Dáil Éireann debate -
Wednesday, 3 Jun 1970

Vol. 247 No. 3

Local Government (Temporary Reduction of Valuation) Bill, 1970: Second Stage.

Minister for Local Government (Mr. Molloy)

Tairgim: Go léifear an Bille an Dara h-Uair anois."

Beartaítear ag an mBille na socraithe sealadacha i leith rátaíochta a deineadh sna h-Achtanna Rialtais Áitúil (Luacháil a Laghdú go Sealadach) 1954 go 1966, a chur ar ceal, diaidh ar ndiaidh. Faoi láthair, baineann maolú rátaí faoi na hAchtanna sin le foirgnimh a tógadh nó a feabhsaíodh i rith na tréimhse dar chríoch 31 Márta, 1969, ar an gcoinníoll nach raibh na foirgnimh i dteideal maolú rátaí a fháil faoi aon Acht eile. Faoin mBille, leathnófar an tréimhse le h-aghaidh críochnú na bhfoirgneamh suas go dtí 31 Márta, 1972. Leanfaidh an maolú de dhá thrian ar feadh sé, cúis no ceithre bhliain ag braith ar an mbliain inar chríochnaíodh an obair, agus, ní dheonfar é ach i gcásanna inar iarradh cead pleanála, nuair is gá sin, ar dháta nach déanaí ná 9 Nollaig, 1969. Ní bheidh sé i gceist na socraithe sealadacha seo a choinneáil i bhfeidhm i ndiaidh na tréimhse a luaitear sa Bhille seo.

The purpose of the Bill is to phase out, over a period of three years, the general rating reliefs, which have been provided on a temporary basis under the Local Government (Temporary Reduction of Valuation) Acts, 1954 to 1966. The 1954 Act provided for the granting of a two-thirds remission of rates for seven years on the valuation of new buildings, or on increases in the valuation of existing buildings which had been enlarged or improved, provided the erection, enlargement or improvement was begun and completed within a three year period which expired on the 26th July, 1956. Amending Acts, passed in 1956, 1960, 1963 and 1966 had the effect of extending that period up to the 31st March, 1969. The remissions apply to buildings which do not qualify for rate remissions under any other code.

The remissions were designed originally to stimulate activity in the building industry generally and they have applied to a very wide range of building projects including factories, hotels, office blocks, supermarkets and houses other than grant-type houses for which separate rating concessions are provided in the Housing Acts or the Housing (Gaeltacht) Acts. The need for this form of stimulus of the building industry no longer exists and there is no justification, in present circumstances, for the continuance of relief from rates for all forms of building activity at the expense of the general body of ratepayers. If no action were taken to continue the Acts, buildings at present being erected or which have been completed since the 31st March, 1969, would not qualify for any rates relief under the Local Government (Temporary Reduction of Valuation) Acts. This would, perhaps, be unfair to persons who had undertaken building projects in the expectation that the temporary rating concessions which had heretofore applied would be continued for a further period. The purpose of the present legislation, therefore, is to provide for a further and final extension of the temporary rating concessions, but on a reducing scale, in respect of buildings which are completed by the 31st March, 1972, and in respect of which application for planning permission, if required, had been made not later than the 9th December, 1969, that is, the day on which the Government's decision to phase out the rating concessions in this way was announced in the House.

Section 2 of the Bill provides for an extension of the period within which building must be completed in order to qualify for the concessions from the 31st March, 1969 to the 31st March, 1972. Section 3 limits eligibility for the rating reliefs by reference to the date on which planning permission, if required, was applied for. The section also has the effect of modifying the seven year remission which heretofore applied by providing that the two-thirds remission will apply for a period of six years to buildings completed by the 31st March, 1970, for a period of five years, in respect of buildings completed by the 31st March, 1971, and, for a period of four years, for buildings completed by the 31st March, 1972.

The phasing out of the temporary rate reliefs will not, of course, affect in any way the exemption from rates provided for in the 1966 Act in respect of new or improved farm buildings.

