: I move:
In page 7, subsection (1), line 25, to delete "it" and substitute "them".
This amendment corrects a grammatical error. It changes the person of the pronoun so as to make it consistent with the usage adopted in the remainder of the Bill.
Local Government (Financial Provisions) Bill, 1977: Committee Stage.
Debate resumed on amendment No. 18a:
Amendment agreed to.
As amendment No. 45 is cognate with amendment No. 19, both amendments may be discussed together.
I move amendment No. 19:
In page 7, subsection (1), line 32, to delete "1976" and insert "1978".
These amendments are necessary because of the enactment of the Rates on Agricultural Land (Relief) Bill, 1978 since the present Bill was circulated.
Can the Minister explain why in those amendments the year 1978 is being substituted for 1976?
As I have stated the change is because of the enactment since this Bill was circulated of the Rates on Agricultural Land (Relief) Bill, 1978.
Amendment agreed to.
Section 3, as amended, agreed to.
SECTION 4.
I move amendment No. 20:
In page 8, subsection (1), line 3, to delete "1976" and substitute "1978,".
This amendment was substituted in the later list of amendments for that originally circulated.
Amendment agreed to.
Amendments Nos. 21 and 22 are related and may be discussed together.
I move amendment No. 21:
In page 8, subsection (2) (d), line 14, to delete "is" and substitute "are".
These amendments each change the person of the verb in order to keep the usage consistent with that applying generally throughout the Bill.
Amendment agreed to.
I move amendment No. 22:
In page 8, subsection (2) (b), line 17, to delete "is" and substitute "are".
Amendment agreed to.
Question proposed: "That section 4, as amended, stand part of the Bill."
(Cavan-Monaghan): Section 4 is, in effect, the section which gives legal effect to the decision in 1977 to derate domestic dwellings to the extent of one-quarter.
That is correct.
Question put and agreed to.
SECTION 5.
I move amendment No. 23:
In page 10, subsection (2) (d), line 6, after "valuation", to insert "(being that fixed as regards the specified local financial year)".
This amendment is necessary in order to tie apportionments under this section to the position obtaining in 1977, the last year in which rates were a cost factor in rents. The amendment makes it clear that the valuation to be apportioned is that fixed on the dwelling in relation to 1977. Without the amendment, confusion would arise on any subsequent change in the valuation of a rented dwelling.
Amendment agreed to.
Amendments Nos. 24 and 25 are related and may be discussed together.
I move amendment No. 24:
In page 10, subsection (2) (b) (i), line 15, to delete "apportionment," and substitute "apportionment.".
These amendments simply improve the punctuation, in each case replacing the comma with a full stop.
Amendment agreed to.
I move amendment No. 25:
In page 10, subsection (2) (b) (ii), line 19, to delete "section," and substitute "section.".
Amendment agreed to.
Question proposed: "That section 5, as amended, stand part of the Bill."
(Cavan-Monaghan): This is the section which purports to pass on rates relief in respect of the years 1977 and 1978 to tenants of rented dwellings. I believe this section is wholly ineffective. It does not effectively pass on to tenants the relief given by this Bill to landlords. It is significant to note, before considering how effective the section is, that it really applies only to those who were tenants of private rented accommodation in 1977. There is a free-for-all situation for those who for the first time become tenants of rented accommodation after 1 January 1978.
The Bill presumes that the fact that private dwellings are not subject to rates will, in some way or another, reduce rents. As far as I am aware this section affects only those who were tenants of rented accommodation in private dwellinghouses before 1 January this year. Of the thousands of tenants occupying rented accommodation, hardly any have had the benefit of this rate relief which the landlords enjoy. The effect of the Bill is to provide a bonanza for landlords of private dwellings, who under the terms of letting agreements were obliged to pay the rates for their tenants or to indemnify the tenants against the rates. The landlords are being relieved of the obligation to pay rates but the Bill fails hopelessly to ensure that this relief is passed on to the tenants.
Until such time as the Bill becomes law the Minister cannot even pretend that the machinery was there to pass on rate relief. The Minister says this Bill contains the machinery to enable the tenant to recover from the landlord the rate content of the rent. Tenants of flats in this city and throughout the country have been deprived of approximately £30 a year which they should have received if the Fianna Fáil manifesto meant anything. As far as tenants are concerned, it meant nothing. It was effective in one respect only, that is, to get their votes in the election on the promise that they would be relieved of rates. That has not happened.
On Second Stage, the Minister seemed to be convinced that the tenants had rights under this Bill which they could enforce. The only tenants who have any rights under this Bill are those living in controlled premises. I understand the number of controlled premises forms a very small percentage of dwellings let by private landlords. The tenants of such premises have rights because the amount payable in respect of rent and payable in respect of rates is clearly spelled out and the rent is increased each year as rates go up. Tenants can now refuse to pay that. However, there is nothing at all to prevent landlords in these cases from terminating tenancies which existed before this Bill became law. It has not yet become law. A landlord may serve a notice to quit and negotiate a new tenancy which would provide for a higher rent.
As from 1 January this year there appears to be a free-for-all situation. The market is supposed to operate in favour of the tenant but we know that young married people are being forced more and more to rely on rented accommodation in the private sector. The Minister is forcing people off the local authority housing list by insisting that those with incomes of more than £70 per week are not to be considered for local authority housing. That forces people to search for flats and other accommodation in the private sector. Furthermore, since the Government came into power it has become impossible for people of modest income to provide housing for themselves because the price of houses has greatly increased. The latest bulletin from the Minister's Department shows that the price of a private house has increased by more than £2,000 since 1 January 1978. The mortgage interest rate has also increased dramatically this year.
They promised to get the country moving.
Houses are being built and bought.
(Cavan-Monaghan): The effect of this is to push these people onto the private sector with the result that competition has become keener and rents will soar. This Bill does not provide for the passing on of the rates, with which the Minister bought votes in 1977, to the tenants. Having made that statement, I challenge the Minister to tell me how tenants who were in occupation before 1977 and tenants who had taken up residence during 1977 and before 1 January 1978 can effectively recover the rates from which their landlords have been exempted.
This section places an obligation on landlords who, before 1 January 1978, paid the rates on dwellings occupied by their tenants and who benefit by an allowence granted under the Bill, to make to the tenant a corresponding allowance in the rent. This section does not apply to small dwellings within the meaning of the Local Government (Rates on Small Dwellings) Act, 1928, whether owned privately or by a local authority; these are dealt with by sections 6 and 18.
Subsection (1), in addition to what I have already said, specifies the amount of the allowance to which a tenant is entitled. Two situations are covered in subsection (1). The first is where the tenant was in occupation immediately before 1 January 1977. Here the tenant is entitled in 1977 to an allowance equal to that by which the landlord benefited as a result of the 25 per cent relief of domestic rates. For 1978 and subsequent years, he is entitled to four times this allowance. In other words, the total rate has been taken off. The second situation arises where a tenant has come into occupation of a dwelling sometime during 1977. Here no allowance is due to the tenant in 1977, since only the reduced rates were a cost factor in providing the accommodation in that year. However, for 1978 and subsequent years the tenant is entitled to an allowance equal to the three-quarters rates which influenced his rent for 1977.
These illustrations assume that the dwelling comprises the whole of the premises on which the rating authority had made a rates allowance. Where this is not so, subsection (1) allows landlord and tenant to agree on an appropriate portion of the aforementioned amounts as the size of the allowance to which the tenant is entitled. Failing agreement between landlord and tenant on this apportionment, the provisions of subsections (2) to (4) can be availed of.
