Michael Murphy (Tipperary South, Fine Gael)
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348. To ask the Minister for Housing, Planning, and Local Government if his Department has assessed the impact on small and medium-sized enterprises of recent and proposed increases in local authority commercial rates; and if he will make a statement on the matter. [67128/25]

Michael Murphy (Tipperary South, Fine Gael)
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349. To ask the Minister for Housing, Planning, and Local Government if he is engaging with the Minister for Housing, Local Government and Heritage to ensure that local authority funding pressures do not unduly increase costs for small businesses through higher commercial rates; and if he will make a statement on the matter. [67129/25]

Michael Murphy (Tipperary South, Fine Gael)
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350. To ask the Minister for Housing, Planning, and Local Government if he has undertaken, or will undertake, a whole-of-Government review of local authority funding pressures, including roads, housing, climate adaptation and other statutory functions; and if he will make a statement on the matter. [67134/25]

Michael Murphy (Tipperary South, Fine Gael)
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372. To ask the Minister for Housing, Planning, and Local Government if his Department has carried out an assessment of the financial sustainability of local government; his views on the fact that many councils are facing a funding crisis; and if he will make a statement on the matter. [67120/25]

Michael Murphy (Tipperary South, Fine Gael)
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374. To ask the Minister for Housing, Planning, and Local Government if his Department has assessed the extent to which local authorities are being forced to increase commercial rates to balance their budgets; the expected number of local authorities increasing rates in 2026; and if he will make a statement on the matter. [67122/25]

Michael Murphy (Tipperary South, Fine Gael)
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375. To ask the Minister for Housing, Planning, and Local Government if he has examined the impact on small and struggling businesses of increases in commercial rates arising from local authority funding pressures; and if he will make a statement on the matter. [67123/25]

Michael Murphy (Tipperary South, Fine Gael)
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376. To ask the Minister for Housing, Planning, and Local Government his plans to bring forward proposals to reform the local government funding model, including measures to reduce over-reliance on commercial rates; and if he will make a statement on the matter. [67124/25]

Michael Murphy (Tipperary South, Fine Gael)
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377. To ask the Minister for Housing, Planning, and Local Government if he is satisfied that the current system of equalisation and central transfers ensures a fair distribution of resources between local authorities with differing rates bases; and if he will make a statement on the matter. [67125/25]

Michael Murphy (Tipperary South, Fine Gael)
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379. To ask the Minister for Housing, Planning, and Local Government if he will provide additional support for those local authorities that face structural funding deficits and have limited capacity to increase commercial rates without damaging their local economies; and if he will make a statement on the matter. [67127/25]

James Browne (Wexford, Fianna Fail)
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I propose to take Questions Nos. 348, 349, 350, 372, 374, 375, 376, 377 and 379 together.

Local authorities are entirely independent corporate entities having full responsibility under law for the performance of their functions and the discharge of their governance and other responsibilities. They provide in excess of 1,000 services on behalf of over 30 public bodies. Accordingly, the funding system for local authorities is a complex one, as authorities derive their income from a variety of sources including commercial rates, charges for goods and services, Local Property Tax (LPT) as well as funding from Government Departments and other bodies. Central Government funding of local authorities similarly presents a complex picture, with transfers, both current and capital, coming from a wide range of Departments and Offices for a variety of purposes. Funding for local authority functions that may come within the area of responsibility of other Departments is a matter for the relevant Minister.

It is a matter for each local authority to determine its own spending priorities in the context of the annual budgetary process having regard to both 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 includes adopting the annual budget, and are democratically accountable for all expenditure by the local authority. The power to set many local charges and spending priorities is a critical function of local councillors. That said, I acknowledge the current financial environment in which all local authorities, are operating, and the pressures facing them in respect of general inflation and higher costs. Every effort has been made to provide support to the sector in the delivery of its functions.

Commercial rates income makes a significant contribution to the funding of services provided by local authorities such as roads, footpaths, the public realm, litter management, public lighting, development control, parks and open spaces; all essential elements to create the environment in which businesses can prosper. Rates Income provides between 13% and 43% of total funding at individual local authority level, averaging 24% nationally. Analysis on the impact of rates on business costs is limited. What analysis is available concludes that commercial rates represent a small portion of overall business overheads compared to energy, rents, payroll and other inputs. A 2024 survey conducted by the Small Firms Association found that just 5% of businesses cited rates/water/other local government charges as being the single biggest challenge in respect of operating costs.

As with all local charges, the invoicing and collection of rates is a matter for the local authority concerned to manage in the light of prevailing local circumstances and in accordance with normal credit control procedures. My Department encourages local authorities to engage with ratepayers. In practice, it is understood that most local authorities promote the use of direct debit payment facilities and work with businesses to put in place flexible payment options that reflect capacity to pay.

