Thursday, 5 December 2019
Local Government Funding: Statements
I thank Senators for giving me an opportunity to speak about local government funding. We are all conscious that at this time of the year, we are in the budget-making season for local authorities. The adoption of a balanced budget is the single most important duty that elected members of local authorities are called on to carry out each year. As I speak, 29 of our 31 local authorities have agreed a budget. Sligo County Council and Waterford City and County Council are the final two authorities to agree a budget. They are scheduled to meet tomorrow and next Thursday, respectively. The decisions made by elected members to balance the budget are matters for themselves in line with their statutory role and democratic mandate. I recognise the challenges facing elected members of local authorities in adopting annual budgets. Councils are required to adopt budgets which are sufficient to meet the expenditure arising during the year. In arriving at their decisions, members must consider the impacts on local homeowners and businesses, the requirements of the local authority in delivering critical services to local communities and the need to adopt a balanced budget. Ultimately, elected members must strike a balance between all of these issues.
The financial position of the local government sector has improved considerably over recent years. As we know, authorities derive their income primarily from four main sources: commercial rates; charges for goods and services; funding from Government grants; and the local property tax. Since 2015, the revenue of local authorities has grown from €4 billion to €5 billion. In 2015, 32% of local authority income came from goods and services, 37% of it came from commercial rates, 22% of it came from Government grants and 9% of it came from the local property tax. In 2019, that picture has changed significantly. Income from goods and services has reduced by 6% to 26% of overall local authority income. Income from commercial rates has reduced by 7% to 30% of overall income, although it is higher in some local authorities. Income from Government grants has increased by 12% to 34%. Income from local property tax allocations has increased by 1% to 10%. That is a very significant transition in local government funding. Local authorities vary significantly in terms of size, population, public service demand, infrastructure, income sources and overall financial position. I recognise that some local authorities face greater challenges than others due to these variations. As a whole, the sector is in a much healthier financial position now.
Local authorities are also funded to deliver other programmes, including housing and roads projects. Next year, the Government will invest some €2.63 billion in housing, representing an increase of €250 million since 2019. This funding will help local authorities and partner bodies to deliver 27,500 homes for families and individuals in need. Some 11,000 of these homes will be owned or managed by local authorities and approved housing bodies, supported by almost €1 billion in Exchequer funding. Over 7,000 of those 11,000 homes will come from various build programmes. This means that in 2020, there will be more new-build homes in the social housing sector than in any other year so far this century. Budget 2020 has maintained strong support for local authorities. This Government has not been found wanting. In 2020, it will provide €156 million to support local authorities through the Exchequer contribution to the Local Government Fund. On a like-for-like basis, local authorities will receive €23 million more in funding in 2020 than in 2019. The extra €23 million represents an increase of 27% in Exchequer support for local authorities to meet additional pay and pension costs arising from national pay agreements.
Support for local government in 2020 has been realigned, largely as a result of the valuation of Irish Water as a global utility liable for commercial rates. From 2015 to 2019, compensation of approximately €47 million per annum was paid to local authorities in lieu of commercial rates from Irish Water. From 2020, Irish Water will be liable for commercial rates once more. Therefore, the compensation in lieu of commercial rates will be discontinued. The decision to make Irish Water liable for rates, similar to other global utilities like the ESB, was made in consultation with local authority management. It is the right thing to do. The apportionment of the valuation of Irish Water among local authorities from 2020 will be based on population, as it is with other global utility companies with national networks. Following the valuation of water infrastructure by the independent commissioner for valuation, the local government sector is expected to collect a broadly similar amount in commercial rates to that previously funded by the Exchequer in water rates compensation. The precise final figures will not be fully available until all local authority budgets have been concluded and annual rates on valuation have been confirmed.
The Department of Housing, Planning and Local Government is taking an overview of the financial impact of this transition on local authorities in the context of their overall financial positions and the preparation of budgets for 2020. A small number of individual local authorities are expected to receive less in Irish Water rates than they received in compensation. Based on analysis by the Department, as well as bilateral and sectoral engagement, a number of local authorities were identified as being challenged to deliver balanced budgets in the first year of the changeover. Along with the Minister, Deputy Eoghan Murphy, I am providing a once-off special assistance payment of €2 million to Waterford City and County Council and €300,000 to Wicklow County Council to assist them and to allow time for rebalancing of income and expenditure in 2020.
Annual commercial rates of almost €1.5 billion account for approximately one-third of local government current income. Earlier this year, the Oireachtas made great strides in modernising the commercial rates system in the Local Government Rates and Other Matters Act 2019, which contains provisions to support local authorities and ratepayers. The Act contains provisions in section 15 relating to new rates alleviation schemes. These provisions empower the elected members of local authorities to devise and achieve policy objectives through locally-targeted rates waiver schemes. The elected members have the discretion to introduce waiver schemes that support objectives outlined in county development plans, local area plans, local economic and community plans or the national planning framework. The power to make alleviation schemes is an extra tool that is available to local authorities to encourage economic development, respond to local needs and support national policies. In effect, it is an extra reserved function for local authority members. Work on the commencement of section 15, which deals with the new alleviation scheme, is under way.In order to ensure any local authority that wishes to implement an alleviation scheme in 2020 can do so, my Department advised such local authorities to make a provision in their budgets for 2020 on the basis that the necessary regulations will be made in time so the local authority can draft its scheme and carry out public consultation in quarter 1 of 2020.
The Act also amended the Valuation Act 2001 in respect of the making of a rate limitation order. A rate limitation order is set for local authorities following a revaluation, to ensure the revaluation is revenue-neutral by setting an upper limit for overall rates income in the following year. The rate limitation order formula was amended to take account of the potential loss of rates income following the conclusion of valuation appeals. This is an important amendment for local authority finances. In addition, the formula was amended to account for the addition of a new global utility and for increases in the valuations of existing global utilities. Prior to the formula amendments, instead of being revenue-neutral, the rate limitation order could have had an unintended negative impact on local authority finances by not taking account of the loss of rates income following appeal and buoyancy from rates on global utilities. I commend the constructive approach taken by this House to that legislation. Unsurprisingly, this measure has been widely welcomed by the local government sector and is exactly the kind of approach, both practical and strategic, we must take to continue modernising local government funding.
Local property tax, LPT, is also a significant source of local authority funding. The role of local authorities in deciding the local adjustment factor for LPT, up to 15% annually, is a vital one. This decision provides an important connection between local revenue raising and local expenditure. Any losses arising from local variation decisions are ultimately borne by the local authority in question. It is interesting to see the change in attitude to LPT over time, with 19 local authorities varying their LPT rate upwards in 2020 as compared to only five in 2019. LPT, as with all taxation policy, is a matter for my colleague, the Minister for Finance, Deputy Donohoe. The review of LPT was published by the Department of Finance earlier this year and referred by the Minister, Deputy Donohoe, to the Committee on Budgetary Oversight for its consideration. There are significant policy implications and choices in the report and it requires careful consideration by the Oireachtas. A local government funding baseline review group was also established to consider the methodology to determine local authority funding baselines and to inform the distribution of any additional funding that could become available for general operational purposes, for example as a result of the implementation of recommendations in the LPT review. When the ongoing process on the consideration of that review of LPT is concluded, the linked work of the baseline review group will be considered further.