Subsection (2) provides that where a rented dwelling is not separately valued, the landlord or the tenant concerned may apply to the rating authority to have the valuation apportioned for the purposes of this section. The rating authority must notify both landlord and tenant of their decision and indicate that it may be appealed to the Commissioner of Valuation. The landlord is then obliged to publicise this to the tenants of other dwellings which may be affected, for example, those forming part of the same valuation complex.
Subsection (3) provides for the coming into force of apportionments under subsection (2). If no appeal is taken, an apportionment becomes operative at the end of the 30-day period within which appeals may be taken. If an appeal is taken, the apportionment comes into force on the day after the Commissioner's decision or on the appeal being withdrawn. The coming into force of a decision refers to the stage at which the decision is absolutely final and beyond the reach of any possible revision. Decisions, when they come into force, will of course have retrospective effect in 1978 and, where appropriate, in 1977.
Subsection (4) spells out the amount of the allowance due to a tenant whose valuation has been apportioned under subsection (2). The formulae involved apply in exactly the same way to an apportioned valuation as do the rules of subsection (1) to a dwelling which comprises the whole of a valuation.
Subsection (5) provides for the recovery by a tenant from a landlord of any allowance due under this section as a simple contract debt in any court of competent jurisdiction.
Deputy Fitzpatrick referred to controlled rents. Controlled rented accommodation comprises 40 per cent of rented accommodation. As well as that, there are undoubtedly people who had agreements with regard to rates, agreement under which tenants have taken responsibility for rates. This type of tenant would have no problem in being exempted from rates. In cases where landlords have failed to reach agreement with their tenants, this section gives tenants access to the court in order to get the benefit of derating. This course is open to any tenant who feels aggrieved.
Deputy Fitzpatrick also said that the landlord could come along the following day and give notice to quit. This is not anything new in regard to rented accommodation. Landlords could have given notice to quit at any time under existing law. There is no departure in that respect, no change in existing legislation.
(Cavan-Monaghan): The point is that if a determination is made that people will be entitled to a reduction because of this measure, landlords can serve notice to quit and negotiate a new lease which would have the effect of increasing the overall charge.
It is up to themselves what they negotiate. This gives people access to the courts. We have had a lot of discussion on this during the Second Stage and outside the House in the past months. A lot of thought and work went into producing the best possible way of achieving exemption from rates for rented accommodation. Despite all these criticisms, not one amendment or a better proposal has come from either of the parties opposite although it would have been possible for them, without risk of being ruled out of order from the point of view of putting a charge on public funds, to have put down an amendment. This is the best way to make it possible for these people to benefit, or to have access to the courts if they do not get their rights.
(Cavan-Monaghan): Would the Minister be surprised to hear that a survey was made and it was found that only two out of five lettings were found to have been controlled in this city?
I assume that was a part survey.
This is an important section and the best verdict that could be put on it has been provided in a banner heading in the Irish Independent which describes it as a “con job”.
How about yesterday's headline in the Irish Independent?
We answer for ourselves only, not for the journalists. I regret the Minister has taken up so much of the valuable time of the parliamentary draftsman in producing what I on Second Stage called this legislative gobbledegook. The Minister did not have to go much further than his own manifesto to find a very clear understanding by the people who drafted the fine print of what the situation would be. In the manifesto it is stated that there would be no rates content in regard to private rented accommodation.
The Minister is being less than fair, particularly to Deputy Fitzpatrick and me, if he suggests he is trying to assign rights to people, because he knew on 20 May 1977, when this manifesto was published, that unless an effort was made to change the landlord and tenant laws this kind of legislation is nonsense. That is my verdict on section 5 and I will support it with some observations.
Unfortunately they have to be incomplete observations because the Minister responsible does not have the basic statistics available. I asked a number of questions for written reply in relation to the number of flats and tenants and all matters related to lettings in order to evaluate the effects of section 5 and I got a reply to the effect that the information was not available. We have here evidence of a lack of basic homework on the part of the Minister and the Department. They cannot plead that the legislation has been hurried, that it had to be produced in a short time. They did not see fit to produce the statistical data in relation to the situation—what are the numbers and what is happening?
Because the Minister has not seen fit to produce that data we can rely only on partial studies. But when Deputy Fitzpatrick attempted to quote from such data the Minister's reply was that it was a partial study. It would be nice to have even a partial study coming from that side of the House, but we have nothing coming from there in regard to flat dwellers. In the regrettable absence of such information, let us have a look at what we have, partial though it may be. The first is a survey published by the National Flat Dwellers' Association. I will give it to the recorders later on so that they can get the necessary references, and if it is not already in the Library I will ensure it will go there for official reference. It is dated 16 March, and I will begin to quote from the first page:
Rates abolition benefits 8,000 landlords but not the 130,000 tenants in private rented accommodation in Dublin.
This is the main finding of a recent survey carried out by the Rathmines Branch of the N.F.A. (National Flat Dwellers' Association). The Rathmines Branch dealt with 70 complaints from tenants from January 1st-February 28th. The only tenant who benefited from Rates Abolition paid rates directly to the Corporation. The other 69 tenants had rates included in rent paid to their landlords but failed to benefit.
It was decided to survey a street of houses let in flats to (i), determine whether landlords are consistently refusing to pass on the benefit of Rates Abolition——
Is the Deputy saying that from 1 January to 28 February one person had benefited this year?
The survey goes on to clarify that situation. Legally, landlords would not have been in a position to pass on the benefits of the aboltion of rates because it would have been Christmas 1977 before they would have paid the second half of the rates due. I will resume my quotation from the survey:
It was decided to survey a street of houses let in flats to (i) determine whether landlords are consistently refusing to pass on the benefit of rates abolition to tenants by reducing rents proportionately; (ii) collect up-to-date information on rents, repairs, conditions and so on of tenancies and (iii) check whether landlords are complying with legal requirements...
We are pressed for time and I do not propose to quote the entire report.
The only interest the Chair has in this matter is that long quotations are not permissible from any side of the House. It is in order to paraphrase from a document.
(Cavan-Monaghan): Are long quotations permitted by the Minister for Education at Question Time?
The Chair has not said anything about that.
The fact is that virtually none of the tenants in private rented accommodation, where the separate dwellings were not separately apportioned, benefited from the abolition of rates. The benefit the landlords got was not passed on to the tenants. I wanted to check, for my own information, if the survey carried out by the National Flat Dwellers' Association was consistent or reasonable and I got the Ranelagh Branch of the Labour Party to carry out a similar survey. The NFDA survey was carried out on a particular road in the middle of "flatland" and it came up with a picture for that road, but we decided to do a spot check on a number of roads in the centre of "flatland" in Ranelagh. The number of roads surveyed was ten, the number of houses was 21 with 80 flats. We received 18 replies in the 21 houses. According to the conclusions of that survey the number of houses in which tenants received a reduction was one in which there were two flats. The number of houses in which no reduction was received was ten with 48 flats. The number in which tenants spoken to had moved in after 1 January and, therefore, were not in a position to benefit, was 38 flats and the number of houses in which the tenant claimed special agreement with the landlord and that the rebate did not apply was one house, two flats. In the absence of official surveys and statistical information, which I have complained about, the one reasonable conclusion I can come to is that, in so far as one can assess private rented accommodation, bedsitters and furnished accommodation, the benefit landlords received due to the abolition of rates in 1978 was not passed on to tenants.