The principal objection to the continuance of the temporary concessions is that they apply indiscriminately to all types of buildings without regard to the suitability of particular types of buildings for this form of financial assistance from the ratepayer. Consideration will, however, be given within the phasing out period to the desirability of providing in permanent legislation for the relief from rates of any specific types of building activity which may seem to merit special consideration in this respect, though it must always be remembered, of course, that the provision of rates relief in respect of any particular type of hereditament increases the burden of rates on the remaining ratepayers. I commend the Bill to the House.

Mr. Hogan

Heretofore this Bill was a simple repeat measure of previous years. It appears now from the Minister's statement and from the format of the Bill that it has been fundamentally recast. It has been recast in such a way that an increased burden will be placed upon building in general and in particular on the building of non-grant-aided housing. Some aspects of construction and building continue to be helped but to a limited degree. The Minister mentioned that the Principal Act on which this Bill is based is the 1954 Act. That Act was brought forward each year for limited periods and, as these limited periods expired, a Bill was introduced into the House without very much change. This is the first time the Minister has seen fit to introduce a substantial change in the Act.

The 1954 Act applies to practically all sorts of construction work apart from non-grant domestic housing and agricultural outpremises. All other forms of reconstruction were covered by it and the two-thirds remission on the increased valuation because of the new erection or construction was applied. This Act, as I understand it, applies to all forms of construction not covered by other Acts. The other Acts to which I am adverting are the 1966 Housing Act which covers grant-aided houses and the 1852 Act which covers agricultural outpremises.

Section 33 of the 1966 Housing Act covers ordinary housing, special farmers' housing—that is section 15 and section 16—and, of course, flats and —I think they have been dropped in the new Bill—what we might call geriatric housing. The concession as regards these was based upon tenths over a nine-year period. The first year you paid only one-tenth of your increased valuation, two-tenths next year and so on, and eventually you were paying the full valuation of your new house at the end of nine years. The Minister can correct me if I am wrong, but I gather that this Bill does not interfere with that at all.

Neither does it interfere with the 1852 Act which applies to farmers' out-offices. The Valuation Act, 1852, gave exemption from rates increases for seven years for newly erected or reconstructed farm out-houses and out-office buildings. That exemption was extended to 20 years in 1960 for work carried out to the 1st April, 1960. Later on it was extended in the 1963 Act to the 31st March, 1966. The 1966 Act abolished the time limit altogether and left it on an indefinite basis. The idea was to provide the greatest incentive possible for farm building schemes. I take it that that Act in its application to out-office buildings is in no way touched by the amendments introduced in this Bill. I am putting these two points to the Minister because I should like to have it clarified that the provisions for domestic housing and repairs under the 1966 Housing Act and the provisions under the 1952 Valuation Act are in no way being set aside by the provisions in this measure.

I am opposed to this Bill because, taken in conjunction with the present Housing Bill before the House, it will be more expensive for the public to provide building in general and non-grant-aided houses in particular. The new Bill provides grants for smaller types of houses and so the field of private domestic housing to which this Bill would apply is thereby enlarged and concessions which were applicable formerly would not appear to apply to this section of domestic housing in the future.

Section 3 is the operative section of the Bill. It amends section 4 of the 1954 Act and thereby deprives people who are building of the concessions they previously enjoyed. Admittedly this is a concession which came from the rates. We all argue and have argued here time and again, that rates are an unjust form of taxation and that something should be done about it. Nobody has ever been able to do very much in that regard. It is a substantial figure of our revenue now approaching £40 million a year. No matter what anybody tries to do about it, even if it were decided to do something about it, it would have to be phased down and could not be removed overnight.

Although it may be argued that this Bill relieves the rates, it does so at the expense of people who are trying to provide a house from their own resources. If we examine the trends in housebuilding here over the past 20 or 21 years, and take the two decades, in the past 11 years the number of houses built by local authorities plus grant-aided houses is almost equal to what had been built in the previous ten years but there has been a substantial change. In the first ten year period the emphasis was on local authority housing and more local authority houses were built than grant-aided houses. In the past 11 years the trend has been the other way. The trend has been towards grant-aided houses and there has been relatively less demand on revenue than in the earlier period because it was cheaper on the Government to build grant-aided houses than to build local authority houses.