I am pleased with the progress the Government, with the support of this House, has made in improving local government funding this year. The impact of the new Local Government Rates and Other Matters Act 2019 in reducing income uncertainty for authorities and providing for important alleviation schemes cannot be underestimated. The establishment of Irish Water as a rateable utility increases the sustainability of the overall rates collection base and brings Irish Water into line with other utilities. This is another important step, supported by local authority management. The Government continues to increase its support for revenue and capital funding for the sector. The growth in the capacity and performance of the sector in delivering key programmes, such as housing in particular, continues to improve. Over the last five years, this Government has played its part and will continue to play its part in ensuring the satisfactory funding of our local authorities. I am of the local government sector, having served as a member of Kilkenny County Council what seems like many moons ago, and I will continue to advocate for adequate funding on its behalf and on behalf of the sector in general. Local government funding is growing year on year and is being rebalanced and the transition is not over yet, with important policy decisions to come.
I am taking six minutes and I will share two minutes with Senator Davitt. I thank the Minister of State for being here today and I want to speak about local government funding but first I welcome two good colleagues of ours, Councillor Joe Malone from Kilkenny and Councillor Cormac Devlin from Dún Laoghaire. They are both excellent councillors and they are here because Senator Davitt will ask the Minister of State when the Moorhead report will be published and how quickly, because that is of the utmost urgency.
It is vitally important local authorities like Carlow have sufficient long-term sustainable funding to deliver critical services to rural and urban local communities. I know Carlow County Council struggles with the day-to-day running of the local authority because of consistent underfunding from the Government. There is enormous pressure on the good people who work there but they are under pressure. Government grants and subsidies make up just 31% of local government funding and the rest of the finance on which they rely must come from charges for goods and services, commercial rates and local property tax. In 2019, business contributions will directly account for €1.55 billion or 34% of the total local government budget. This represents a 14% increase in the total value of commercial rates collected since 2010. Some €300 million goes uncollected each year and there is a need to address this. Reductions in central Government contributions have resulted in local authorities, such as Carlow County Council in my native county, becoming even more reliant on local business for their revenue. Our rates in Carlow are among the highest in the country, yet local authorities are responsible for the local economic development and these kinds of massive commercial rates can cripple businesses. We need to support businesses in our towns and counties and encourage the sort of vibrant economies that keep this country competing globally. New commercial rates incentive schemes are needed to encourage regeneration, entrepreneurship and strategic investment. We also need to hold local authorities to account and ensure they are effective in asking for help with investment issues and with spending money.
This Fine Gael Government has continually deprived local authorities of fiscal autonomy and limited their capacity to spend in areas such as housing. I am glad to say Carlow County Council has built a lot of houses in 2019 and I know it has a lot more housing in the pipeline for 2020 and 2021. However, across the country we need to see greater freedom and flexibility to ensure local authorities are able to react adequately to local circumstances, such as our housing crisis. This Government needs to ensure local authorities know how to access funding and ensure they know where to spend it and not hit homeowners constantly, which is a huge issue. In recent times, rural counties left far behind on capital funding have had to raise the rate of property tax, whereas places such as Dublin have been able to reduce the property tax rate. This all comes down to funding and the funding allocated to local authorities. It is grossly unfair to rural Ireland. I have said before and I will say again that we cannot all live and work in Dublin. We cannot reach into the pockets of hard-pressed homeowners in rural Ireland for more money because they are unfairly marginalised due to a lack of funding. The reason we have any economic recovery at all is because these people are working and paying taxes already. They do not feel they are getting value for money from this State and that is a problem.
Local government is a vital tier of government, quite simply because it is the local face of national politics. Local government needs to be adequately resourced and empowered to tackle local issues when they arise. Unfortunately, more and more of this power has been taken from local authorities and instead the citizens are left feeling frustrated and let down because more red tape is being introduced.
The last revaluations were done in 2015. In Carlow, only 30% were physically revalued and 70% were revalued using maps. If one is trying to appeal this, the process goes on for months and even years. The Government needs to look at this. This is not being addressed. One cannot physically go on a map and decide what the measurements of a premises will be. That is not right and 70% of were revalued by using maps in Carlow. That is unacceptable.
I am sure the Minister of State will come back to me on this matter because we are neighbours. How does Carlow compare with other counties with the same population in capital funding? Since 2008, Carlow County Council has not had an increase in general capital funding. It has had no increase in general funding for 11 years. Carlow County Council has been speaking to the Department and it seems there is a claim for underfunding of over €4 million. That is unacceptable. I am disappointed the county of Carlow, which is the Minister of State's neighbouring county, is fighting for funding from this Government and the Government is not delivering on it. It is unacceptable and I am looking for answers here because Carlow cannot be forgotten again.
Senator Murnane O'Connor is active on matters in Carlow, which is close to the Minister of State's heart. I welcome the Minister of State and councillors Cormac Devlin and Joe Malone who are representing the Local Authorities Members Association, LAMA, today. In my county of Westmeath, we had a long-standing problem with the harmonisation of rate valuations between Athlone and Mullingar, as the Minister of State would know.Harmonisation caused many problems for the county, as Senator McFadden and I learned when we served on Westmeath County Council together. Special funds and resources are probably needed to address this. It is very hard to change a rate. To try to bring a rate down will not be helpful to anybody. To try to bring a rate so far up is exceptionally hard, particularly in the Mullingar area. If something could be done in this area, it would be practical.
The Minister of State was present for a Committee Stage debate here ten days or so ago and he told us he hoped he would have the Moorhead report at hand in ten days. Could he enlighten us on that?
I welcome the Minister of State and his officials to the Seanad to debate an important aspect of local government, namely, the sustainability of local government funding. It would be remiss of us not to put on record that this year we celebrated 120 years of the local government system in Ireland. Despite inadequacies and imperfections in the system, it has sustained itself over the that time and served the public quite well. We should acknowledge that while also recognising that reform and modernisation are required.
In Ireland, we have a funding model that is mainly centralised. The main power is that of the Minister to dissolve a local authority that does not discharge its duties under legislation. A local authority's main function is to pass an annual budget. Any public representative or democrat would oppose and hate to see the appointment of a commissioner in the place of an elected council. It would be a matter of last resort. It would be the last thing any of us would wish to see.
Having said that, budgets and draft budgets are mainly prepared by the CEO and council staff, with an input from the corporate policy groups of the council. One hears complaints that councillors do not have enough input into the draft budget but they have the final say. They have the power to prioritise expenditure within the local authority. Councillors need to exercise that power as best they can.