This is an extraordinary situation. If one compares this provision in the Bill with other provisions one has the extraordinary situation whereby landlords, who consistently argue in their public utterances through a landlords' association that they are in the business of providing accommodation, have not given tenants voluntarily the benefit of the abolition of rates. The inadequate and partisan survey which I have referred to—the only surveys carried out in relation to this matter—shows that the overwhelming majority of tenants did not receive that benefit. Curiously enough, the people who will not get the benefit of the abolition of rates are those responsible for the running of the Iveagh Hostel, the Salvation Army Hostel, youth hostels or guest houses. Those people argue that they are in business, some of it of a voluntary kind like An Óige, and others of a straightforward commercial kind like guest houses. But they have been denied the benefit of the abolition of rates while landlords have not.
The Minister may say that he is attempting to confer on tenants the benefit of the abolition of rates and that is as far as he can go as Minister for the Environment without having specific responsibility for landlord and tenant law— that football is still being kicked very adroitly between the Department of Justice and the Department of the Environment. He may tell us that that is the only way he can give effect to the commitment outlined in the manifesto. What is the commitment in the manifesto? It signals to all that there was never any serious intention of conveying to tenants sufficient legal powers to benefit from the rights that would result in the abolition of rates.
The Minister asked us, presumably with tongue in cheek, why we did not put down amendments. The House is well aware why we did not. The technicalities involved in trying to amend this section are complex enough; but any kind of amendment would undoubtedly result in a reduction in money to somebody and therefore would run the possibility of an increase in expenditure and be ruled out of order by the Chair.
The Minister has already told us that it took a lot of time to draft this section. It is not reasonable to ask Opposition Members to draft additional complex amendments for a complex and contradictory section. There is in this section a total absence of statistical knowledge of the field of private rented accommodation. We are aware of the position with regard to other aspects of our housing. I asked the Minister questions six weeks ago about this matter and replies to those questions would have provided a reasonable basis for a rational discussion of this aspect of our housing.
The document produced by the National Flat Dwellers' Association claims that there were 120,000 tenants living in private rented accommodation in Dublin in 1971, based on the 1971 census. They also claim that there were 300,000 such tenants in the State. The assessment made by the NFDA, using the 1971 figures, is that it could be calculated that the cost of abolishing rates on houses let in flats would be approximately £3.4 million for Dublin in 1978 and, allowing for a 10 per cent population increase, the real cost would probably be £3.78 million. They stated that it would cost the taxpayer a minimum of about £8.5 million to remove rates from flats in the entire State in 1978. Has the Minister an estimate of the cost of such a provision? The NFDA stated that the giving away of that kind of money into a business sector could only be justified if the tenants got the benefit but it was clear that the tenants did not get the benefit.
I should like to dwell further on the narrow point of the cost of the abolition of rates on private rented accommodation, the area which is not controlled. In case there is any doubt about this, I am not talking about purpose-built dwellings where the occupier is the listed ratepayer. I am not talking about the numbers of flats converted some time ago, where there were separate valuations and where the occupier was the listed ratepayer. I am talking about the vast bulk of flats and bed-sitters where many young people live and where there is no such distinction. In many cases there is not even a multiple dwelling valuation, because the valuation is the old valuation when the property was a single-family dwelling.
It is regrettable that we do not have accurate statistical information. It is all the more regrettable when one considers that this measure was contemplated for more than a year. In the absence of such official statistical information we have some evidence to suggest, with a reasonable degree of certainty, that only 10 per cent of such people are getting the benefit of the abolition of rates. If the cost to the State of the abolition of rates is in the region of £8.5 million how does the Minister justify it? Will his entire case rest on the fact that he has conferred on flat dwellers the legal right to pursue landlords into the courts to get back the money? He is far too experienced to be accused of being naive in this respect. He and his party must stand accused of being totally cynical because they know, as the Pringle Report on Law Reform has clearly indicated, that a substantial number of cases requiring free legal aid involve landlord and tenant issues. Deputy Fitzpatrick, as a solicitor, will testify that most solicitors would run a mile rather than take a case pursuing a tenant's right to set out in this legislation in order to get the benefit of no more than £100. The cost of going to court would be hardly worth while. The workability of this measure is seriously in question.
Earlier today the Minister argued that some sections of this legislation should stand on the grounds that they were administratively feasible and that proposed amendments from me—such as the one with regard to the statute acre—should be ruled out. He implied that while it might be more equitable it would be inconvenient from the administrative point of view. I would argue that there is a considerable administrative inconvenience of one kind or another in attempting to make this section work. I would ask the Minister to give us some information regarding statistical data in his Department on this matter. Before proceeding to assess how these formulae might function effectively, has the Minister any answer to the statistical questions I posed?
I can answer the Deputy very quickly with regard to the statistical questions. If the census had been held when it should have been held the information would have been readily available, but the census were not held because of a decision by the Coalition Government. We would have the information at our fingertips had the census been held and it would have been the most accurate information available.
Section 5 provides for the recovery by a tenant from a landlord of any allowance due under this section as a simple contract debt in any court of competent jurisdiction. Until this Bill becomes law the tenant could not take these proceedings. Now there is nothing to stop the aggrieved tenants taking the proceedings.
Deputy Quinn questioned the statement in the Fianna Fáil Manifesto that there will be no rates content in rent. Rates have been abolished as from 1 January 1978. Whatever other factors may be included in rent, rates cannot be included. With regard to recovery, the procedures are available: access to the courts which makes it possible for the tenant to recover the amount.
With regard to the surveys, while I do not dispute Deputy Quinn's survey of 21 houses that were visited, I would point out they were visited at an early stage. Those people who were not given the benefit of the rates remission at that stage could not have started proceedings by letter but they can do so when this Bill becomes law.
The only way to have accurate information and statistics for the Deputy in a matter like this is by means of a census. The corporation and other local authorities attempt to do it but the information could not be described as accurate. Probably this is not due to any fault of the local authorities. A census would have got the necessary information but the information is not available to us. I do not have to give the reason.
(Cavan-Monaghan): The promise given by Fianna Fáil was to derate all private and domestic dwellings among others and to remove the rate content from all rents in respect of domestic dwellings. That was the promise on which they got thousands of votes in this city and throughout the country.
The Minister has stated that the formula proposed in this Bill is the best that he or his Department could produce after 18 months. The Minister said that in an apologetic way——
I said it not in an apologetic way——
(Cavan-Monaghan): The Minister said it with tongue in cheek. He said it was the best advice he and his Department could produce to ensure that thousands of tenants in this city and throughout the country would benefit from the derating of private dwellings. The Minister commented on the fact that this side of the House did not put down any amendments. He should be fair about this. He knows perfectly well that we cannot put down amendments. They might be held to impose a charge on the Exchequer and the Minister also knows that they might be ruled out of order for another reason. It would be ruled out under the Long Title of this Bill:
An act to provide for certain reliefs in relation to the payment of rates to make other provisions with respect or in relation to rates, to make provisions regarding local government, and to make other provisions connected with the foregoing.
Any amendment we put down would be a Rent Act amendment. It would be said to come within the Rent Act code and the Chair would rule it out of order. The Minister should not try to put across a quick one like that, when he knows such an amendment would be ruled out of order.
