage per tonne is reduced by 36%. I can also quote a Norwegian study and I shall supply all of the research to the Minister of State.

I understand that vehicles with more axles do not cause potholes and the engineers tell me that tandem axles are even better. We could reward those who have vehicles that do not cause potholes and should consider changing the system to achieve a revenue neutral outcome. I accept the wish of the Minister of State that any change should be revenue neutral, as this did not happen on a previous occasion.

We do not have a truck manufacturing business, however we could transmit a signal to importers to import a different kind of heavy goods vehicle that will not do so much damage to our roads. We could apply the principle that those who cause potholes pay for them, as an adjunct to the polluter pays principle.

In this amendment I ask the Minister to look at this and incorporate it in the system. As I said earlier the research is available and it is a task for the engineers in the Department to compile it and discussing it with the engineers I mentioned. It is not designed to reduce revenue, but it might reduce expenditure and get us better value from our roads budget.

The research is robust and has been around for a while. We might ask the Irish Academy of Engineering to examine it but I genuinely put forward this suggestion on the basis that it makes sense. It should assist the Minister in managing his budget and this would help us at a difficult time in the public finances. I genuinely believe this is a worthwhile suggestion but I ask the Minister of State to consider it and come back to us in time.

Deirdre Clune (Fine Gael)
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I am aware of research in this area. If one increases the number of axles, the load is spread more widely and this reduces the impact on the roads, which should reduce wear and tear. Senator Barrett would like the Minister to consider this suggestion. I know of engineering groups in the country and in America which have conducted studies on this issue. The transport operators are well aware of the wear and tear on their vehicles and by increasing the number of axles, they would appreciate that it will lower their costs. We have discussed the impact of CO2 emissions on the environment, but the redesign of the axles will have a direct impact on the purse and could have long-term implications by reducing the wear and tear on our roads. Everybody is trying to pitch in with ideas that reduce the costs to local government and lessen the negative impact of these vehicles on our roads.

Fergus O'Dowd (Louth, Fine Gael)
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I thank Senator Barrett for tabling this amendment. The contribution of the Members of this House allows for the most reflective debate on the issues. I acknowledge the professional information and the background studies that he has offered to the Department. I know they will be welcomed and will be considered, which is what he requested.

The Minister cannot accept the amendment today. He has no opposition in principle to the evaluation of the basis of charging for commercial vehicles but we cannot commit to particular timescales for completion of such an evaluation. We are aware of the report on the road haulage industry published in October by the Joint Committee on Transport and Communications. At present, motor tax is payable on the basis of the unladen weight of a vehicle. It is generally accepted that unladen weight is not a satisfactory basis for motor tax and that it is out of line with the basis of taxation of commercial vehicles in other countries, which is generally based on gross design vehicle weight. There is no correlation between gross design vehicle weight and unladen weight. Care must be taken to ensure that if charges are applied in the future to the current fleet, motor tax rates are set in such a way that they do not lead to large increases for some owners and large reductions for others. Initial analysis undertaken last year by the Department on a sample of the commercial fleet would suggest there are large variations both up and down between unladen and gross weight design. This seems to be a particular issue for those vehicles in the 10,000 kg to 14,000 kg unladen weight categories. If the basis of taxation were to be changed, it would apply equally to all commercial vehicles, not just those over a certain weight. There has already been some consideration of the matter and once the Non-Use of Motor Vehicle Bill 2013, which is a priority for the Department, has been enacted, it is intended to review the basis of taxation for commercial vehicles.

The timescale for such review is subject to the resources of and competing demands on the Department and accordingly I cannot give an absolutely specific timescale for completion. We can certainly look at the correlation between gross design vehicle weight, which is readily available from the manufacturer's certificate of conformity, and the laden weight per axle as the Senator is suggesting. There are legal limits on axle weight and enforcement structures in place to ensure compliance. The road network is built to modern standards in full knowledge of the standards applicable. This helps to ensure that structural damage to the road network is prevented and ameliorated as much as possible. The tax rate applicable to the larger HGVs is already quite high, almost ¤5,200 per annum for over 20 tonnes. The industry has concerns about its competitiveness and this would obviously have to be understood.

I do not know if my reply has been helpful to Senator Barrett. The points he has made will be examined but we cannot commit to a timescale or what the outcome will be. We cannot accept the amendment as such. Within these parallel lines, we will do all the work that needs to be done to analyse the matter.

Sean Barrett (Independent)
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I thank the Minister of State. I do not think it will take too long as much of the research has been done and the Department may be unduly pessimistic. I was glad to hear the Minister of State agree in principle with my suggestion. Do we progress by continuing with the existing system, which is unsuitable but people bought into the concept of the unladen weight? When the Minister decides, and I think he probably has in principle, to communicate to the road haulage system that we are moving from the current system, which we are all agreed is an unwise system, that would be a signal to them and they could be heading down this road in advance of the Minister's decision. We would prefer if they bought vehicles with a larger number of axles, because vehicles with a smaller number of axles are damaging the road network unnecessarily compared to vehicles with a larger number of axles. Would one call that a declaration of intent to move to the system, which the Minister of State described in his very eloquent reply? I think this is worth doing and probably has been worth doing for a number of decades, based on the research which he says was outdated and other countries have made the move.

I will not press the amendment because of the Minister of State's response, but the momentum that is indicated in his reply must be maintained. It is just worth doing it. The industry should know the Minister of State's thoughts. In fact his reply should be circulated to the industry. The record will be there. I think it is the wise way to go. The industry will probably agree that it a wise way to go but they will have an incentive to purchase vehicles which do not have a damaging impact on the roads.

Such vehicles are available and we do not have an industry which manufactures them to defend. The impetus provided by the Minister of State in respect of that change is very welcome. I hope it will be circulated to people.

As already stated, the Department is taking an overly pessimistic view in respect of how long it would take to carry out the research work involved. Much of that work has already been done and is available, I presume, from the NRA, which absorbed part of An Foras Forbatha when it was disbanded. As Senator Clune stated, there are many engineers who are aware of the work to which I refer, who see it as worthwhile and who would undoubtedly assist the Minister, Deputy Varadkar, in making the kind of move he is contemplating. I am of the opinion that he is actually doing something more than contemplating and that he intends to go in the direction to which I refer when the workload within his Department has been reduced. I commend him on that. Perhaps it might be the case that next year we will be considering moving towards a system for the taxation of heavy goods vehicles which the Minister of State described.

Fergus O'Dowd (Louth, Fine Gael)
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I assure Senator Barrett that all of the issues he raised, and those which are regularly raised with the Department by the industry, are very much under discussion. However, they are extremely complex. I know the Senator acknowledges that fact. Notwithstanding their complexity, the issues in question are the subject of active contemplation and discussion. I appreciate that the Senator does not intend to press his amendment. I assure him that the Department, the Minister and the industry are very much aware of all of the issues involved. That is as much as I can say at this point.