On Wednesday evening last I had been deliberating on this important measure when it fell to my lot to move the adjournment of the debate. I had been seeking to convey to the House and to the country the serious implications of this Bill for the future of our local authorities. The Bill is obviously designed to give legal effect to the Fianna Fáil promise to abolish rates on domestic dwellings and other types of buildings. On that basis alone it must surely be a popular measure.
The promised abolition was certainly a good political gimmick in the general election. This is a sugar-coated Bill containing a deadly poison, a poison which connotes the ultimate destruction of the local authority system and the democratic basis on which it exists. Central to the Bill is the provision enabling the Minister for the Environment to direct local authorities with regard to the rate to be struck by them in each area. It is significant that that direction will be taken by the Minister for the Environment in consultation with the Minister for Finance. It is reasonable to assume, therefore, that in future the determination of the level of local public expenditure will be a matter for officials in the Department of the Environment and the Department of Finance.
Have the real implications of this measure sunk in? On the face of it, the Bill takes away the right of local authorities to determine the amount to be levied to meet local needs plus the right to determine priorities. If the Minister for the Environment is not hell-bent on the destruction of our local authorities and the withering of the democracy and autonomy which they have always enjoyed, he should quickly tell this House that this is but a temporary measure and that it is not his intention to unsurp the authority of all these bodies.
Section 2 empowers the Minister for the Environment to make an Order fixing reduced valuations permanently at their reduced level. The existing arrangement is that new buildings are rated on only a fraction of their total valuation over a number of years. This is well known. In the case of a dwelling house this arrangement is phased over ten years but eventually rates are payable on the local valuation. The intention in this Bill is to fix the existing reduced effective valuations at their present level and, as a quid pro quo, to rate all new domestic properties which would otherwise have been subject to a temporary reduction over ten years. For example, a house appearing on the valuation list for the first time in 1978 eligible for nine-tenths remission and valued at £20 will permanently remain in the effective valuation list at £2, while its neighbour appearing for the first time on the valuation list in 1979 will effectively be valued at £20 for the purpose of determining the State's contribution to local authorities in lieu of rates. There must be serious doubts about the long term benefits of this alleged quid pro quo in urban areas such as Clonmel and Cashel, where building land for houses is scarce and becoming scarcer all the time. There is very little scope for the building of new houses, on which the State would pay a full grant in lieu of rates in the future based on the gross valuation, whereas the urban authority now stands to lose out permanently in respect of all existing buildings which have been built in recent years and on which the effective valuation is at present at a low level.
Secondly, the local authorities' income from the State in respect of any new buildings that might be erected depends on prompt action by the commissioner of valuations in placing valuations on these structures. This applies in all local authority areas. Any delay in the placing of such valuations will redound to the benefit of the Minister and his Department, because it seems that the State now has a vested interest in delay in that it will not have to pay anything to the local authorities.
Thirdly, a loss arises to local authorities in the case of council dwellings. The practice heretofore was that tenants paid their rate contribution as soon as they took up occupation of a local authority house. Where the house had not been valued, the assessment was based on a notional valuation. The recoupment made by the Department of the Environment in respect of contributions in lieu of rates in 1977 included such cases. As far as 1978 and subsequent years are concerned, it seems that no notional value will be placed on these dwellings and, therefore, they will not be recoupable and only dwellings listed in the valuation book will be recouped.
Under section 1, having regard to the definitions of "domestic hereditament" and "lodgings" and the provisions of subection (3) (a), the new Bill will mean that registered tourist accommodation will not enjoy rates relief, whereas non-registered accommodation, which would include the vast bulk of dwelling houses catering for bed and breakfast, will get full relief. I contend that this will be detrimental to the tourist industry and will discourage proprietors from registering and, therefore, from being listed in the tourist guides of Bord Fáilte. The provision caused many existing registered proprietors to de-register, and this is surely a retrograde step and will cause a loss of control exercised by Bord Fáilte over standards. These standards will surely be undermined in the process.