I concede that the tenants of controlled premises can effectively benefit from this rate relief, but I want the Minister's statement that 40 per cent of rented dwellings are controlled. Forty per cent of what? Dwellings built since 1960, I think, are not controlled at all. A great many others built since 1940 are not controlled. Over the past 20 or 25 years, various means and devices have been used to decontrol premises for a variety of reasons. If the landlord gets possession because of a change of tenant they become decontrolled. If the poor law valuation is over a certain figure—and a figure is quite low—the premises are decontrolled.
I challenge the Minister to substantiate his statement that 40 per cent are controlled. He knows perfectly well that practically none of the flats in the city of Dublin are controlled. Because they are furnished flats, or alleged to be furnished flats, they are not controlled. I do not know what the Minister meant when he talked about 40 per cent. I am talking about all rented private dwelling units. I challenge the Minister to prove to me that 40 per cent of them are controlled. In one street in Rathmines——
The two parties over there are very fond of Rathmines.
There are more flats there per square mile than anywhere else.
(Cavan-Monaghan): It is flatland now. The Minister and his colleague, the Minister for Justice, lobbied the flat dwellers of this city before the last general election. They had them in here in Leinster House and told them what they would do for them and how they would relieve them of burdens. They probably got some information then about Rathmines. In one street in Rathmines where there are 51 houses and 274 flats only four per cent of the houses are controlled and 1 per cent of the flats. How could the Minister possibly establish that 40 per cent of all controlled when we know, as a matter of common sense, that 40 per cent of all rented accommodation cannot be controlled.
In 1978 the Minister paid out £3,444,000 to flat landlords in this city and about £8,500,000 to flat landlords throughout the country. I am satisfied that a mere fraction of that got passed on to the tenants. The Minister should be ashamed of himself. A promise was made in June 1977 to derate private dwellings and to ensure that the tenants would get the benefit of that derating. The Government took office in July 1977 and, 18 months later in the dying days of 1978, not alone have the tenants not got the benefit of this derating, but the Minister and the Government have done nothing to provide the machinery to enable them to benefit or even to pretend that they could benefit. Section 5 is not yet law and the Minister has done very little to make it law.
The Deputy is holding me up.
(Cavan-Monaghan): In regard to processing this legislation through the House, the Minister and the Chief Whip have treated the tenants of this city in a cynical way. The Bill was introduced on 14 December 1977. This is the first time any serious effort has been made to get it on the Statute Book.
I do not wish to interrupt the Deputy——
We are dealing with section 5. We cannot have long Second Stage speeches. The Chair has given a tremendous amount of latitude. We are on Committee Stage. All down the years the procedure was that we had short speeches on Committee Stage, not long Second Stage speeches. The Chair must intervene at some stage.
(Cavan-Monaghan): That must have been a long time ago. That was not my experience between 1973 and 1977 when I sat over there.
The present occupant of the Chair has no responsibility for the Chair during those years and will not accept it. We must have a Committee Stage debate and nothing else.
(Cavan-Monaghan): Taking the Chair as an inanimate object that is so, but the occupant of the Chair had a lot to do with it because he was Assistant Whip and he kept in the talk fodder in those days.
Do not ask the Chair to comment on that.
(Cavan-Monaghan): These tenants have been deprived of this rate relief. The Minister knows that in no way will he get this Bill through the Dáil and Seanad before the Christmas recess, and that it will be well into the next year before the machinery will be there and the tenants will have to start on a long trek to their lawyers and the courts. This section is unworkable and there is no way in which it can be amended. It is intended to implement a political promise made to get votes. If the Minister consults his legal advisers he will be told this section is completely ineffective.
They were consulted.
(Cavan-Monaghan): That is why it took the Bill so long to see the light of day and get into the House. The Minister said it is the best they can do. I am sure when it was handed over to the Minister they said: “There you are. That is the best we can do with it. Good luck to you. I hope it works.”
No one can do more than his or her best.
(Cavan-Monaghan): That is not good enough——
How do you surpass your best?
(Cavan-Monaghan): ——when you con a weak section of the community, the section who are dependent on bed sitters and flats.
It would take a miracle to enable you to surpass your best.
(Cavan-Monaghan): The best is not good enough when it is not effective. The Minister's best is not good enough.
What supercedes best?
(Cavan-Monaghan): If the Minister adoped the attitude in May 1977 he would have got a very different reception. “Flat Dwellers' Charter: Finna Fáil's Broken Promises.” There is a headline if we are talking about headlines. Does the Minister agree that for post-1 January 1978 tenants there is no machinery, it is the market that counts and the tenant takes the best he can get? There is no way to ensure that he gets the benefit of derating.
A man who takes up tenancy after 1 January 1978?
(Cavan-Monaghan): Yes.
Is the Deputy saying that the tenant should get a refund of rates when there are no rates?
(Cavan-Monaghan): I am suggesting that in some way the tenant might benefit through an easing in the PAYE system of income tax.
The Deputy is talking specifically about a tenancy which begins in 1978?
(Cavan-Monaghan): I am, and the only effect of this Bill is that the landlords do not have to pay rates while the tenants pay as much rent as ever.
There are no rates.
(Cavan-Monaghan): I know, but who does that benefit?
The Deputy is saying that even though there are no rates tenants should get a refund in some form.
(Cavan-Monaghan): He should get the benefit the landlord is collecting.
Deputy Fitzpatrick should make his case on section 5 and nothing else and then the Minister may reply.
(Cavan-Monaghan): I repeat that the effect of this Bill so far as rented dwellings are concerned is to give relief to the owners of those premises without any relief to the tenant. One method suggested was that flat dwellers should get relief in their PAYE income tax. There is no point in the Minister saying that the question does not arise after 1 January 1978 because there were no rates. I know that, I know too, that the people who benefit from that are the owners of the dwellings concerned but the tenants are paying as much rent as ever. With the situation created by the Government, between pushing people off the local authority housing list, increasing the price of houses, not doing anything about mortgage interest——
The Deputy has gone off the section again. We are not dealing with local authority housing, mortgage or anything else. We are dealing with relief of rates for flat dwellers in this section.
(Cavan-Monaghan): I cannot help but notice that if a person on this side attempts to make a political point, even in passing, he is told he is not on——
The Chair has been very fair to the Deputy all day long and that charge will not stand. There is no question but that the Deputy is dealing with matters that do not arise on this section. Whether they are political or otherwise does not matter to the Chair. The Deputy should be fair to the Chair. The Deputy on the section and nothing else.
(Cavan-Monaghan): I am making the point that tenants are not getting the benefit of rates relief at a time when rent on private dwellings is increasing and I am giving the reason for these increases—because the Government have done nothing about them. There is a perfectly logical, coherent argument. I believe the Minister should take this out of the Bill, or introduce another section or even another Bill. If it is impossible to do this he should come clean with the tenants and tell them that in his anxiety to get into office and get their votes he made promises which he cannot fulfil. He should tell them that his best is not good enough because it is impossible to devise a formula which will pass on rate relief to tenants. He should tell them he is very sorry but that he made those promises in good faith.
He should devise another form of relief, such as tax relief, to make up for what he appears to think he cannot do. I am asking for more than his best; I am asking for a miracle. He should tell the people that he made these pre-election promises in good faith but when he got into the cool and calm of the Custom House he found it was not possible to implement his promises.
I did not see anyone going back on the 14-point plan.
(Cavan-Monaghan): As part of his best the Minister had his legal draftsmen try to draft a Bill and after six months they gave him a Bill which they knew was not effective. The Minister should apologise to the people and tell them that in the next budget his colleague, the Minister for Finance, when he gets his other problems sorted out, and his colleague the Minister for Economic Planning and Development——
We are not dealing with the budget or with other Ministers. There is only one Minister in the House and we are dealing with section 5. If the Deputy continues to repeat himself I am going to put the section to the House. I am warning the Deputy of this.