Often we hear calls for more autonomy and independence for local authorities. I remind the House, however, that with autonomy comes responsibility. That is where councillors can frame the budgets of their councils.
The main sources of income in the revenue accounts include commercial rates, housing rent, charges for goods and services, including for waste disposal or parking, and application fees. All these charges are set by the councils in their respective areas. The local property tax, which goes into the equalisation fund, is also a source of income. Coming from a rural area and rural local authority, we should retain the equalisation measures that are currently adhered to. I acknowledge the system is being reviewed. Some local authorities have a much greater ability to raise commercial rates than others. It is important that we maintain good public services in the local authorities that have less ability. That is where the equalisation fund comes into play in respect of local government funding. I ask the Minister of State to ensure this is retained as much as possible.
Capital funding comes from the Exchequer. I note what the Minister of State said in this regard, namely, that Government funding for local authorities has increased from 12% to 34%. This is a substantial increase in the provision of funding for local authorities. We must not forget our EU partners, who provide much needed funding for projects in the regions. Development levies are set by individual local authorities. Local authorities may borrow funds and they may obtain moneys from the sale of assets. There is quite a responsibility on them, therefore, in regard to funding and financial management. I am sure some local authorities are better than others at financial management. Local authorities have audit committees. Local government has an audit service constantly oversee financial management. Regarding performance, including in respect of the collection of rates and housing rent, is it possible to have readily accessible the performance levels of the local authorities? Where there are efficient collection rates, there will be efficient financial management. We must have this.
With regard to rates and valuations, I acknowledge the efforts to reform and modernise the commercial rating system through recent legislation. The Minister of State alluded to this. There is an opportunity for councils to introduce a rates alleviation scheme whereby they can reduce rates in areas within their jurisdictions to incentivise commercial activity. In 2020, I hope there will be some targeting through the commercial rating system in these areas. It is a statutory requirement of local authorities to levy rates on commercial properties.
There was a revaluation in Waterford a few years ago. It is a difficult time for businesses because there are always winners and losers. One will always hear about the losers but rarely about the winners, who see a vast reduction in their rates when a revaluation is carried out. Revaluation is carried out by what is a quasi-judicial independent office, the Valuation Office. After that, it lies with the elected members of the council to decide what the annual rate on valuation is in terms of the annual budget.
I am coming now to some recent controversies surrounding the revaluation of some utilities. Two or three years ago, there was a revaluation of telecommunications infrastructure. That left deficits in some local authority areas. This year, there has been a revaluation of the Irish Water asset infrastructure in local authority areas. That is having a very real impact on local authorities, especially those in Dublin and Waterford. Many local authorities saw an increase in their income from the valuations and the rates applied to Irish Water infrastructure. Unfortunately, in Waterford, there was a reduction of almost €3.5 million. That has created problem for the local authority, which has limited capability due to its relatively low rates base. Dublin also experienced significant reductions. To be fair and as anybody will acknowledge, local authorities in our capital city have a much more significant ability to raise finances from commercial rates.
Although it is said in Waterford and elsewhere that the cut is Government imposed, it is not. I acknowledge the efforts of the Government to support the Waterford local authority. A few years ago, when a large deficit was created after the amalgamation of local authorities, more than €3.5 million was provided to help harmonise the rates when the city and county local authorities were amalgamated. The rates at that time were harmonised to the lower rate, matching the then Dungarvan Town Council rate. Businesses in the city and across the county had their rates reduced but we do not hear that acknowledged publicly. Responsible politicians of all parties and none should acknowledge that. I have not heard it said anywhere in the public domain. There were reductions. We need to have responsible budgets and we need to assist businesses because, over the years, they have been expected to carry the can to fund local government.
I acknowledge the additional contribution by the Government of €2 million this year to assist Waterford City and County Council in adopting its budget. This is a significant additional contribution that other local authorities did not get. The Minister of State is meeting a delegation of councillors from Waterford who are seeking more money to try to close the gap. I wish him well in the talks. Having said that, I acknowledge the Fine Gael councillors in Waterford who lobbied significantly for the additional €2 million that was secured. Now it falls to the council to prioritise its expenditure, examine its budget options and pass a budget that is fair and balanced. I believe there is the ability within the council to do so. When it came knocking on the door of the Government looking for assistance, it received significant assistance, and that should be acknowledged.
There will always be challenges in passing an annual budget and in trying to provide greater public services at local level. The demand is increasing all the time but that is where the balance has to be struck. We elect councillors to strike that balance and to use their mandate to pass a budget, not to hand over responsibility to any bureaucrats or commissioners. I would hate to see that happening.I call on all councillors in the country to take up the challenge, do what is best for the people who elected them, which I know they will, and pass the budget, which is their primary function.
I welcome the Minister of State to the House and apologise for being a little late. I have raised the issue of local government and councillors' conditions consistently in recent years, as have several colleagues from all parties and none. It feels as if there is a form of consensus but concrete action in that regard, set out in a clear timetable, is missing. The process so far has been slow and frustrating, although I acknowledge that the Minister of State is aware of that. We need to be clear that we cannot come to the Chamber next year and make the same points again. I welcome the Minister of State's comments, therefore, that he is committed to getting the matter sorted urgently. I thank the Local Authority Members Association, whose representatives are in the Public Gallery, and the Association of Irish Local Government for their valuable input on the issues. They represent councillors throughout the country and have made it clear how working conditions and remuneration badly impact local representatives and local government.
Since the Local Government Reform Act 2014, there has been a serious change in the role of local councillors. A smaller number of elected representatives try to cover larger geographic areas and for many, it is not possible, which is especially true in rural areas with vast constituencies. Councillors do not get a full-time wage but theirs is effectively a full-time role. The expectation is that if a constituent asks for help, his or her local representative needs to be able to respond quickly and appropriately, as I have witnessed. If local representatives want to do a job well, they need to be available as the first port of call for their constituents, not least vulnerable people who may need help accessing vital services and supports. As one will learn from any councillor in the country or anyone who has served in local government, it is impossible to do the job properly on a part-time basis. Many councillors do it out of hours, or by taking unpaid leave, or are lucky enough to have flexible working arrangements, but many cannot. Sadly, the current system squeezes people on lower incomes out of local government. Many fantastic councillors, some of them in the Chamber today, who represented their local communities well have been forced to step away from the role because it was not sustainable. This was especially true in advance of the recent local elections and it badly needs to be addressed.
The Moorhead report was requested to examine such issues but, as we are all aware, it has been severely delayed. There was a commitment to publishing the relevant material before the local elections in May but it did not happen, which left many councillors unsure of what their job would entail if elected and whether they could put themselves forward. I accept that some of the delays I outlined are out of the Minister of State's hands but he will be aware of the anger, disappointment and frustration of local representatives because it was pushed back until after the elections. I welcome his commitment to publishing the final Moorhead report in the coming weeks and urge him to do so. I am glad to hear his acknowledgment that councillors are underpaid for their work and the length of time that goes into the job, a point on which the House has consensus.