Perhaps the most far-reaching provisions in the Bill as far as local authorities are concerned are contained in section 10 and section 11. Section 10 empowers the Minister to issue directions to local authorities limiting the amounts to be provided in their estimate of expenses. Additionally, in the case of rating authorities the Minister may issue directions limiting the rates in the £ to be adopted by the authorities and it will be the duty of the local authorities to comply with any of these directions under this section. If they purport to provide an amount in the estimate of expenses or in the rates in the £ in excess of the limit notified, the estimate of rates will not be invalidated but will be deemed to be reduced to the minimum amount permissible having regard to the limit. It will be the duty of the county or city manager to prepare a statement for the local authority indicating the effect of the direction in relation to the estimate of expenses. If the direction is not complied with, it shall be the duty of the manager to notify the Minister in writing of the extent to which the limit is exceeded, and to amend the relevant estimate of expenses adopted by the local authority to make it consistent with the Ministers direction.
We are also perturbed and concerned because the Bill gives legal effect to the overall limitation to the rate in the £ as exercised by the Minister in 1978, that is to say, an increase of not more than 11 per cent on the rate that applied in 1977. The Minister is also given authority to limit individual items in the estimate, and I emphasise this point. Looking carefully at subsection (1), it would appear that the Minister will have the power to fix both the upper and lower limits of the amount to be provided if he chooses to operate these new controls. The exercise of these new powers in any degree would mean a limitation in the exercise of discretion by local communities, acting through their local public representatives on the local authorities.
It will now be within the Minister's power to decide the works and services on which the revenue of local authorities is to be spent, whether that money is raised locally, provided by grant or from other sources. Every one of us, especially those who have been or are members of local authorities must have serious doubts about the desirability of a remote and elusive Department of State such as the Department of the Environment or the Department of Finance, and the ability of those Departments to make proper assessment of local requirements. This is a very improper procedure.
We should ask ourselves if the decision by the Government to relieve the rated occupiers of private houses and other premises of their liability to contribute towards the cost of local works and services, and a further decision to delimit the powers and controls of local councils over all their activities, is justified. I do not think it is. We know that after the local authorities had adopted an estimate of expenses for a given year they could authorise by resolution the expenditure of money or the incurring of a liability in excess of the expenditure provided for in that particular year. It is very pertinent to point out that under this Bill the sanction of the Minister for the Environment will be required for any excess in expenditure. It is also intended that the recession will take effect from 1 January 1978 but it is not too clear what will happen if the local authorities overspend in any year. Must the local authority provide for the debit so created in the following year? If this is not the case will the Minister use his powers under section 10 of the Bill?
We all know that over-expenditure arises in attempting to forecast for a period of 14 months ahead the financial provisions that must be made to enable local authorities to carry out a full programme of works and services. I contend that assumptions must be made with regard to variations in the cost of wages and salaries, materials, machinery and overheads, including certain items which central Government might vary or determine during the year to which the estimate relates and of which no account was taken at the time the estimate was prepared and adopted. An example of that is the estimates struck by local authorities for 1978. These estimates were prepared at a time when the guideline set down by the Government in respect of wage and salary increase was fixed at 5 per cent. The Government said that no more than this would be permitted. We now know that the actual wage increase worked out at 8 per cent with a further 2 per cent negotiable at local level and in respect of which claims have been made in a number of local authorities. It is too early to say if the local authorities can live within the various programme estimates as a result of such increase in labour costs and other costs which have accrued during this year. Local authorities are being placed in an intolerable position by handing them a lump sum like this, not to mention emergency situations which can arise from time to time. This time last year we had very heavy snowfalls which had a very bad effect on our roads. Our local authorities had to take immediate action to repair them. This was an expenditure which could not have been envisaged when the rates were struck. No account is taken of situations of this kind.
Sections 10 and 11 strike a death blow at the foundation of our local authorities and our future. I hate to think what will be the future of local government if this Bill is not amended. Perhaps it is significant that when Fianna Fáil got back into power they changed the name of the Department of Local Government to the Department of the Environment. They never had much respect for local government as we know from the abolition of the city council in this city. Local government at the moment is a misnomer. If this Bill is passed unamended local democracy will be dead in the country in a very short time. The decision to abolish rates on domestic dwellings and certain other property and to control individual elements of the estimate of expenses and the rate of income of all other property has left our local authorities in a very bad way as they have completely lost control over their purse strings.