The fact that we are falling off in the provision of local authority houses means that people are forced to provide their own houses. If they do not qualify for a grant, if they have a big family and decide they want a bigger house—and now the size of the house is being reduced under the new Bill—they are forced to go without the rate remission which previously obtained. The provisions in regard to the date and the Planning Act in section 3 will rule out a large amount of construction work and in that respect it is very effective and places an increased burden upon the ordinary person who is trying to build. Those who happened to get a remission will now have their remission phased out and instead of enjoying it for seven years they will enjoy it for a diminishing number of years.

I oppose section 3 because it hits at all building except grant-aided domestic housing which is still covered by the Housing Act, and farmers' out-office erection and reconstruction work which is covered by the 1852 Valuation Act. I am assuming and putting it directly to the Minister that the work carried out under these Acts is still outside the scope of this Bill. As I understand it the Bill only applies to reconstruction work or building work not covered by other Acts. If that is correct this Bill will increase the burden upon non-grant-aided domestic housing, upon people who are doing any other form of building or reconstruction work.

The Minister says here he thinks the time has arrived when that kind of work no longer needs any form of help. On the other hand he must admit that the cost of building, whether it is house building, office building, shop building or reconstruction work, has increased considerably. Furthermore our rates have gone up considerably. Therefore the removal of these concessions will put a very severe burden on the people concerned.

On that basis I must oppose section 3, which is the operative section of this Bill. It has fundamentally alerted the whole approach to the temporary reduction in valuation. Not alone is it being reduced but in some cases it is completely abolished and even those who do secure it will be phased out. They must be outside the Planning Act and must be in before 31st March, 1969. Even the people who are in before that date and who do not come under paragraphs (a) and (b) of the Planning Act will be phased out and will not get the rates remission as herefore for a period of seven years but for six, five or fours years respectively depending on the time when they began their building. This is a radical change from the previous approach.

Many people have been forced to improve their shops, their smallholdings, or to do reconstruction work. A large number of small shopkeepers, small traders who are now so badly hit by large combine stores—these people have no rates remission, unlike the farming community who have been fairly lucky in this respect—will now be deprived of this reduction in valuation if they happen to build an extension to their shop or do other reconstruction work. These are the people who will be particularly hit by this, people who are already paying large amounts of rates because they get no concessions. This was the only concession available to them and this is now being taken away from them. The Bill is ill-timed and we on this side of the House cannot support it.

Mr. Treacy

Having regard to the growing burden of rates and the serious impost which they constitute for a large section of our people, it is very difficult to understand why we must have legislation of this piecemeal kind as has been coming into this House appertaining to this vital problem of rates. There have been various pieces of legislation in recent times on rates. There was a small, positive measure for the relief of rates in respect of necessitious persons. There has been relief of rates in the Housing Bill which is presently before the House. Now there is this measure and one wonders when the Government will introduce a consolidating measure which will face up to the reality that our rating system is essentially unjust and needs to be revised.

Instead of legislation designed to ease the burden on the backs of our ratepayers, instead of a relaxing measure, in this instance there is a pretty stringent measure which withdraws a concession which has been in operation for some years. The concession will be withdrawn on 31st March, 1972, and the two-thirds relief of rates for a period of up to seven years in respect of certain buildings will be withdrawn after that date.

The reasons given here are unacceptable to us in the Labour Party. The first reason given by the Minister is laughable, that the remission applies to factories, hotels, office blocks, supermarkets and houses other than grant-type houses. He says that the need for this form of stimulus in the building industry no longer exists. This is patently untrue, in a situation in which the building industry has ground to a halt as a result of a 17-week old strike. Perhaps this is an extraneous matter but the facts are that our building industry, our crafsmen and our tradesmen are in the doldrums. Many workers have emigrated, and if ever the building industry required a stimulus I submit to the Minister it requires it urgently in this situation.

The Minister is not long in office. I have admired him for some years past as a Deputy and as a Parliamentary Secretary and I most sincerely congratulate him and wish him well. I offer him my personal support and assistance in all he undertakes as Minister for Local Government to improve the lot of our people in this very important sphere of the housing of our people and all things ancillary to it. However, to say that the building industry no longer requires assistance by way of rates relief is so essentially untrue in present circumstances that one must refute it in this House.