It has been suggested the issue of remuneration could become part of the public sector pay talks next year, but there will need to be discussions with the Department of Public Expenditure and Reform on the matter. Is there a commitment in principle from the Minister for Finance and the Taoiseach that it will be prioritised? I recognise the Minister of State's commitment to making the request but can we expect collective support from the Government? Ultimately, we will need to make a decision as to what role we want for local councillors and local government. Will it be an inclusive position, available to all? We are currently stuck between two poles. It is not a voluntary position with a low level of commitment but nor is it a full-time position with the resources available to do it properly. All the councillors I know make the same point, namely, no one takes up the role for a high-earning career. They just want it to be feasible and sustainable to be involved in local government. I urge the Minister of State to publish the Moorhead report in full and support a move to sustainable, full-time pay.
I welcome the Minister of State to the House. As a former, albeit brief, councillor on Offaly County Council, it was apparent to me that local authorities are painfully underfunded. This causes not only a deep sense of frustration for people in local communities but also for councillors. It is disheartening to tell constituents repeatedly that there are not enough funds to deliver even basic facilities such as footpaths and public lighting, not to mention to be able to deal effectively with larger-cost projects such as providing infrastructure for public transport, facilitating non-motorised transport such as cycling or walking, retrofitting social housing and providing proper support for community amenities such as swimming pools and libraries.
Ireland has one of the lowest state subventions to local government in Europe. Coupled with the least devolved system of local autonomy of any local government system in the EU, this leaves our local government in a poor state. Maynooth university research has found that only 8% of public spending occurs at local government level, compared with an EU average spend of more than 23%, which is quite a discrepancy. This leaves local authorities over-reliant on funding streams such as the local property tax, which at times can be very difficult for some councils and their councillors to increase, as I recently experienced on Offaly County Council. Local property tax is a ticking time bomb as it will eventually have to be re-evaluated, which will probably result in an increase for homeowners. Local authorities are also highly dependent on commercial rates and development charges, which can significantly compromise local authority impartiality in deliberating on planning matters.
The Green Party would like a root-and-branch overhaul of the funding model for local government, including: an increase in funding; the devolution of more powers to local authorities in housing provision; the re-municipalisation of waste and recycling services; and support of local enterprise. We would also like borough and town councils to be reinstated as part of an overall package of local government reform to make councils fit for purpose, not only to deal with pertinent issues such as housing and infrastructure but also to deal effectively with the climate and biodiversity crisis we face.
I welcome the Minister of State back to the House. In simple terms, when it comes to administration, money is power, and the lack of money or the lack of discretion over how to spend it means being powerless. As a former town and county councillor - in the centre of the universe - I am aware of the frustration felt by council members and staff when trying to progress projects or provide appropriate local services. Currently, local government has fewer powers and functions than that of almost any other EU country. Local government has the potential to play a crucial role in our society, providing many of the basic public services, and should be the most important investor in public infrastructure. In other EU countries, local authorities are responsible for the vast majority of infrastructural investment. In Denmark, Finland, France and the Czech Republic, for example, local authorities are responsible for between two thirds and three quarters of all public investment, while Italy tops the list, exceeding 80%.
In 1940, Éamon de Valera, a man I do not like to quote too often, stated the essential thing in any state is not the governmental framework but the standard of citizenship on which it rests. This is only true, however, if the framework takes responsibility for providing the conditions and stimuli for the practice and development of active citizenship. Local government has the potential to do this. Unfortunately, in the following decades, successive Fianna Fáil Governments did the opposite and
continued to undermine the role and funding of local authorities, culminating in the reckless Fianna Fáil budget of 1977, which dealt a hammer blow to the independence of local authorities. By abolishing rates and service charges without any
consideration of a substitute method for financing local government, they effectively choked its independence and power, diminishing local responsibility and control. This lack of local control leads to a loss of faith in the ability of local government
structures to work.If we are to restore the trust and to close the civic deficit, funding is the place to start.
The central collection of tax revenue to be dispensed on a rather arbitrary basis is far from ideal. The problem is further exacerbated by the fact that much funding from central government is tied to particular projects or areas of spending, very often requiring ministerial approval.
All across the country there are excellent councillors, whose only motivation is to do the best for their local communities, but their efforts and their creativity are being hamstrung. If local authorities were given the power to raise more of their own income and had control over how it is spent, we would have a much more responsive system. Councillors would have to make the harsh decisions. Money would have to be spent on the most essential projects and be needs driven, rather than on plans that currently are grant or funding driven.
The cynics among us might suggest that power has been stripped from councillors so that they do not become a threat. Others would suggest that if funding and powers were devolved downwards, some Departments would be left with little to control or administer. Would that be such a bad thing? The principle of subsidiarity holds that central government should only be performing those tasks that cannot be performed at local level. Many areas that are currently controlled centrally could be administered more appropriately and efficiently at a local level. Urgent changes are needed in terms of funding, frameworks and mindset. These changes must aim to increase local autonomy, local democracy and local participation, thereby ensuring a more flexible, creative and developmental role for local government.
Giving the responsibility for financing back to local people bestows on them the duty to spend money as wisely as possible. I have faith in councillors to do just that.
They never own up to their own mistakes which is part of the problem. After coming through the recession, we often say we have learned the lessons of the recession and we will never go back there. Listening to Fianna Fáil Members, it is clear that they are quite prepared to rush back into the same mistakes.
Perhaps I should apologise to Fianna Fáil Members for reminding them of all their mistakes. That is fair enough.
The Minister of State will forgive me for mentioning Dublin as an example which has suffered so badly from the abolition of domestic rates. Probably the first great example of populism in this country was the buying of votes to the detriment of its citizens. Hundreds of millions of euro have been lost or stolen from Dublin since the abolition of rates in 1977. A structure was supposed to have been put in to compensate Dublin for the loss of domestic rates but that never happened. I believe an independent study found that about €300 million in investment in the Dublin region was lost because of that change. Dublin was never compensated for that. Currently it works out at about €38 million a year when what would have been raised in domestic rates is compared with local government grants, etc. Those are rough figures.
I want to be positive and suggest solutions. I believe there is a menu of solutions and what suits Dublin might not suit Kerry, Carlow or other places. About 6 million tourists come to Dublin city. The norm when staying in a hotel abroad is to pay a tourist bed tax. I do not suggest such a tax in Donegal or Kerry would be sustainable. However, a bed tax in Dublin would be sustainable and would also be a financial encouragement for tourists to move outside the city and visit the rest of the country. That needs to be offered as part of a menu.