The Government recognised the need to modernise the collection of commercial rates and the Local Government Rates and Other Matters Act 2019 was passed by the Oireachtas and enacted on 11 July 2019. Local authorities are levying and collecting rates under the new legal rates framework since 1 January 2024. The Act contains provisions to add to the suite of options already available to local authorities to support local businesses and ratepayers. These include new rates vacancy abatement and rates waiver schemes, to be decided by local authority members. The vacancy abatement scheme allows the local authority scope for targeted policies in respect of vacant commercial properties. The rates waiver scheme provides for local authorities to make schemes to support local and national policy objectives, by waiving the paying of commercial rates in certain circumstances. It is open for a local authority to design a waiver scheme as long as it supports county development plans, local area plans, local economic and community plans and the national planning framework. Similar to the decision on the ARV by elected members, rates vacancy abatement and waiver schemes are decided by the elected members of a local authority. Many local authorities offer rates schemes specifically targeting SMEs and smaller businesses, providing a reduction on their rates bills if payment is made within defined timeframes.

Local Authorities are key stakeholders and partners for delivery across a wide range of areas under the remit of my Department. In terms of programme funding for housing, the combination of capital funding secured under the NDP and current funding under the most recent Budget will enable continued delivery of services across the board to the citizens reliant on local authorities for housing and housing related services.

In 2024, funding from Central Government to local authorities totalled around €8.6 billion, of which my Department provided just over €5 billion, across all schemes and funding sources. Central Government funding to local authorities has more than doubled since 2019. Local authorities vary considerably from one another in terms of size, population levels, population distribution, public service demands, infrastructure and other income sources, all of which must be taken into account when comparing levels of funding in different local authority areas. The criteria for the distribution of central government funding varies by the scheme in question and is determined by a range of factors.

Central Government has traditionally provided non-programme funding to local authorities; in the form of an annual contribution towards meeting the cost of providing a reasonable level of service in their area. Up until 2014, this was in the form of a General Purpose Grant (GPG), and in 2015, it was replaced by Local Property Tax allocations, which were linked, to the most part to the GPGs.

Annual funding allocations from LPT are decided in accordance with Government approved distribution policies, and are based on estimates of the yield and the baselines in individual local authority areas. Under the LPT allocation model, every local authority has a minimum level of funding available to it, known as the baseline. A review of baselines was completed by a working group in 2023, and it identified that the baseline funding of some authorities needed adjustment according to the criteria of population, area, local income, deprivation and achievement of National Policy Priorities. The Government agreed that these adjustments be applied, and furthermore that every local authority would receive a minimum increase of at least €1.5m. The intention is to carry out a similar review every 5 years.

Building on the baseline increases of 2024, there will be a further increase of €42m in 2026, which will ensure that any benefit from the revaluation of LPT will go directly to the sector where it is needed. In addition, the allocation model for 2026 is changed to allow those authorities with an LPT income above their baseline to retain a greater portion of the surplus for their own use, increasing from 22.5% to 31% of overall yield. Both changes together will lead to an increase in own use funding in the overall sum of €85.4m; a substantial increase in recognition of the challenges facing local authorities in respect of increasing demands and higher prices.

My Department, through the Local Government Fund, will be making a contribution of over €670m million to support the local government sector in its vital work during 2026. This represents a year-on-year increase of €80m million in funding from the Fund. Of this, €110m is towards fund LPT equalisation; to ensure that all local authorities, including those with weaker property tax bases, have a minimum level of funding available to them that is separate to programme funding. Building on the baseline increases of 2024, there will be a further increase of €42m in 2026, which will ensure that any benefit from the revaluation of LPT will go directly to the sector where it is needed. In addition, the allocation model for 2026 is changed to allow those authorities with an LPT income above their baseline to retain a greater portion of the surplus for their own use, increasing from 22.5% to 31% of overall yield. Also included is a sizeable contribution of over €527m to cover the cumulative impact of National Pay Agreements on the sector in 2026. This allocation will ensure that local authorities will have the necessary resources in terms of people, to support their functions.

In line with commitments in the Programme for Government, a Local Democracy Taskforce has been established to reform and strengthen local government. Its Terms of Reference set out an ambitious and detailed work programme, which is expected to give rise to a series of reforms in the local government sector. The Taskforce will bring forward proposals for Government consideration, including in the area of enhancing local authorities’ fiscal autonomy. The Taskforce met for the first time on 26 June 2025, and is to deliver its recommendations early next year. I look forward to engaging across Government on this important issue next year.