Apart altogether from the serious setback which has been caused by the cement strike, the disappointment and disillusionment of the many thousands of persons who were looking forward to new homes, the loss of jobs, the undertaking of all kinds of building projects, I submit that even if the strike never took place, in the long term the withdrawal of this rates relief is bound to have a bad effect on industry which had come to rely on State aid of this kind. When concessions of this kind are built into legislation going back over a long number of years, to the 1954 Act, all the various segments of the building industry, the builders themselves and the various agencies concerned come to accept these things as concessions, especially in the costing of the work. If these concessions are withdrawn the impact is felt and it is bound to impede progress. There is no use in trying to circumvent that by the pretence that a stimulus of this kind is no longer required.

This is the most serious problem for our local authorities. As the Minister well knows, being a member of a local authority himself for a long number of years, local authorities are unable now to provide the services which are so badly required, by reason of the inability or unwillingness to fix a rate sufficient to do all the things which require to be done. The impost has become so great that even the most progressive of us in local authorities are shying away from the imposition of any further increase in rates. It has reached breaking point and the concessions which have been given in recent years are not adequate.

I was pleased to see the worthwhile concessions given in respect of the poorer sections of our people, only pleased to the extent that it made it clear in legislation that these people were now entitled to exemption from rates not as a charity but as a right. However, I do not regard it as a concession in the strict sense of the word. I knew full well that these persons for whom we legislated then were people who normally were exempt from the payment of rates by reason of their sheer inability to pay. At the end of the financial year the rates of these people were struck off as irrecoverable. Therefore very largely we did not confer any concession on them except to make it clear that they enjoyed this exemption as a right rather than as a charity. Again in that context many local authorities were unable to give effect to this concession for which we legislated here because the additional cost involved is borne by the ratepayers at large——

An Ceann Comhairle

That does not seem to arise under this Bill.

Mr. Treacy

Maybe not, but I am relating the concessions granted to the withdrawal of a concession in this measure. I shall not elaborate on that point except to say that the concession to which I have adverted, even though it was legislated for in this House, has not been implemented among many local authorities, especially small local authorities because of their inability to finance it from current resources. The concession was not funded by the Minister's Department. The financing of it was left to the local authorities and only the better-off local authorities were able to implement it.

It is disappointing to learn that this Bill now proposes to withdraw by March 1972 the concession of some two-thirds abatement of large sections of building. It is all the more disappointing if it is coupled with the bad news contained in the Housing Bill which is presently before us. It worsens the position in regard to relief of rates. Any buildings which we propose to build and which exceed 1,249 square feet in area or £6,000 in value will no longer have rates relief. The abatement of rates over a ten year period is being withdrawn in the Housing Bill. The seven-year relief of rates in respect of other buildings is being withdrawn in this case. I think I am right in submitting to the House that we are getting legislation from the Fianna Fáil Government which is retrogressive. Instead of providing relief for our people in respect of this colossal burden of rates. We are worsening their position.

It is a pity that a young and, I assume, progressive Minister such as Deputy Molloy should have the duty of asking us to support this retrogressive measure and asking us to accept it under the shabby and untrue pretext that the building industry no longer requires this kind of stimulus, that our people are so affluent that they can well do without it. This is not the position as we know it and this attitude of mind to the problem of rates is to be deplored.

There are so many anomalies involved that, perhaps, I should be brought to order if I attempted to go into the subject in detail. However, one would imagine that the Government would face up to the matter of rates generally and the growing volume of indignation emanating from our people and public representatives at local levels. They have been crying out for positive relief whether by way of making health charges—which are the greatest charge on the rates in all local authority areas—the responsibility of the national Exchequer or whether the State should intervene more directly in matters of this kind. On many occasions we have asked for a complete reappraisal of our rating system——

An Ceann Comhairle

I hope the Deputy will not attempt to discuss the revision of the rating system on this Bill.