Too much of local government funding is ring-fenced. When local authorities are given their funding where that money must be spent is already preordained. We need to give greater powers to local councillors to make those decisions. As they are closest to the coalface, they should have the responsibility for deciding how that money is spent.
Senator Hackett earlier spoke about footpaths, etc. Such infrastructure should be provided by the developer with the development levy coming through. When housing estates are being developed at the edge of a small town there should be a requirement to put in a footpath and street lighting connecting the new estate to the town centre prior to families moving in.
The revaluation for the purposes of calculating the local property tax will be problematic. Senator McDowell frequently cites the comparison of someone living in a two-up two-down in Dublin with someone living in a mansion in Carlow or Kilkenny and the differential in the property tax they pay. When the revaluation comes through, someone outside Dublin living in a five-bedroom house on one acre of land might end up paying €500. Someone in Dublin living in a two-bedroom terraced house with no front or back garden could end up paying €700. There is no equity in that and there needs to be some recognition for the size. It depends on whether we are talking about a property tax or a wealth tax. I have no problem with either, but we need to define what we are taxing. Are we taxing for the provision of services or are we taxing the accumulation of wealth through property? We need to define exactly what we are taxing. The only tax some of the wealthiest people, whose homes are in the constituency I formerly represented, are paying in this State is the property tax because they are tax exiles. They have very salubrious homes in Dublin 4 and that is the only tax they pay. We need to define what we want to get. Property tax in urban areas should be for the service that is provided.
I was heckled extensively by Fianna Fáil at the start of my contribution. I ask the Acting Chairman to give me a little bit of flexibility towards the end. In other jurisdictions a capital city is sometimes funded as a federal city. Certain infrastructure in a capital city is funded by central taxation.Washington DC would be the prime example. The infrastructure is maintained by the federal state while the city raises money for its services. It has a range of government buildings.
The Irish Water issue was raised as Dublin City Council lost approximately €8 million in that case. We have argued about this but it was a loss of revenue for the city that had to be made up by the ratepayer. There were two votes in Dublin City Council. One was earlier in the month, at which the property tax rate was set. Fine Gael and Fianna Fáil voted to reduce the rate of property tax and then fought against the raising of the commercial rate. There is a cause in this and there is responsibility. People wanted to reduce the property tax rate and this caused the raise in rates.
In the couple of minutes I have, I will try to make my contribution as positive as I can. I will briefly address some of the comments made by some of colleagues sitting opposite me. If we are talking about damaged local democracy, first prize must go to Fine Gael and Mr. Phil Hogan for his sledgehammer approach to local government.
Local government is a vital tier of government and it is the closest link to our communities. Judging by contributions today, we need a root-and-branch review of the funding and role of local government. It is long overdue. Many local authorities throughout this country are starved of funding. The business community in many counties has been carrying a disproportionate burden when it comes to the funding of local government. I come from a part of the world close to the Border and there is a unique position there with respect to the challenges of doing business on a daily basis. There is fluctuation in currencies and the added burden and stress of Brexit and what it will bring to our communities. It is high time some kind of economic zone was introduced for Border counties to help the businesses survive the difficulties they have, which most other parts of the country do not suffer. I look forward to the Minister of State's opinion on that.
The authority in County Monaghan recently went through a rates revaluation as well. Some sectors have been hit disproportionately again, including filling stations in small rural villages in the county, which have in some cases seen rates double or even increase by a greater rate. It is disappointing and people are scratching their heads about this while trying to make ends meet as they find money to pay that rates bill. It is part of the reason I seek some form of economic zone, particularly for the Border counties.
When we speak of local democracy, one of the most important components is the councillor. I welcome two of my colleagues, Councillors Cormac Devlin and Joe Malone, to the Seanad. It is disappointing that both Fine Gael and Labour, in its time, refused to accept the great work that county councillors do by remunerating them properly. They have been treated in a disrespectful manner until now. I look forward to the Minister of State's comments today on the publication of the Moorhead report; it must be very big as it seems to be very difficult to publish. I look forward to that and perhaps the Minister of State could comment on the timescale for the recommendations. Will he tell county councillors when they can expect to be properly remunerated for the great work they do?
It is high time town councils are returned to certain parts of our country, where applicable. We are trying to encourage more people to enter politics and town councils were the first step for many. That step has now been removed and it makes it more difficult for people to enter local government.
I thank the Minister of State for being here. I was attending a meeting of the finance committee as he delivered his speech but I read it subsequently. I look forward to his defence of his former constituency colleague, the former Minister, Mr. Phil Hogan. I have no doubt he is ably positioned to do it. I have a few comments to make in the limited time I have.
The Moorhead report is not directly related to local government funding but it is essential that we get to see this report. Its publication has been repeatedly delayed. As somebody who was delighted to spend 12.5 years on a local authority, I know councillors are doing full-time jobs for what is effectively less than minimum wage. They are putting in hours of work and not just at committee meetings, including strategic policy committees, area committees, municipal district meetings, health forums and regional assemblies etc. They also make enormous amounts of representations and get involved with personal cases. They deal with political parties, resident associations, traders and Tidy Towns committees. If one adds together all the hours that people put in and what they get for it, I have no doubt they would be in breach of the working time directive and would be on half or even less than half of the minimum wage per hour. Will the Minister of State deal with that in his response?
We are dealing with local government funding. I do not have a go at people in here but if a council maintains a reduction of 15% time and again and year in and year out before deciding to not apply the same reduction in a following year, it is an increase from 85% of whatever it was to 100%. That is an increase of more than 15% of the charge that people would have paid in previous years. People would notice that when the bill arrives. The deduction would be taken from a bank account or salary and it would be more than a 15% increase. To most people, including Senator Humphreys, that is an increase.
When the local property tax was initially applied, the line was that it was funding local services. It was then a household charge. It funded local services all over the country and not just in the region it was collected. There are 12 local authorities paying into the equalisation fund, with 19 authorities taking money out. Some local authorities in Dublin are putting more into the equalisation fund than other counties are raising. A charge of €1,000 in Dún Laoghaire, which would not be uncommon, reduced by €150 to €850, would see €600 of the total replacing grants that used to be there from the central government that were killed off by the Fine Gael-Labour Party Government. There is €200 going to the equalisation fund. This means Dún Laoghaire-Rathdown County Council is only €50 per household better off despite taking €850 from a household. People thought when they paid very significant levels of property tax that they would get something for it.People thought they would see an improvement in services, libraries, swimming pools, footpaths, tree cutting and everything else but that did not happen. It could not happen because central Government deprived local authorities of huge amounts of money that it used to give to them. It was a con job. There is no point in pretending it was not. That is the reality and they are the figures published by the head of finance in Dún Laoghaire-Rathdown. It applies to all the Dublin region and probably to the 12 local authorities paying into the equalisation fund. We must have a reasonable debate on it.
