Tuesday, 18 November 2014
Local Authority Funding
While the Minister of State is welcome, I am disappointed the Minister, Deputy Kelly, is not present to deal with this very important issue on the need for the Minister to provide immediate financial assistance to Sligo County Council to ensure that in agreeing a budget for 2015, it does not unfairly penalise the citizens of Sligo and-or its businesses and industrial community because of the council's adherence to the policy directed by the Minister's Department.
This night last week the Minister secretly met his party colleagues, and those of the Minister of State, from this House and the other House in connection with Sligo County Council. He threatened at that stage that he would abolish Sligo County Council if within a two-week period it did not get on top of its own finances. To do that at this stage would be like Jean-Claude Trichet and the people in the European Central Bank telling the people of Ireland that they will take the entire hit, and all of the pain, on behalf of the European bondholders.
It is wrong to treat Sligo County Council and other small local authorities in isolation because in effect they have performed in line with the directions of the Minister's Department in the context of targets set by it on performance with water services, the upgrading of wastewater treatment facilities and the targets laid down by the national spatial strategy, which was driven and supported by members of the Minister of State's party, members of the Labour Party, Independents, Fianna Fáil, Sinn Féin and many vocational, civic and commercial groups. That policy was being driven by the Department of the Environment, Community and Local Government and towns like Sligo were told to prepare for an infrastructure to facilitate a population of 100,000 people.
Against that backdrop, local authorities, especially those selected as gateway centres, were told to be more ambitious and seek to engage in public private partnerships to ensure enough land was bought in order that local authorities would not be subservient to the developers of the future in the context of having enough land for the people for social housing, leisure space, industry and so on.
Sligo County Council did that in the context of water, an issue much to the fore in recent days. The costs between 2008 and 2012 for wastewater treatment and water services in Sligo increased from €5 million to €10 million per annum. In the same period, central Government subvention to that local authority decreased from €18 million to €9 million.
The Minister of State can see, therefore, where the problem lies. When that infrastructure is handed over to the super-quango that is Irish Water, there will be no recompense for the people of Sligo. No funding has been made available to them to cover that outlay in which they engaged over that time. Much of the debt in question has come along from the acquisition of land and the investment in wastewater treatment and water services.
For the Minister to finger Sligo local authority, telling it to get its act together, with no help from the Department, or it will be abolished, is ridiculous in the extreme. The Minister’s own county council has issues. Donegal and many other local authorities have debt issues. To treat them as independent republics, telling them to sort out their problems without any centralised subvention is ridiculous in the extreme, particularly when the Minister knows there are local authorities in Dublin city, as well as other wealthy ones, which have tens of millions of euro on deposit. Fingal County Council, for example, which has Dublin Airport in one corner, has a rate base higher than Sligo and Leitrim county councils together. Fingal County Council has €100 million on deposit alone. This is fundamentally wrong.
Last week, the Minister travelled to meet officials in Sligo County Council in secret, without consulting any councillors or the cathaoirleach, to deliver the ultimatum to close its second tax office in Teach Laighne in Tubbercurry and lay off another 50 staff, even though 188 staff have been laid off over the past three years. It is a wonder the Government was not trumpeting the setting up of a task force on employment because so many staff have been let go by the local authority. He also told council officials that more commercial rates needed to be collected. The Government wants to shove it all onto struggling small businesses to pay this bill. This is ridiculous in the extreme.
Donegal County Council has five tax offices. Tipperary - the Minister’s county- has five municipal offices. To treat Sligo in this way is disgraceful. Smaller local authorities are providing services for citizens. Just because they are not in Fingal County Council, which is cash rich, does not mean they are not entitled to those services. Picking Sligo as a bad example is the same as Jean-Claude Trichet, the Merkels and our European masters telling Ireland to take the pain of austerity. The people of Sligo should not have to do the same. Will the Minister make the funds available to assist the citizens of Sligo, assistance to which they are as entitled as every other citizen?
I thank Senator MacSharry for raising this matter. I am responding on behalf of the Minister for the Environment, Community and Local Government who thanks the Senator for providing the opportunity to outline the situation regarding the financial difficulties of Sligo County Council.
The continued deterioration of Sligo County Council's financial position is of serious concern to him, despite the achievement of savings in recent years. On Thursday last, 13 November, the Minister met the chief executive of Sligo County Council and his senior management team to discuss these very issues and had a constructive and useful engagement with them.
The council has been incurring revenue deficits over recent years to the effect that the cumulative deficit now stands at €19.67 million with long-term debt in excess of €120 million. It is a matter for each local authority, including Sligo County Council, to determine its own spending priorities in the context of the annual budgetary process having regard to Government policy, locally identified needs and available resources.