(Cavan-Monaghan): I have no intention of dealing with next year's budget because we have not finished last year's yet. It is on the Order Paper.
We are not dealing with the budget for last year or next year.
(Cavan-Monaghan): This section is unworkable. It will not pass on the relief to people living in rented accommodation. By way of restitution the Minister should scrap this section, make a public apology to the tenants and introduce some measure in the budget by way of tax relief that would make up for the promises he made here which he is not carrying out.
I heard with interest the Deputy's suggestion about making an apology. Not for one moment do I concede that an apology is due to anyone but even if it were I do not recall any of the Deputy's colleagues when in government going to any person or group to apologise for their failure to implement the 14-point plan.
(Cavan-Monaghan): We implemented every one of them.
That is not before the House. Section 5. I am about to put the section in two minutes flat——
(Cavan-Monaghan): This is a very important section.
We are having nothing but repetition.
(Cavan-Monaghan): Deputy Quinn has to deal with the formula——
Before putting the question I want to give Deputy Quinn some accurate information he asked for. I mentioned that we did not have a census a few years ago which would have given us the necessary information. For the Deputy's information the 1971 census gave good information which might be of interest, but it could be out of date.
Local authority rented accommodation at that time amounted to 112,320, rented as unfurnished, 59,264—which would correspond to the controlled rents because those people could not be put out of their accommodation—rented as furnished, 17,360, that is the relevant figure in this discussion—and occupied free of rent 16,877. That figure was made up of caretakers of large premises and such people. The 1971 census gave those figures.
We made it possible for people to go to court and get their rights under Section 5 of this Bill. It would not be possible to do that without this legislation which, hopefully, will be enacted shortly. But there is another reason, too. In the area mentioned, Rathmines, there would be many multiple tenancies, perhaps four or five tenants to each flat. Except in cases where there is agreement that the tenant would pay the rates, I assume that any house let in a number of flats would have to be apportioned for rates as between the landlord and tenants in order to arrive at a true figure. To enable this to be done for 1978 each case would have had to be submitted at the end of 1977. Therefore, that is a valid reason for a delay on the side of both landlord and tenant in arriving at the proper figure. The lists will be going in again at the end of 1978. These apportionments could be and should be included and the Bill gives to the tenant the right to ensure that the apportionments are included. The same applies to the landlord. Either landlord or tenant can do this by getting in touch with the secretary of his local authority. This would involve a further delay but an unavoidable delay in the circumstances I have outlined. I am reasonably confident that this section can be made to work and that we can fulfil our commitment in this regard. All the factors will be teased out when the apportionments are made.
Regarding the point made by Deputy Fitzpatrick on the question of a person entering a tenancy in 1978, I do not know whether compensation should be paid. There is no way in which there could be compensation for rates in such a case because of there not being rates on the premises in 1978. Therefore, I do not know what exactly the Deputy means. The rent to be paid is a matter to be decided on between the tenant and the landlord in cases of private lettings, but there is no way in which rates could be regarded as a cost factor.
I appreciate the Chair's concern in this matter and I shall endeavour not to be repetitive in any way. However, I asked the Minister for some statistical information and in addition to saying that there was not a census—a decision which I regretted very much at the time—the Minister offered the statistics that were to hand but admitted that these were very limited.
They related to the 1971 census.
Consequently, they would be out of date. As one who is not a stranger to the property business generally, the Minister will understand readily that the census information might not necessarily be an accurate reflection of the situation on the ground regarding the number of houses converted into flats and which would therefore directly concern the people who would benefit as a result of section 5. It was for this reason that I asked about the number of landlords of private rented houses who have registered with each local authority as well as asking a number of similar questions that were for written answer on 14 November. In all instances I was told that the information was not available in the Department. I can only accept that official reply but it is a reply that indicates something extraordinary so far as the Department are concerned in that they do not even have this information monitored from the local authorities. The Minister has claimed that in section 5 and with these formulae which we have not discussed in any detail—we are talking about the section in general terms—he has, with hand on heart, done the best job possible.
Not with hand on heart. I believe that I have done the best job.
I agree with the Minister. He has done the best job possible in protecting the property interests of landlords. If we consider the legal system and if we consider the effectiveness within which a tenant who might benefit under section 5 would derive that benefit, we find that the person whose interests are protected best by this section is not the tenant but the landlord.
In those circumstances would the Minister consider restructuring the entire section in order to give it the opposite effect? Indeed, having regard to the case made by the Minister in respect of guesthouses on the basis that they are businesses and also to the case made in respect of such premises as hostels and in order to pick up the gap in statistical terms between what we have officially in terms of statistics in respect of known furnished property and the reality which is much greater, would the Minister not consider withdrawing the section and coming back to the House on Report Stage with a section on the lines that a house which is a multi-dwelling but having attached to it a single rateable valuation would not benefit from the abolition of rates on domestic dwellings until such time as each dwelling was apportioned and valued separately within each local authority? In other words, would the Minister not put the onus back to where it belongs, that is, on the landlord, the person who purports to be running a business? In the case of a house in Pembroke Road, for instance, there could be ten or eleven separate flats and if the landlords of such houses were to be told that until such time as they seek apportionment and have the valuations calculated, they will not benefit from the abolition of domestic rates, there would follow the two-fold effect, first, of bringing into the open the real number of rented dwellings and also of bringing to the attention of the Minister for Finance a certain number of subterranean factors which are related to this area.
In so far as we can talk about alternative directions to section 5 we can talk only within the context of departmental responsibility. Much as I would support matters of tax relief in respect of the private rented sector, since it is the only sector that is not in receipt of any State subsidy, the Minister has it within his power, should he so choose, to come down on the side of the tenants and not on the side of the property owners, to reverse the sense and direction of section 5 so that the onus is on the landlord to have his dwelling or dwellings so valued that each separate letting or dwelling is separately apportioned and valued with the local authority. Then all the formulas would be redundant. The onus would be on the landlord.
The benefit to the community would be that landlords who are serious about the business of providing accommodation would benefit from the abolition of rates and therefore would be able to reduce their costs relative to others. The professional landlords would have a cost incentive which those outside the system would not enjoy. Secondly, local authorities would have a much clearer picture of the number of dwellings in their area which are sub-divided. We certainly do not have this picture as a result of the non-answer to my question. There would not be an onus on the tenant to take the landlord into court.
If the Minister asks the opinion of any practising Fianna Fáil solicitor as to the workability of that section if a tenant seeks redress against a landlord, he will say it would be a waste of time to take on such a case because of the costs involved. He would probably direct the tenant to a free legal aid centre. The FLAC report states that a large number of the cases requiring free legal aid involve landlord and tenant law where the tenant is seeking redress against the landlord. The Pringle Report supports that statement.
The Minister challenged us as to why we did not suggest amendments. The cards are in the Minister's hands in this regard because any amendment which would require redrafting the whole section would undoubtedly be ruled out of order. If the Minister is serious about promises made to tenants, it is within his power to change the bias and direction of the section. We will be opposing the section because it is legal nonsense. If it is passed it will be bad law cluttering the Statute Book and possibly cluttering the courts. The Minister can withdraw this section and come back on Report Stage with a provision——
To exclude these premises from derating.