Mr. Treacy

With respect, a Deputy is entitled to refer to the Exchequer without going into detail. It is a matter appertaining to rates——

An Ceann Comhairle

The Deputy should keep to the Bill. Discussion on revision of the rating system would not be in order.

Mr. Treacy

I shall not discuss it but, with respect, I put forward the point of view that it is a matter that should be faced up to——

An Ceann Comhairle

The Deputy may be correct but it cannot be faced up to on this Bill which deals with a different matter.

Mr. Treacy

I accept the Chair's ruling. However, it is sometimes difficult when debating in this House to know when one is in order or not, vis-à-vis the liberty which is conceded to other speakers. The Bill being discussed will give little hope or relief to many people who are burdened by the ever-growing incidence of rates. I do not think it will transpire to be an accurate piece of legislation, any more than the other amending pieces of legislation proved to be accurate in 1956, 1960, 1963, 1966 and 1969. It is likely that we will have a further piece of continuing legislation on or about 31st March, 1972 to extend this still further. This has been the history of relief. It is mentioned in the Minister's brief that the purpose of the present legislation is to provide for a further “final” extension of temporary rating concessions but on a reducing scale in respect of buildings completed by 31st March, 1972. However, in 1972 we expect that another Minister for Local Government will be dealing with the matter of rates in a more practical, progressive and pragmatic manner and not in the piecemeal, retrogressive manner which is now adopted.

In his reply, perhaps, the Minister might give us an indication of awareness on his part of the problem of rates or an indication as to how the Government are facing up to the matter and whether they have taken seriously the various reports of the rating commissions. Perhaps he could tell us whether we shall have a worthwhile piece of legislation in the near future, facing up to the valuation system in this country as Griffith did many years ago, and thereby devising a system that will be equitable and just.

Mr. J. Lenehan

I should like to take this opportunity of congratulating the Minister on his appointment and wishing him well. I do not agree with many of the statements that have been expressed in this House in the past few hours. No matter what is said about us as a party and a Government, we do not come in here for the purpose of causing trouble or inconvenience to any people. In connection with rating, as with all other matters, any steps we take are aimed at improving the lives of people throughout the country. When I hear the Labour Party members—the alleged socialists in this country—talking I should like to point out to them that so far as socialism is concerned we are a long way in front of them.

An Ceann Comhairle

This does not arise on the Bill.

Mr. J. Lenehan

I know, Sir. I would not have said it if it did but there were funnier things said here in this debate in the past few hours. However, I should like to emphasise that the people who are suffering most in this country today are the small shopkeepers. I would appeal to the Minister to look into the plight of the small shopkeepers and publicans in the small towns of our country and see what can be done for them. I do not agree with the present rating system. It is the craziest in Europe. Everybody must realise that. A doctor can come into my house and rent a room from me; he can make a fortune and yet he will never pay any rates. But I must pay rates.

An Ceann Comhairle

The question of paying rates does not arise. The Bill relates to the phasing out of rating reliefs.

Mr. J. Lenehan

Phasing out? Are we going to finish up with rates? I thought they were getting worse, not better. The question of size was raised. I do not know whether or not it is relevant.

An Ceann Comhairle

The question of size does not arise.

Mr. J. Lenehan

I did not think it was relevant. I took a note. Even the cement strike was brought into this.

An Ceann Comhairle

Just in passing—the Deputy mentioned it in passing.

Mr. J. Lenehan

People should be entitled to whatever size house they want.

Minister for Local Government (Mr. Molloy)

First of all, I should like to thank Deputy Treacy and Deputy J. Lenehan for their kind remarks and good wishes. Deputy Hogan expressed similar good wishes for me elsewhere. I am grateful for these expressions. I also wish to make it quite clear that I intend to be here as Minister for Local Government for the next 3½ to four years and I assure Deputy Treacy that I shall be as progressive as I can be in all legislation for which my Department will be responsible.