A number of ways can be explored to meet that situation. The most obvious one is to try to generate extra or new non-rate revenue. This would take the form of new local taxes such as local entertainment taxes or local income taxes. More likely it would be possible to allow local authorities to make direct charges for services rendered or for goods supplied, but whatever device is conjured up by the Minister he must find a way of giving back revenue to the local authorities. It is the life's blood of the local authorities. When the Government remove such a large amount of money from them and subvent it by way of a grant, it is no substitute. Strings, conditions and sanctions are attached to grants. Local authorities must be given back moneys for their own purposes; they must be given back self-respect, new hope and autonomy. It is for the Government to find the ways and the means. We could make many suggestions.
Another point that comes to mind in respect of the pressure for derating domestic dwellings and other properties, is the lack of consistency in the valuation and the rating system. Studies have been done on the situation and many sources favoured total revaluation such as the basis of the revaluation in respect of the Copeland and Walsh Report, but the basic principle of site valuing is that the land is valued according to remunerative potential use as defined by the planning authorities. The main benefit of site valuing is the penalty it imposes on the failure of a property owner to put his property to its most efficient use not only where the site is vacant but also where the site is not used to its full potential. In relation to the exemptions from the remission of rates many experts have pointed out that there is no case for subsidising electricity consumers by exempting the ESB generating and transmission facilities from local rates. The same applies to many other State enterprises which could and should be rated as a means of providing much needed revenue for our local authorities.
When speaking on Wednesday evening, I mentioned the powers already vested in members of local authorities. These powers have been reduced over the years especially by reason of the implementation of the County Management Acts which gave vast powers to county managers as distinct from the members but the members had the power to strike the rate and to convene estimates meetings and this was taken very seriously resulting in not merely one but many meetings prior to the striking of the rate. Members of all parties conscientiously faced up to their responsibilities and provided manfully and courageously what they felt was the proper amount of money for the maintenance of the essential services of local communities in the knowledge that they would have to face the public at the next local or general election. Under this Bill the need to convene estimates meetings has been ruled out. The members of our local authorities be they Fianna Fáil, Fine Gael, Labour or anything else, are puppets of the Department of the Environment when it comes to the time for the next estimates meeting. It simply will not take place. The manager will draw up the estimates and the Minister will sanction them and will have power to vary any item in their estimates. Surely this is an affront to members of local authorities. Surely this is a colossal insult to those who have served their local communities devotedly and sincerely down the years, that they are now stripped of all power and influence in respect of the affairs of their community.
Section 4 contained a very important power for members of local authorities. They could invoke section 4 to instruct the manager to do a certain thing and to provide the necessary money for that purpose, whether it was the erection of a cottage for a homeless family, the repair of a roadway or the provision of a water supply or any other essential service. I know that section 4 was abused and I may have abused it, but the first time I invoked section 4 as a member of a county council was an occasion I am always proud of. The situation was where a single man was being appointed to a council cottage and another applicant with a wife and six children living in a hovel was also an applicant but was ignored. In such a situation where there was such an obvious flagrant injustice I was prepared to invoke section 4 and win the support of my colleagues so that that family could be rehoused. I wonder is this power also gone from the members of local authorities? What now is the position in respect of the implementation of a section 4 motion directing the manager to do a specific thing and asking that the necessary money be provided in the estimate? I would assume that this too would not require the sanction of the Minister. May we take it that this would be regarded as being in excess of the estimate and that it would not be sanctioned? Has section 4 become ineffective?