——to exclude from derating those premises for which the landlord has not sought separate apportionments from the local authority. The onus would not be on the tenant to seek his rights. The onus would be on the landlord to benefit from the abolition of rates by complying with requests which are already implicit in the bye-laws of a whole range of local authorities under the 1966 Housing Act regarding rented accommodation. In Dublin only 11 per cent of landlords so register their property. If the Minister wants to do his best for the tenants and not the property owners he can put the onus on the landlord to apply for the apportionment and until such time as the apportionment is made the rates would be payable. Who is likely to suffer from that? It is certainly not the tenants because in the vast majority of cases they have not benefited from the abolition of rates. The survey of the National Flatdwellers' Association and our own survey would support that. In any case, it applies only for a certain length of time. Anybody coming in after 1978 is not eligible. The only people who would suffer would be those landlords who insist that they remain underground, and they are enabled by this provision to remain underground.
On numerous occasions we have tried to establish who in the Government benches has specific responsibility for the whole area of landlord and tenant law. The ball has been adroitly kicked between one Department and another. The Department of the Environment have a partial responsibility with regard to flat dwellers but not in the area of landlord and tenant law. This would be an opportunity for the Minister to strengthen the position of tenants, the only people in the housing sector for whom he has specific responsibility who get no direct State subsidy of any kind. I propose that the Minister should withdraw this section and make the changes necessary to make the Bill much more beneficial to the community, especially those who depend for accommodation on the private rented sector.
Regarding the apportionment of multiple dwellings, an apportionment cannot be applied for until the Bill becomes law.
Is the Minister saying that a landlord owning a house in four flats cannot apply for four separate valuations?
I am talking about the purposes of this Act. As Deputy Quinn knows, 1,075 owners have been registered in Dublin in respect of 6,949 dwellings. The enactment of bye-laws is a matter for the corporation but they have not been very successful. This applies to many other local authorities.
We are all familiar with the reasons for that.
Deputy Quinn mentions the re-imposition of rates. The apportionment could not yet have taken place for the purposes of this Bill. Our manifesto undertaking was to abolish rates and the Deputy is now suggesting we should reimpose rates in certain cases or on certain classes. What he is suggesting could victimise the tenant. There could be landlords who have already reached agreement with tenants regarding a reduction, even without apportionment. I am sure there are landlords who have already given reductions. We would be victimising some tenants also.
Our commitment was to derate the domestic sector and we have no intention now or at any time in the future of re-imposing rates on domestic dwellings.
(Cavan-Monaghan): I refer to section 5 (2) and I want to bring home to the House how absurd this section is. Let us take the case of a tenant in occupation of a flat in 1977 and 1978 whose landlord refused to give any allowance for rates relief. The tenant has now left the flat and moved somewhere else and finds that the sum of £50 or £100 is due to him. If he is not satisfied with the landlord's offer the unfortunate tenant will have to apportion the valuation of the house of which the dwelling is part in order to enforce his rights. The first thing he will have to do is to ask the local authority to apportion the valuation. If the local authority move as quickly as they usually move, it will be some considerable time before they apportion the valuation and serve notice on the tenant. If the tenant is still not satisfied—and we must assume that he would have reasonable cause for being dissatisfied—he must then go to court under section 7. If he is going to a District Court in Dublin or in some other busy area he will be delayed there for an indefinite time. He will eventually be informed of the apportionment sometime in 1979.
The extraordinary part of this subsection is that the apportionment will not become effective, as is usual, from the date of application but from the date on which the District Court gives a decision, which could be a couple of years after the date of application.
Having got that valuable work carried out by the local authority and the District Court, he will be able to calculate what is due to him under the Fianna Fáil manifesto. If the landlord is still unreasonable, the tenant will have to go to the Circuit Court or the District Court to sue the landlord. By 1985, if he is lucky, he will have what the Fianna Fáil manifesto promised.
Why should he be held up in a District Court?
(Cavan-Monaghan): There are delays in District Courts.
They are not like the higher courts.
(Cavan-Monaghan): There are delays in District Courts as well as in higher courts.
Who is responsible for that?
(Cavan-Monaghan): If the thousands of tenants in the city of Dublin have to invoke the assistance of the District Court——
Is the Deputy talking about an apportionment?
(Cavan-Monaghan): I am saying that when an apportionment has been made the tenant may have to go to court again if the landlord refuses to pay him. It could be well into the eighties before he receives payment, which will be worth less to him than at the time the debt was incurred. That is the sort of absurdity which the Fianna Fáil manifesto promised these unfortunate people.
I am against this section. I am not against derating in an orderly way. It was part of Coalition and Fine Gael policy to derate private houses in an orderly way consistent with the ability of the economy to pay. However, I am against this monstrosity of a section which leads people to believe it will work. The Minister started by saying that it was the best that could be got. Later he said he was reasonably satisfied that it would work. If those are not watery undertakings to the unfortunate flat dwellers, I do not know what they are. I am against this section because it is a legal monstrosity. Even solicitors who are prepared to help their clients will be frightened by the formulae in this section. The section is absurd and it should be removed.
Question put.
The Committee divided: Tá, 67; Níl, 45.
Tá
- Ahern, Bertie.
- Ahern, Kit.
- Andrews, Niall.
- Aylward, Liam.
- Barrett, Sylvester.
- Brady, Gerard.
- Brady, Vincent.
- Briscoe, Ben.
- Browne, Seán.
- Burke, Raphael P.
- Callanan, John.
- Cogan, Barry.
- Colley, George.
- Collins, Gerard.
- Conaghan, Hugh.
- Connolly, Gerard.
- Cowen, Bernard.
- Cronin, Jerry.
- Daly, Brendan.
- Davern, Noel.
- de Valera, Síle.
- Doherty, Seán.
- Farrell, Joe.
- McEllistrim, Thomas.
- MacSharry, Ray.
- Meaney, Tom.
- Molloy, Robert.
- Moore, Seán.
- Morley, P.J.
- Murphy, Ciarán P.
- Noonan, Michael.
- O'Connor, Timothy C.
- O'Donoghue, Martin.
- O'Hanlon, Rory.
- Faulkner, Pádraig.
- Filgate, Eddie.
- Fitzgerald, Gene.
- Fitzpatrick, Tom (Dublin South-Central).
- Fitzsimons, James N.
- Flynn, Pádraig.
- Gallagher, Dennis.
- Geoghegan-Quinn, Máire.
- Gibbons, Jim.
- Haughey, Charles J.
- Hussey, Thomas.
- Kenneally, William.
- Killeen, Tim.
- Killilea, Mark.
- Lalor, Patrick J.
- Lawlor, Liam.
- Lemass, Eileen.
- Lenihan, Brian.
- Leonard, Jimmy.
- Leonard, Tom.
- Leyden, Terry.
- McCreevy, Charlie.
- O'Kennedy, Michael.
- O'Leary, John.
- O'Malley, Desmond.
- Reynolds, Albert.
- Smith, Michael.
- Tunney, Jim.
- Walsh, Joe.
- Walsh, Seán.
- Wilson, John P.
- Woods, Michael J.
- Wyse, Pearse.
Níl
- Barry, Peter.
- Barry, Richard.
- Begley, Michael.
- Belton, Luke.
- Bermingham, Joseph.
- Boland, John.
- Bruton, John.
- Burke, Joan.
- Clinton, Mark.
- Cluskey, Frank.
- Collins, Edward.
- Corish, Brendan.
- Cosgrave, Liam.
- Cosgrave, Michael J.
- Creed, Donal.
- Crotty, Kieran.