I am slightly disappointed at the attitude adopted by both Fine Gael and Labour to this Bill. I think it is a good piece of social legislation. It provides for the abolition of the remission of rates introduced at a time when there was need for a stimulus in the building industry. Whatever difficulties there may be with regard to the availability of cement at the moment, I do not think Deputy Treacy's argument that there is need for a continued stimulus in the type of building activity the Acts were designed to assist would stand up to much examination. I hope the cement strike will come to a satisfactory conclusion as quickly as possible. We are all aware that it is gravely affecting the local authorities and private housebuilding programmes throughout the country. This is very distressing to me as Minister for Local Government and I can only hope that both sides will reach an amicable solution to their difficulties and allow us to get on with the task of building houses for those of our people who need them.

Deputy Hogan seemed to imply that this measure is of a permanent nature. This is a repeat. It is now being recast. It was never a permanent measure. The discontinuance of the Act was recommended by the interdepartmental committee on local finance and taxation. The Deputy asked whether this would apply to the Housing Act of 1952 and whether the remissions allowed in the case of farm buildings would be affected in this Bill. I want to make it quite clear that the concessions granted under the relevant Acts will continue to apply. So will the concession for factory buildings in the undeveloped areas.

Deputy Hogan said he thought the Bill would increase the cost of housing to the public. The cost must be borne by the ratepayers. Grant type houses are not affected. The Deputy seems to think that the ordinary ratepayers should subsidise luxury and semi-luxury housing. The whole purpose of this legislation is to remove a remission in an area in which it is no longer necessary to give a stimulus to building such as office blocks, dancehalls, factories or supermarkets. By removing this remission we are relieving the burden on the ratepayers. It is difficult to establish precisely the cost of the reliefs but the returns obtained from local authorities some years ago indicate that the termination of the concessions at that particular point of time would have resulted in a saving of £1 million. On the best estimates I can get the present concessions will probably be between £250,000 and £500,000. That would relate to the total rates remitted in one year in the seven year period and not just to the rates valuation qualifying for the first time in a single year.

Reference was made to section 3. I think Deputy Hogan said he would oppose it. As I indicated in my opening speech, the need for a stimulus in the building industry no longer exists and, when the cement strike concludes, as I hope it will, the Deputy will find a tremendous activity in this type of building.

Deputy Treacy seemed to be concerned about the rates burden and he said the present system was unfair and inequitable. I suppose that when rating legislation of any kind comes before the House there is a very strong temptation to Deputies to travel the many avenues open for discussion of rating. I think we managed to keep the discussion to the Bill before the House to a certain extent. At present in the Department a very comprehensive review is being made of the whole problem of local taxation and while this is going on and we are awaiting the outcome the Government have continued to take positive measures to relieve the burden on certain classes of people. I do not wish to extend this discussion into that field now, but the cancellation of rates on farmers of under £20 valuation, a concession to which Deputy Treacy himself referred, and many other concessions have been helpful. As I said in my opening speech, whether one can say there is any justification for providing in legislation for some form of rates relief for any specific type of building is a separate question which I do not think arises for determination here. The matter is under consideration, as I said, and I intend to review the whole position while the phasing out period is in operation. I hope to be able to come back with legislation for specific areas in the construction industry where I feel a real need exists for rates relief.

I should like to assure Deputy J. Lenehan who referred to the problem of the small shopkeepers that I am very much aware of the existing position and without trying to raise any false hopes I should like to assure the House that this is one area of the rating system of which I shall be particularly anxious to have a very full study made to see if any system can be devised to bring about some small improvement for that section of the community.

I do not think there were many other points raised. The measure does not apply to the houses Deputy Hogan mentioned. In concluding, I should like to say that this legislation was prepared by my predecessor, Deputy Boland, and I am quite happy with it. It is very progressive and I am glad to have the privilege of bringing it before the House. I hope it will be the forerunner of a similar type of legislation that I hope to have the opportunity of bringing before the House in the years that lie ahead of me in the Department of Local Government. I regard the Bill as a major step forward and I do not think anybody who examines the whole position could fail to agree with the legislation we are now asking the House to support or deny that we are trying in all local government legislation to divert State assistance to those of moderate means. This is yet another effort on the part of the Government to ensure that the assistance goes to that section of the community most in need of it.

Question put and agreed to.

Committee Stage ordered for Tuesday, 9th June, 1970.