This Bill is the fulfilment of an election promise to abolish rates on domestic buildings and other properties, but it is to the eternal disgrace of Fianna Fáil that they have used the Bill to attack the very foundation on which our local authorities have been built up and sustained. There is the pretence that rates are being abolished as if this were some kind of gift from Fianna Fáil, but the valuation officers seem to be extremely busy revising valuations and, in all cases, revising them upwards. Those revised valuations that I have seen in recent months are almost double the previous figures, although the people concerned have not been given an explanation for such increases. These people are entitled to be informed fully in relation to the increases. They are told that they have a right to appeal against a decision, but in the notices I have seen the recipients are informed also that in the event of their appealing, their valuations may be increased rather than reduced. There is also the right of appeal to the courts, but most people are reluctant to avail of this procedure because it is a daunting experience. In the cases of the increased valuations to which I have referred, internal inspections of the premises were not undertaken. Those of my constituents who are concerned with this matter tell me that although they have received notices of increased valuations, there was no visit from anybody for the purpose of inspecting the premises. What kind of yardstick is applied in deciding to increase valuations? Is it the position that an arbitrary figure is arrived at by some faceless official who does not even see the property in question? The system is archaic. It needs to be democratised and opened up to public scrutiny. It is a system that has been responsible largely for the present chaotic situation. If the necessary changes had been made down through the years it might not have been necessary to abolish rates on domestic dwellings and, consequently, the local authorities would have been spared the disastrous consequences that the abolition of rates mean to them.
When I refer to local authorities I refer to our local communities, whether they be corporations, county councils, urban councils or town commissioners. I refer to our county managers and their staffs and to the dedicated and long-serving members of local authorities who are stunned by what is happening. We thought we had won freedom when we rid ourselves of foreign domination, but we have now a big element of domestic tyranny manifested in this Bill, a Bill which is designed to destroy democracy in every one of our villages, towns and cities and which is designed to give to central government the dictatorial powers whereby every local community can be told what is considered good for them. This legislation is a bad day's work.
The appeal procedure in respect of increased valuations should be designed to give the right of appeal to a neutral tribunal. It is absurd that an appeal be heard by the people who made the decision in the first place. There is long overdue a fair and just means of redress for people in this regard.
I am appealing to the Minister to uphold and protect the rights of members of local authorities and to assist them quickly to find their self respect. A previous Minister, Deputy Molloy, set out desperately to abolish local authorities. He was gaining good ground to that end but was interrupted by a general election which resulted in a change of government. However, the present Minister seems to have achieved by stealth all that Deputy Molloy had set out to do. Almost surreptitiously the abolition of local authorities is being effected without any form of protest in the streets. I am appealing for the stranglehold to be removed from local authorities and for continuance of the grant system until such time as the means of raising revenue is given back to local authorities. I trust that we will have an intimation from the Minister that this Bill is a temporary device and will be operated only until there are devised ways and means of financing local authorities. The Bill is the worst blight ever to befall local authorities. In the future when the estimates are exhausted, local authorities will be helpless so far as remedying the situation is concerned. In such circumstances cutbacks in such essential services as water, sewerage, housing and so on are bound to follow. There will be also the consequential loss of employment, because the local authorities will not be able to go to the rescue of their workers.
No longer will county councils be able to maintain continuity of employment which has been built up over a number of years. Workers' pension rights will also be affected. After all this wreckage one would imagine that the people were getting away with the payment of rates as such. Some £80 to £100 million is involved which we are told by the Minister in his brief, is being provided by the Minister for Finance. I am entitled to pose this question: where will the Minister for Finance get this money? He will get it from the people, the taxpayers. This extra money will be provided by direct and indirect taxation.
We know from the facts before us that the increased revenue required by the abolition of rates will be borne most heavily by all those caught in the PAYE net, people who already subscribe over 85 per cent of the tax gathered. The working class people will pay this bill. They are the people who are mulcted while the professional classes, farmers, business people, shopkeepers and so on pay merely a pittance by way of direct income tax. The fact is that the people caught in the PAYE net pay over 85 per cent of the tax collected.
That is where the Minister for Finance will find the money to pay the local authorities for the abolition of rates. This gimmickry has been bought at a terrible price and the other gimmicks involved will be paid for dearly also by massive borrowing, and we are now told that it may even result in food subsidies being withdrawn, children's allowances being slashed and in a cut back of moneys to local authority house building and even social welfare recipients. All this is being done while the wealth tax is abolished——