The money that was being paid to compensate Irish Water is not there now. I do not like using the words "con job", but it is certainly very disingenuous to say funding has not been affected, and for Government to say the funding of local government has not been affected if it is taking money from them. For Dún Laoghaire-Rathdown - the local authority I am most familiar with, even though I am familiar with all 31 local authorities - to be handed Dún Laoghaire Harbour with liabilities and ongoing maintenance of €33 million with nothing to compensate for it is another transfer of cost from central Government to local government.
I thank the Minister for being here and the Acting Chairman for being somewhat lenient on time, which we are sharing. It is important to publish the Moorhead report and to remunerate our councillors for what they do in a decent and respectful way. Let us get on with treating local government with the respect it deserves.
The Aire is very welcome. I welcome this timely debate on local government. The Minister was in Limerick last Monday for the launch of the directly elected mayor. It is a very exciting time in terms of local government reform. What is being proposed and what the committee is going to look at will be a template for the rest of the country. Currently, local government is funded through the Department and there is a lot happening in terms of housing, water services, roads, etc., but there are a lot more things I would like to see happening. We sometimes see houses that have been boarded up for quite a while. If extra funding was provided, a lot of these houses would be back in use more quickly. There should be easy access, a fast track or something that could be approved by the Minister's Department. We constantly talk about issues such as housing, roads and even small side roads and footpaths and repair of same. These are issues local councillors are hit with on a daily basis.
I would like to compliment the local councillors on the wonderful work they do. I was a councillor for 17 years. I support the review of the whole structure of local government and what councillors are paid. I hope that report is published soon because it is supposed to be a part-time job but it is a full-time one, and I know that from my 17 years as a councillor. With the removal of the dual mandate, Deputies and Senators were prevented from being members of councils and the life of the councillor became an awful lot busier.
There are a lot more things happening in local authorities. There is the economic development side of it. There are an awful lot of things happening in local authorities that years ago were not looked at. There is a lot more pressure on councillors in terms of being able to deliver. They also have to look at what they can do to bring in jobs into the local authority area. This should be looked at in terms of the remuneration of local authority members.
On the delivery of local authorities, under the directly elected mayor, we are going to have to look at the functions and with that will come the issue of remuneration. That was pointed out to the Minister on Monday in Limerick. When it is extended around the country, it cannot be done on a piecemeal basis. Once Limerick is up and running and is successful, it should replicated around the country. This is an exciting opportunity. Councillors are sitting on that committee, as are people from different backgrounds across different communities and they bring their own experience. I welcome the fact they are to report by next June and that there will be a directly elected mayor in Limerick city and county by 2021 and that it will be the leading local authority.
Local authorities around Europe deal with issues like health and education. Councillors have a role and they may sit on ETBs or on HSE committees but the role they had in the past has been eroded. We should look at strengthening their role because councillors have a huge contribution to make in terms of education and health. They meet people on a daily basis and listen to their issues. They have a huge role to play in local government. We have to get the local government house in order but there should be an expanded role for councillors and it is something that should be looked at in the long term.
On funding for roads and footpaths, quite a substantial grant is given to local authorities but there are a lot of roads and footpaths that are not done. We need to look at increasing funding in that area. Another area, which is under the Department of Finance but which affects the local authority areas, is the living over the shop scheme. When one looks around towns and cities, one sees vacant units. I only have to look at my city of Limerick. There are fewer than 300 people living in the city centre in flats or apartments over businesses. There are so many vacant units. It is an area that local government and the Department of Finance are going to have to look at because we need to get people back living in city and town centres to help in terms of economic delivery for local authority areas.
I am conscious of time. This debate is due to adjourn at 2.30 p.m. A number of speakers are offering and the Minister has to respond. I am trying to include as many colleagues as possible in the debate, so I would ask colleagues to share time if they are not going to use all their time.
I will try to be as brief as possible. I want to touch on a few issues. The first is around the overall funding available to local government funding. I very much welcome the fact local government funding this year is approaching the €5 billion, but we should never lose sight of the fact we are only getting back to where we were back in 2008. Funding for local government dipped to its lowest level in 2015, when it dipped below €4 billion. Last year, the allocation of approximately €4.7 billion for local government was comparable to 2010. We are really only standing still. If one takes inflation into the mix, we are worse off now than we were in 2008. I would argue strongly that the whole issue of local government funding needs to be kept on the agenda and councils need to be adequately funded.
It is quite worrying that the moneys that have gone over to Irish Water have not been replaced in the local government funding model. I accept that Irish Water is now carrying out most of the responsibilities local authorities would have been carrying out in the water end of it. Nonetheless, that is a net cut in funding to local authorities.
The funding mix available to local authorities is about 10% local property tax. Then there is one third from goods and rental income, one third from State grant and one third from commercial rates. The dependence on commercial rates, and now the revaluation which was referred to by Senator Gallagher, is creating an atmosphere where local authorities need to collect that money and of course that is creating difficulties for many businesses. Aside from that, we should consider providing additional powers to local authorities. Many State services provided by Departments and quangos could instead be driven through local authorities. At least there would be democratic oversight. A root and branch review of some of those services should be carried out in the Custom House. The doubling up of quangos managing services that are beyond the reach of democratic scrutiny should be ended. Local councillors could provide oversight and act on behalf of the people by questioning the delivery of services.
The Custom House and the Department have power over the way that local authorities spend their money. Senator Humphreys, with whom I agree, touched on this matter. Local authorities lack autonomy over how they spend their money. Strict criteria apply to how the block grant from the Department is spent. I will cite an example from yesterday. The director of housing services for Kildare County Council appeared before officials of the Department of Housing, Planning and Local Government. The director was told that the local authority could no longer purchase second hand homes where individuals were living and the landlords wanted to sell. Instead, the council must buy new homes. This is despite the fact that no new homes are being built in the region. It makes no sense. Reality needs to be brought to bear. Issues like these are being raised by local authority members throughout the country. Unfortunately, there seems to be a lack of joined-up thinking. Local authorities are on the ground and should be listened to by the Department and not lectured as is happening currently. Councillors should be given additional powers.
I wish to touch on the provision of funding for local councillors. I attended the meeting of the Joint Committee on Housing, Planning and Local Government when the Minister of State appeared before it on Thursday, 28 November. He indicated that this matter would be addressed and stated his hope that the Moorhead report would be published within ten days or two weeks. Where is the report? We are one week on. When will he receive it? Will he act on its findings? I welcomed his statement last week that he would publish it upon its receipt. He should fight on behalf of local councillors to ensure that this report is not given over to the Public Service Pay Commission. Were that to happen, we could be looking at a result months, or maybe even years, from now. We need a result now.