- D'Arcy, Michael J.
- Deasy, Martin A.
- Desmond, Eileen.
- Donnellan, John F.
- Enright, Thomas W.
- FitzGerald, Garret.
- Fitzpatrick, Tom (Cavan-Monaghan).
- Flanagan, Oliver J.
- Gilhawley, Eugene.
- Hegarty, Paddy.
- Kelly, John.
- Kenny, Enda.
- Lipper, Mick.
- McMahon, Larry.
- Mannion, John M.
- Mitchell, Jim.
- Murphy, Michael P.
- O'Brien, Fergus.
- O'Brien, William.
- O'Donnell, Tom.
- O'Leary, Michael.
- O'Toole, Paddy.
- Pattison, Séamus.
- Quinn, Ruairi.
- Ryan, John J.
- Timmins, Godfrey.
- Treacy, Seán.
- Tully, James.
- White, James.
Tellers: Tá, Deputies P. Lalor and Briscoe; Níl, Deputies Creed and Bermingham.
Question declared carried.
SECTION 6.
Amendments Nos. 26 and 27 are being discussed together.
I move amendment No. 26:
In page 11, subsection (2), line 43, to delete "has" and substitute "bears".
This amendment and amendment No. 27 are wording improvements as suggested by the parliamentary draftsman.
Amendment agreed to.
I move amendment No. 27:
In page 12, subsection (3) (b), line 6, after "would", to insert "fall to".
Amendment agreed to.
Question proposed: "That section 6, as amended, stand part of the Bill".
(Cavan-Monaghan): Does this section deal with rates on small dwellings which are assessed on the owners and not on the occupiers?
That is correct, plus local authorities.
(Cavan-Monaghan): A subsection for this section provides for the refund of one-quarter of the rates in 1977 and a further three-quarters in 1978, is that correct?
It applies to the 25 per cent in 1977 but not in 1978. Section 18 deals with that.
(Cavan-Monaghan): Does the section deal with houses of this category owned by local authorities?
This section applies the 25 per cent relief of domestic rates which obtained in 1977 to the occupiers of small dwellings. These comprise all tenants of local authority rented dwellings and all tenants of privately rented dwellings whose valuation is less than £6. A higher limit obtains in certain urban areas. Termination of rates supplements to the rents of small dwellings as regards 1978 and future years is provided for in section 18 of the Bill. Occupiers of small dwellings did not pay rates as such; this was the responsibility of the owner. However, the owner was empowered to recover the rates from the tenant by means of a series of additions to the rent spread over the whole rental year. Where the owner of the small dwelling was the local authority actually responsible for levying the rate, the power to make these additions was section 9 of the Local Government (Rates on Small Dwellings) Act, 1928. In every other case, contributions in lieu of rates were imposed under section 6 of the 1928 Act.
Subsection (1) provides for a one-quarter reduction in 1977 of all rates-linked supplements to rents levied by local authorities on their tenants under section 9 of the 1928 Act. Subsection (2) provides for a similar reduction in rent supplements arising from the 1977 rate which are levied under section 6 of the 1928 Act. Subsection (3) prevents a local authority from making any rates linked addition to a rent under section 9 of the 1928 Act on or after 1 January 1978.
Subsection (4) places a similar prohibition on local authorities operating under section 6 of the 1928 Act. Section 6 of the 1928 Act applies where a local authority owns a rented dwelling but is not the rating authority for the area in which the dwelling is situated, for example, Dublin Corporation providing houses in parts of Ballymun and elsewhere. Section 9 will recoup them the amount of any such loss by means of the State grant. Subsection (5) makes it clear that owners of small dwellings qualify in 1977 for discount on prompt payment of rates if they tendered three-quarters only of the amounts previously prescribed. These former amounts were eight-tenths of the rates in the case of Dublin city and Dún Laoghaire and nine-tenths elsewhere. The other fractions mentioned in the subsection represent three-quarters of these amounts.
Section 18 of the Bill safeguards tenants of privately-owned small dwellings against rates-linked additions to rent in respect of rates for 1978 and subsequent years.
(Cavan-Monaghan): Would a substantial amount of the rent really be rates in the case of small dwellings?
In the case of small dwellings it is a separate demand note.
(Cavan-Monaghan): The rent would remain static and the rates would be assessed on the owner so that the tenant does not come into this?
That is correct. Owners were in a position to recover it from the tenants over 12 months. It was added on.
(Cavan-Monaghan): How does a tenant get relief?
It is specified in a separate demand note to the landlord and is easily identified.
(Cavan-Monaghan): As far as the tenant is concerned is it ever built into his rent?
It is not built in but it is identifiable.
(Cavan-Monaghan): I am reasonably happy with that.
Question put and agreed to.
SECTION 7.
Amendments Nos. 28 and 29, in the name of the Minister, are related and may be taken together.
I move amendment No. 28:
In page 12, subsection (1) (a), lines 40 and 41, to delete "section 60 of the Local Government Act, 1941" and substitute "an enactment mentioned in paragraph (c)* of this subsection".
These amendments are inter-connected. In dealing with the amendment of a rate, the original draft referred only to the power common to all local authorities which is set out in section 60 of the Local Government Act, 1941. In fact, Dublin County Council, Dún Laoghaire Corporation and the four county borough corporations also enjoy the option of amending a rate under the particular Acts applying to the management system in their areas. The draftsman has considered it more convenient to list these Acts, together with the Local Government Act, 1941, in a separate paragraph.
Amendment agreed to.
I move amendment No. 29:
In page 13, between lines 7 and 8, to insert the following new paragraph:
"(c) the enactments referred to in paragraph (a) of this subsection are sections 73 and 94 of the Act of 1930, section 30 of the Act of 1934, section 29 of the Act of 1939, section 60 of the Local Government Act, 1941, and section 21 of the Cork City Management (Amendment) Act, 1941".
Amendment agreed to.
Amendments Nos. 29a, 30, 31, 32 and 35 are related and may be taken together.
I move amendment No. 29a:
In page 13, subsection (3), line 13, to delete "farm building" and substitute "farm building,".
These amendments are simply corrections of punctuation, each involving the insertion or deletion of a comma.
Amendment agreed to.
I move amendment No. 29b:
In page 13, subsection (3), line 15, to delete "community hall," and substitute "community hall or".
This amendment inserts the conjunction "or" which was overlooked in the original draft.
Amendment agreed to.
I move amendment No. 30:
In page 13, subsection (3), line 17, to delete ", through" and substitute "through".
Amendment agreed to.
I move amendment No. 31:
In page 13, subsection (3), line 17, to delete "concerned" and substitute "concerned,".
Amendment agreed to.
I move amendment No. 32:
In page 13, subsection (3), line 17, to delete "authority may" and substitute "authority may,".
Amendment agreed to.
I move amendment No. 33:
In page 13, subsection (6) (b), line 42, to delete "determine the part of the" and substitute ", determine the part of the buildings".
This amendment gives more precise instructions to the Commissioner of Valuation about the apportionment of an hereditament used partly as a secondary school, community hall or farm building and partly for some other non-domestic purpose. The amendment makes it clear that the commissioner should have regard only to the buildings valuation of the property concerned. This is consistent with the treatment of community halls and farm buildings in section 2 of the Bill where the specified valuation includes the buildings valuation only. The amendment, taken in conjunction with section 2, will allow relief of rates on the apportioned buildings valuation of a secondary school and on any land valuation attaching to the school, subject to a limit of £40 rateable valuation.
