asked the Minister for the Environment the advice or assistance he has to offer to Counties Kildare and Dublin where development is taking place at a very rapid rate and where the limitation laid down by him on rates increase and the grant from his Department do not provide sufficient revenue to meet this expansion.
Ceisteanna—Questions. Oral Answers. - Rate Increase Limitation.
22.
I have recently notified a limit of 11 per cent to all rating authorities as the maximum amount by which their rates in the £ for 1978 may exceed the rates struck for 1977. My concern is to ensure the continued alignment of the programmes of local authorities with national policies in a manner which affords protection also to the interests of non-domestic rate-payers.
The 11 per cent limit on increases in the rate in the £ does not imply a corresponding limitation on the rates income of rating authorities for 1978. In fact, because of new and increased valuations, it is estimated that on the basis of the upper limit of 11 per cent, rating authorities would have, on average, an extra 14 per cent in rates income, including income from rates-linked State grants, available to them in 1978.
In the case of Counties Kildare and Dublin, where development has been taking place at a rapid rate, increases in the valuation base will be above the national average and, accordingly, the additional rates income available to these areas should increase by more than 14 per cent over 1977. To set the limit of 11 per cent for 1978 in perspective it should be observed that increases of 10.9 per cent and 5.5 per cent respectively on the 1976 rates in the £ were provided. I am satisfied that fair provision can be made in 1978, within the limit on the rates in the £ which I have set down, to meet the cost of existing and expanding rates-financed services.
Is the Minister in a position to indicate on what basis the 11 per cent was arrived at?
It was done on a very sensible basis. It is embodied in a circular that was sent to local authorities. It emphasised the fact that last year we had a situation where there was an increase of 14 per cent. This year we have set a limit of 11 per cent. We have kept it flexible in that, while it applies across the board, in certain counties where there will obviously be pressure in terms of development— Counties Kildare and Dublin are two obvious examples and they have been informed—we will have a limit of 14 per cent as of last year. The idea is to strike a balance between the requirements of the local authorities without making it too open-ended, so that we may have a discipline in regard to local authority financing and at the same time meet their requirements. We have struck this balance between the demands of last year and this year and we have drawn a distinction for the coming year between the counties on which pressure will be coming and the counties that will not have the same pressure.
We are trying to get a formula. This is the first time the new scheme is being adopted. Hopefully the formula will work as a compromise between the necessity for financial discipline and the necessity to keep services going. The figure of 14 per cent is based on a planned inflation rate of 7 per cent —hopefully it will be less, but as it looks now it will be 7 per cent—and a real growth of 7 per cent. We take 3 per cent off that 14 per cent in respect of rates income from additional non-domestic premises and we have a variable so far as the whole country is concerned between 11 per cent and 14 per cent.
I am grateful for the Minister's reply and I thank the Chair for its indulgence. This is a fairly important matter. Did I understand the Minister correctly that the calculations were based on what had happened in the past, that the assessments of growth were based on extrapolations of the previous two years rather than on an assessment of potential and real population growth in the obvious growth centres.
It is a combination of the experience acquired last year and in previous years in regard to local authority finance and development and the projection for next year in regard to inflation and GNP. We are seeking to achieve a balance between giving too much and too little. The figure of 14 per cent represents a rate of 7 per cent for inflation and a 7 per cent rate for GNP. That is a reasonable level. We are taking from that 3 per cent for additional non-domestic rated property and this leaves 11 per cent. There will be a balance between 11 per cent and 14 per cent—certainly it will be 14 per cent in Dublin and Kildare and perhaps 11 per cent in the rest of the country. We must see how it works this year. This is a completely new scheme and a new development in local authority financing. It is a new concept to take rates off domestic houses in accordance with our commitment, which has been welcomed by the people. To some extent we must regard the coming year as a trial year. We have tried to adopt the best criteria. We have taken the criteria of inflation and GNP.
The Minister at some length outlined the difficulties in this matter and the undoubted problems with regard to the formula. In view of the difficulties that some local authorities may have in relation to revenue, would the Minister give a clear denial that there is any possibility of a tax on houses or house income being a replacement in any form for the rates?
I can give a complete commitment in that respect. There is no question of any tax on houses in lieu of rates.
Or on house registration?
No.
I appreciate the indulgence of the Chair, but it is a matter of importance to every household. Did I understand the Minister correctly when he said we were going into a trial year, that if the 14 per cent limit placed for areas of real urban growth, such as Kildare and Dublin, was found to be inadequate the Government were open and would review the situation with a view to increasing that amount of money?
No, we cannot have this open-ended when one would be entering into a very dangerous area, as anybody will appreciate.
Are there not two views on this one?
No, we cannot have this open-ended. Fourteen per cent of it will be for Counties Dublin and Kildare; 11 per cent for the rest of the country but——
Suppose Dublin grows at a rate of more than 14 per cent?
Dublin is growing faster than anywhere else.
On the non-domestic element the increase is between 11 per cent and 14 per cent. Hopefully there will be an increase in that element in Dublin city and county, and County Kildare, that does not exist——
The correlation is not as simple as that; it would be nice if it were but it is not that simple.
In so far as we can bring what planning expertise we have available to the problem——
I would remind the House that we are not having a debate on this. I was just wondering how long the House could spend on one question. I think it is probably the Christmas air.
The Chair does not really look like Santa Claus.
Question No. 23.