The Minister of State also mentioned last week that he would backdate to the local elections any additional payment to councillors. Will he confirm whether that will be the case? I welcome his work, which is not made easy by dealing with the Departments of Public Expenditure and Reform and Finance, but this issue must be addressed as it is long overdue. Other Senators, including Senator Horkan, raised the heavy workload of local authority members. They are the practitioners of democracy and are at the point of contact closest to the citizen. A suggestion I have made numerous times is that councillors should deal with local issues and local representations and Deputies should deal with legislative scrutiny and holding major State organisations to account, including banks. Instead of there being competition between Deputies and councillors at local level, Deputies would have less of a role there. Senators would play a comparable role. When there is competition, the Deputy does not want to see the councillor well resourced. That is unfortunate and wrong, as the councillor should be well resourced, given the significant volume of work that he or she must do.
I hope that the Moorhead report is published as soon as possible. Will the Minister of State give a commitment to return to the House following its publication to discuss its findings? It is a matter for the Leader to schedule, but I would like the Minister of State to do so as soon as possible.
I welcome the Minister of State. It is important that we allow local government to recover its status, its authority and the role and functions of the council. To remind the Members opposite, I could mention the former Ministers, Noel Dempsey and a great man from Waterford, Martin Cullen. To go forward, we must remember the past. That is the important point.
This debate is extensive. It concerns the funding of local government, which is not a new topic or phenomenon. It is one that we must grapple with, given that we have not addressed it yet. We are still taking the same chicken-and-egg approach. There must be a national conversation about the future of local government. We had the Putting People First programme and other programmes. Speaking as a former councillor and someone who very much believes in the local, it is critical that a constitutional convention approach be taken to the question of local government. It could consider the question of financing in terms of the rate support grant, local property tax and how local services are funded. Based on the publication of the Moorhead report, it could also consider the roles, duties and remuneration of councillors and, as Senator Ó Domhnaill alluded to, the role and powers of the executive. It is time that we had a real conversation about this. I am not afraid of it. I am not worried about what the future holds. If we are to be serious about taking a non-partisan and non-adversarial political view on this matter, then let us be real about local government. People are leaving in part because of pay and conditions and in part because of increased responsibilities, reduced powers, more of their time being consumed and their inability to achieve a work-life balance.
Dr. Aodh Quinlivan has spoken about local democracy being weak. In one of his scholarly articles, he wrote that we did not have local government, but local administration. I do not necessarily agree with all of that, but it forms part of the debate that we need to have. We should not have that debate in a chamber like this one, though, given that we are just focused on one or two aspects. Instead, the debate must go beyond here. We are setting up a citizens' assembly in January to consider the topic of gender. I ask that the Minister of State discuss the assembly's extension with the Taoiseach, the Minister for Housing, Planning and Local Government, Deputy Eoghan Murphy, his Department and the Minister of State, Deputy English.
I will make two further points about the Moorhead report that the Minister of State would expect me to make. There has been considerable commentary, with members of LAMA and the AILG campaigning strongly on this matter. We support and stand with them, not because they are our electorate, but because many of us have been councillors. We understand the frustration, workload, lack of devolved power and continuous battle that councillors face. Perhaps we made a mistake abolishing all town councils. In Cork city, the representative ratio is 1:6,800; in France, it is 1:1,200; in Austria, it is 1:1,210; and in Germany, it is 1:1,350. The south west ward where I live and that I represented has expanded to nearly half a Dáil constituency. It has more people than some parts of rural Ireland, yet the level of service expected and demanded has remained the same. New councillors were not added to the expanded city council in Cork. I will not fight that argument now, but I will fight over the representative ratio.
I will make an honest plea, namely, that all of us as politicians support a real payment to councillors. Let us do it once and for all. It will be a ten-day wonder in the media and a five-day wonder on "Prime Time", Joe Duffy's "Liveline" and other talk radio programmes, but we will get better local government and people who will stay in local government and represent others. That is what we want. Local government representation should be full time, with councillors paid proper salaries. I believe it was Senator Ó Domhnaill who suggested that councillors should do X and Oireachtas Members should do Y. The dual mandate has not worked because people do not differentiate.It has not worked because people do not differentiate. Then there are Members of the Oireachtas who are piggybacking on the "all politics is local" maxim. Let us be real. It is important that we pay councillors a full-time salary. Putting People First was the document. Along with my earlier request, we should look at having a Constitutional Convention-type citizens' assembly to discuss local government and let all of us not be afraid to support paying councillors proper remuneration. Together, not adversarially, or by Senators picking each other off one by one and going back to councillors, we should work collectively with the Department and with the Moorhead report.
The Minister of State has had a battle with the Department of Public Expenditure and Reform, and others, but that Department does not have all the answers and it is not always right.
It has all the money, I accept that. There is strength in the parties being together on this. I congratulate the Minister of State for having the Moorhead report put together. It is critical it is published and it is equally important that there is an outcome that councillors can live with and that we can support. It is time that we had a national debate on the future and structure of local government.
It is obvious that our local councils are held back by inconsistent and inadequate funding. I second Senator Ó Domhnaill's suggestion that we have a debate on the Moorhead report as soon as it is released. Councils cannot provide the services they are best placed to provide. Powers that suit local government are being chipped away and centralised. When I sat on South Dublin County Council, councillors who had joined it many years before me would remark that it had become a shell of a building. Water was the responsibility that was taken away from it in my time. It is the job of central government to provide local authorities with that stable and certain funding. In recent decades there has been a trend where this has been made impossible by the removal of certain powers. Consistently we have seen studies assert that this State has the least autonomous local government compared with our European counterparts. Experts such as Dr. Aodh Quinlivan and Dr. Theresa Reidy in UCC, and Dr. Mark Callanan of the IPA, have all produced damning studies on this issue. The international index of self autonomy uses seven categories, namely, legal protection, organisational economy, institutional depth, fiscal economy, finance, financial self reliance, borrowing autonomy, financial transfer system and administrative supervision, central or regional access to assess that. From 1990 to 2015, Ireland declined from the third least powerful local authority system to the weakest across the whole of Europe. Only Malta, Cyprus and Greece have less spending and less revenue raising capacity at local government level.
Currently, two thirds of local government funding is generated locally. Austerity budgets reduced funding for local authorities by 20% to 25% with the largest impact felt in housing, from €1.3 billion in 2007 to €83 million in 2013, with only 8,200 units delivered over that time rather than an additional 25,000 social housing units had budgets been maintained. I fear if we continue on the course we are on we will not only see a dilapidation of local services but it will guarantee that the public will see little value in local government. In contrast, our nearest neighbours in Britain offer much more at a local level and can act as a mudguard for ill-thought-out Tory agendas at national level. I have long believed that the conservative establishment in this State holds its place because the left cannot convince the public of its legitimacy, which is not an argument to get the Minister of State on board. We as legislators may not like every decision a council makes but we must appreciate and respect that councillors knowledge and the space they occupy is superior to our own in nearly every case.