The elected members of a local authority have direct responsibility in law for all reserved functions of the authority, which include adopting the annual budget and authorising borrowing. Elected local authority members are democratically accountable for all expenditure by the local authority.
The financial difficulties of Sligo County Council have not been caused by the financial model used to fund local authorities. While it is true that general purpose grant funding to Sligo County Council has reduced from a high of €22.22 million in 2008 to €15.58 million in 2013, the reduction, at 29%, has been less than the national average of 35%. Local authorities are independent bodies with their members responsible for budgetary and borrowing policies. Sligo County Council has the same requirements placed on it as all other local authorities in terms of implementing Government policy.
Other factors such as poor income collection have significantly contributed to Sligo's financial difficulties. Commercial rates collection levels for the county and borough in 2012 were at 62%, compared with a national average of 75%. Sligo's collection levels declined even further to 59% in 2013. Sligo County Council has uncollected rates debt of €6.8 million. Its water collection levels have averaged 48% between 2008 and 2012, resulting in an estimated loss of income of in excess of €1 million per year. Collection levels for housing loans are also poor at 47%, showing arrears of €1 million. Housing rent income collection is 80%, which is below the level achieved by comparator local authorities.
While it is a matter for individual local authorities, including Sligo County Council, to manage their day-today finances in a prudent and sustainable manner, the Department is in regular consultation with the council on its financial position. The Minister has set aside an allocation of €1 million in additional funding for 2014 for the council to assist it to take the steps necessary to move to a more sustainable financial position. The payment of this is fully conditional on a realistic and achievable financial plan which charts a path to long-term financial sustainability being agreed between his Department and the council.
Financial stability must take precedence in all of Sligo County Council's planning in the coming years. It is essential the 2015 budget addresses the gravity of the financial situation in the council, building on the savings achieved to date. The Minister and his Department are committed to continuing to support the council in its efforts to restore financial stability. As the Minister pointed out at his meeting with Sligo County Council, the next steps need to be taken by the council through a firm commitment reflected both in its budget for 2015 and through the agreement of a long-term financial plan with the Department. By ensuring Sligo County Council is supported in making these difficult decisions that will, in the longer term, place it on a more realistic and sustainable path to growth and renewal, the Minister is certain Sligo can put its current difficulties behind it and focus on consolidating its position as a leading economic centre for the north west in the future.
I appreciate the Minister of State was only reading out a reply provided to him. It claims the debts have not been caused by the financial model used to fund local authorities. Who wrote this ridiculous statement? It takes no cognisance at all of the points I made regarding the legacy position which has caused much of the local authority's debt. In some way, this reply treats Sligo County Council like some remote charity 40 million miles away for which the Government has no responsibility. What do Senators Susan O’Keeffe, Michael Comiskey and Imelda Henry, as well as Deputies John Perry and Tony McLoughlin, think of this? Do they realise the Department told an entire section of the community to achieve set targets in providing a wastewater treatment infrastructure and acquiring land for the purpose, which Sligo did, outperforming other local authorities in the process, but now tells the council to sing for its support? Is it some remote organisation on the other side of the world for which it has no responsibility? This Government was elected by the people in Sligo and the north west. It is their tax euro paying the Government’s salaries. Accordingly, the Minister has responsibilities and obligations to the people of Sligo to provide for them.
Last night in Sligo, the Taoiseach echoed the call to close a tax office in Tubbercurry and cut library services, as well as lay off a further 50 staff on top of 188 already laid off. This is a complete abdication by the Government of its responsibilities to the people of Sligo. It is a sad day for democracy. I hope the Minister wakes up soon.
I thank Senator MacSharry who acknowledged that I am responding to the House on behalf of the Minister for the Environment, Community and Local Government, Deputy Alan Kelly, and outlining his position on this matter.
Sligo County Council has made significant progress in achieving savings. There is also a good spirit of co-operation between the Department and Sligo County Council which was demonstrated by the Minister’s recent meeting with the chief executive and senior management of the council. All local authorities have come under serious financial pressure over the recent years of the economic crisis.
If one looks at some of the figures, for example, the general purpose grant funding, while Sligo has seen a decline it has been less than the national average decline. There are figures which I am sure Senator MacSharry and all Members of the Oireachtas, as people who have duties to all taxpayers, would like to see higher in terms of income level collection. If there are debts owed to local authorities those debts must be paid. We need to ensure we have structures within our local authorities to ensure those levels of collection are higher.
I will make sure Senator MacSharry’s comments and the transcript of this debate are conveyed directly to the Minister for the Environment, Community and Local Government.