Enda Kenny (Mayo, Fine Gael)
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Question 127: To ask the Minister for the Environment, Heritage and Local Government the way he will fund local government in view of the predicted shortfall of €1.5 billion by 2010; and if he will make a statement on the matter. [42560/06]

Dick Roche (Wicklow, Fianna Fail)
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The Review of Local Government Financing by Indecon Economic Consultants estimated, on the basis of different methods of projecting expenditure, that by 2010 local authority expenditure would increase by €1 billion to €2 billion in nominal terms over 2004 levels.

Funding this expenditure would be met by a combination of the buoyancy in the existing funding system, some additional funding and the achievement of efficiencies over the period.

As regards the existing funding system, there is significant natural buoyancy in the current revenue sources of local authorities. The valuation bases of local authorities are growing substantially as a result of continued economic growth. In addition revenue from motor taxation — which is paid directly into the Local Government Fund — continues to increase without any increases in the rates of this taxation; in 2006, motor tax revenues are running at 10% above 2005 levels.

I was in a position to announce record levels of General-Purpose Grants to local authorities from the Fund amounting to some €875m for 2006. Taking account of global valuations, this was an increase of some 8% on the 2005 allocation or 21⁄2 times the 1997 level. I am also increasing the general-purpose grant allocations to local authorities for 2007 by 8% and I am confident that this level of funding will be adequate to meet ongoing local authority needs.

To supplement the existing income sources, a number of initiatives are being pursued. In the Local Government (Business Improvement Districts) Bill 2006, which is before this House today, I am making new commercial properties liable to a levy, similar to rates, effective from the date that the valuation of the property is placed on the valuation list, rather than from the commencement of the next rating year as is the case at present. Measures to combat motor tax evasion are being continued and stepped up. I am also considering ways of bringing planning fees, which are fixed by Regulations, into line with the economic cost of dealing with planning applications.

Additional revenues will be complemented by a range of efficiency initiatives. In partnership with local authorities:

I am developing a standard costing system for the sector to deliver enhanced management information, particularly in relation to unit costs,

In the Local Government (Business Improvement Districts) Bill 2006, I am proposing to enhance the arrangements for local audit committees in line with best practice, and

I will pursue the scope for greater sharing of services between authorities.

I will also continue to ensure that the Value for Money Unit in my Department undertakes in-depth analyses of local authority activities and identifies "best practice".

The availability of good information is a key to good decision-making and I have published key financial data on my Department's website.