I appreciate that progress has been made on directly elected mayors, which I have long advocated. That is a conversation which will hopefully re-evaluate the role and power of elected representatives and tip the balance back in favour not only of the mayor but also the council at local level. Will the Minister of State update us on the creation of a citizens' assembly for Dublin on that issue?
The conversation must continue and we must re-evaluate the role and funding of local government. Local councils should have stability and certainty in funding which should be provided by the Government on the basis of multi-annual budgets. I also commend the FÓRSA trade union for its call for a rethinking of local government and a restoration of powers. I strongly suggest that the Minister of State meets with FÓRSA on that issue. We cannot continue on the path of a combination of drastic cuts in funding from central government while removing powers which have left councils with little funding and little confidence from the people. Without review, local democracy will continue to decline. I spoke to local councillors on changing the Local Government Act and live streaming, and wrote to councillors on making it the law that council meetings would be live streamed. Many already do, including Dublin and Belfast, but many are concerned about the costs which have been put to them by their directors of services. By law, councils must provide the minutes and the agendas of the meetings on paper but in this day and age, all the monthly council meetings and the budget and development plan meetings should be online. If cost is an obstacle the Department should facilitate its provision.
During the Seanad campaign of 2016, every candidate from all parties and none knew exactly where councillors stood on pay and conditions. Various issues came up at that time, especially pensions and how the PRSI rate they paid did not qualify them for the contributory pension and an increase in pay for the extra work they did, particularly in the context of boundary changes and the abolition of town councils. After that election I put down a Commencement matter here to the Minister for Employment Affairs and Social Protection that councillors would qualify for the contributory pension. The then Minister, now Taoiseach, came to the House and took the debate and said that he would look into it. He addressed the issue and councillors will qualify for their contributory pension now that their PRSI goes towards it. In light of the Moorhead report, the Government should pay councillors immediately. I think they deserve it. It is acknowledged that they will get an additional €8,000 and that might be backdated to whenever the local elections were held. A large percentage of councillors are new. For some, it is their full-time job. Will the Minister of State address the issue of pay once and for all, and pay them?We would all like to speak on the Moorhead report, and I hope we will have a debate in the House on the report when it is published. There will be more to the Moorhead report than councillors' pay and conditions. I am sure it will also deal with the workload of councillors. Will the Minister tell the House how much interaction there was between the representative bodies for the local authorities - the Association of Irish Local Government, AILG, and the Local Government Management Agency, LGMA - regarding the Moorhead report? Did Ms Moorhead consult widely with those organisations and how many other organisations were involved in the work of compiling the report? It is very important that those organisations were consulted widely. The Minister of State is putting in place a structure that will be there for the next 50 years and it requires great detail and study. I welcome and support the call for a debate on the report when it is published.
In the review of the Valuation Act 2001, the Minister of State has proposed to bring in a rate limitation order. I suppose a rate limitation order means a kind of freeze on a valuation when a revaluation is done in a particular county or local authority where, whatever the rate for a valuation in the county at a particular time, the following year the valuation would be revalued where some properties might go up while others go down but overall there would be no loss of revenue on the previous year's revenue. This has many consequences for people in business. In some cases I do not believe it takes the businesses into consideration. Many businesses are on long leases at €20,000, €30,000 or €100,000 a year, and all of a sudden with two or three years into a long lease - and without ever taking this into consideration - they find their rates could increase by €5,000, €10,000 or €15,000 per year. In the business plans they put forward to banks or other lending institutions they would not have taken this increase into account. It can and will put a lot of pressure on those businesses where they have no choice but to pay the rates. At the same time they had no provision or inclination that their rates would increase by such a huge percentage. The Minister of State brought in new legislation some months ago around where areas can be redesignated or where rates can be reduced. This is for a whole area or part of a town, however, and it does not provide for individual cases where business people operate throughout the State on long leases. It is a problem for them.
There are a few areas where the council lines should be more clear. Consider what happened with councils previously. If a town wanted an extension to a water scheme or a sewerage scheme a council or a councillor would bring forward a proposal or a motion to extend the scheme. I am not sure how this works now with Irish water. How does a town get an extension to a sewerage scheme or to its water scheme? What are the mechanics involved? Are we completely dependent on Irish Water to review local authority sewerage and water schemes every five or ten years or is there a feed in to Irish Water from the local authorities? Is this through the executive of the local authority or do local authority members have an input into formalising or bringing proposals forward to get such extensions to sewerage and water schemes? Nobody knows better what is happening on the ground than the local councillors. They know what is happening in the local town and where the pressure is on for water or sewerage. The local councillor probably knows a lot more about the pressures with these issues than Irish Water does in Dublin, or wherever its headquarters are.
Enterprise offices do tremendous work throughout the country but in many cases there is a shortfall in funding. The enterprise offices nurture and help small businesses and start-ups. They have great expertise developed in the vast majority of those enterprise offices. If they had a little bit more funding there could be a basis for them to do a much better job in providing start-up funding for one, two or ten jobs. This may not be the Minister of State's Department, it could be a combination of Departments, including the Minister for Business, Enterprise and Innovation. These enterprises can lead to quite a considerable number of jobs. I believe that every Member of the House would agree that the local enterprise offices do tremendous work, but if they had a little more money to give out they would do a good job at giving it out. Perhaps the Minister of State's Department could look at this to give them some extra funding. Such funding is not wasted and is put to good use. It goes towards starting up good businesses.
In the Minister of State's speech to the House today-----
The Minister of State said: "A local government funding baseline review group was also established to consider the methodology to determine local authority funding baselines and to inform the distribution of any additional funding that could become available for general operational purposes, for example as a result of the implementation of recommendations in the LPT review." Is this extra funding where people are not currently paying rates but are paying local property tax and would be brought into line? Alternatively is it a proposed increase the Minister of State thinks will happen due to the review of the LPT? It would appear that the Minister of State is suggesting there will be extra funding coming in as a result of the review of the LPT.
Is the Minister of State suggesting that he does not know where that money might be spent, or will it be left in the local authority areas where the extra funding is coming in? It is not quite clear what the suggestion is or might be with regard to the baseline review group, which is in place.
From the Minister of State's speech we can see there is a huge change in the way funding comes into local authorities.
I wish to compliment the roads sections. Some of that might come under the remit of the Department for Transport, Tourism and Sport. There has been a big improvement in roads throughout the country. We see a huge amount of road works, be they on local roads or national routes, taking place every day when we travel the roads. Roadwork traffic lights are up here, there and every place. The quality of work being done on the roads is second to none. I compliment everybody on that. It is one area I have noticed during my political career. Once it was always a case of "When will the road be done" or "Can you do anything with the potholes?".
I wish to acknowledge the presence of Councillors Joe Malone and Cormac Devlin, representatives of the Local Authorities Members Association. I am sure many other councillors were watching. If other Senators wish to contribute the next day. they can do so. The Minister will respond to the debate on another day. I thank the Minister of State, Deputy John Paul Phelan.