Amendment agreed to.
I move amendment No. 34:
In page 13, subsection (6) (b), line 46, to delete "subsection (6)" and substitute "subsection (9)".
This amendment simply corrects a mistaken reference in the original draft. The appropriate reference is to subsection (9) of this section which fixes a time limit relevant to the apportionments to be made under subsection (6).
Amendment agreed to.
I move amendment No. 35:
In page 14, subsection (8) (b), line 18, to delete "determination" and substitute "determination,".
Amendment agreed to.
I move amendment No. 35a:
In page 14, subsection (10) (b), line 41, after "of" where it secondly occurs, to delete "December, 1978" and substitute "March, 1979".
On a point of order, I should like to know when this amendment was circulated.
It is on today's Order Paper. This amendment extends the period of time within which application for apportionment of a valuation may be made to the Commissioner of Valuation in respect of 1977 or 1978. A closing date of 31 December 1978 was specified when the Bill was first circulated. The amendment puts back the date until 31 March 1979.
Is the reason for this the fact that the legislation has been slower than anticipated?
Yes.
(Cavan-Monaghan): This is an example of what I was talking about earlier. Subsection (10) (b) as drafted reads:
Subsection (9) of this section shall not apply in relation to any application under this section which is received by the Commissioner during the period beginning on the passing of this Act and ending on the 31st day of December, 1978.
In the absence of the Ceann Comhairle I complained about the treatment of the Bill in this House and the disregard shown for the people who are entitled to benefit. That is shown very clearly by the subsection as originally drafted. The Minister is extending the date to March 1979. I wonder if that is long enough? When will the Bill become law and when will the people know about it? With the intervention of Christmas and so on I doubt if an extension to 31 March 1979 is long enough. I suggest that the Minister fix a date at the end of May or June. It is not a matter that needs much consideration.
It only applies to 1977 and 1978. I agree to extending it to 30 June 1979.
Is the House agreeing to delete the words "31st March" and to substitute "30th day of June"?
Amendment, as amended, agreed to.
I move amendment No. 36:
In page 14, between lines 41 and 42, to insert the following subsection:
"(11) A determination or other decision under subsection (6) or (8) of this section shall continue in force until—
(a) the valuation of the hereditament in relation to which the relevant application under this Act was made is altered, or
(b) a further such determination or decision is made in relation to such hereditament,
and where a further such determination or decision is made as regards a particular hereditament, the determination shall have effect only as regards a local financial year which is subsequent to that in which the determination or decision is made.".
This amendment adds a new subsection in order to clarify the span of life which an apportionment will enjoy. An apportionment will operate indefinitely until either the overall valuation of the property is altered in the annual revision of valuation or a new apportionment is obtained. Where the overall valuation is altered, the one-third which is subject to the £18 rule will apply again unless a new apportionment is obtained. Where, without the overall valuation being altered, a new apportionment is sought and obtained, then this new amount will supersede the old apportionment. If a second apportionment is applied for and obtained within the same year it may not take effect until the year following.
On a point of clarification as I find this difficult to follow on first reading, is it correct that once an apportionment is made, when a valuation is split between two different activities and two different parts of the same dwelling, it is constant for all time until a new apportionment, if any, is made?
That is correct. It is the apportionment of the existing total.
In a mixed hereditament here, for example, £15 would be in respect of the residential aspect out of a valuation of £40, would that be constant for all time? What is the meaning of the last paragraph of the amendment?
A further apportionment can be applied for and it would not take effect until the following year.
(Cavan-Monaghan): I understand that a determination made under subsection (6) or (8) will remain in force until the entire valuation is altered. I presume that would be done on revision of an application?
On a list for revision in the ordinary way.
(Cavan-Monaghan): I can understand how that would happen. The section uses the words, “...or a further such determination or decision is made in relation to such hereditament”.
If a fresh application is made. It could occur under a change of use, or a fresh application could be needed.
(Cavan-Monaghan): If the premises were improved.
If they were improved they would be listed for revision in the ordinary way.
(Cavan-Monaghan): There would be a case for revision if they improved or deteriorated. If they became less valuable, that would be a case for revision. When would a determination be necessary or possible under the section?
If there was a change in usage with regard to the portion being used for a shop or for private purposes. If there was a change in the usage of part of the building for private or commercial use.
(Cavan-Monaghan): The part we are dealing with would be a dwelling all the time or we would not be interested in it.
Where people are not satisfied with the limit of £18 they can apply for apportionment and get it. Some time after that they utilise most of that premises for business purposes or for private purposes. Then they would make a fresh application.
Amendment agreed to.
Question proposed: "That section 7, as amended, stand part of the Bill."
(Cavan-Monaghan): I am not satisfied that this question of apportioning mixed hereditaments will not in effect lead to an increase in the overall valuation. The Minister tells me that the Valuation Office will simply apportion the valuation and the total valuation will not be increased. I am concerned lest a valuation of £50 goes up for apportionment and comes back with a valuation of £40 on one part and £30 on the other and becomes a valuation of £70. I am told the Valuation Office will only apportion, but I want to be assured by the Minister that the Valuation Office cannot increase the overall valuation.
There is no use in giving me a pious assurance or hope that the Valuation Office will not do that. History shows that once The Commissioner of Valuation is invited to inspect a premises, the end result is a very substantial increase in the valuation. After this I will have something further to say. I want an assurance that the Valuation Office will not have the authority to increase the overall valuation of the building.
I can give the Deputy that assurance. To revise a valuation upwards or downwards it has to be listed in the ordinary annual list for December. It used to be the end of March. Requests for revision must be submitted to the Valuation Office by mid-December and decisions are published in the revised valuation list in the following autumn. On the other hand, a request for an apportionment under this Bill may be made at any time, and a decision may also be given at any time by the Commissioner of Valuation. The Commissioner is empowered to alter the overall valuation of a property only when it has been listed for revision by mid-December of the previous year. A request for an apportionment does not constitute a listing for revision. It does not afford a basis for any alteration of an overall valuation. An apportionment means an apportionment and only that. It must respect the overall valuation of which a breakdown is to be made.
(Cavan-Monaghan): Who makes the application to the commissioner for an apportionment?
The council can do it or the tenant.
(Cavan-Monaghan): Is it done through the council?
Through the local authority always.
(Cavan-Monaghan): That is what I thought. The Minister assures me that, on an application to apportion under the Act, the Commissioner of Valuation may only apportion a valuation between two parts of the dwelling so that the separate valuation——
The existing valuation.
(Cavan-Monaghan): ——so that two or more new valuations can only add up to the total of the existing valuation. This apportionment is done on the request of the rated occupier through the local authority. For many years we have had the unjust method of revising some valuations and not revising others. Lucky people were not noticed and their valuations were not revised. Unlucky people came to the knowledge of the rate collector and through him the county council, or the local authority, and eventually they were listed. This new procedure will create difficulty and it will emphasise this unjust method of revision.
Everybody who wants an apportionment will have to go to the local authority and draw their attention to his hereditament and, in that way, the local authority will get to know about it. They will get a report from the rate collector, presumably, who will tell them what sort of a building it is and what state of repair it is in. It is almost certain that in the next revision list going up to the Commissioner of Valuation this building will be listed for revision. The Minister may say it will only be listed for revision if it merits revision, or if the local authority think it is the type of building which should be revised. There is a lot in that argument.
My objection is that it will come to the notice of the local authority only because it is brought to their notice by the occupier who wants to avail of what is supposed to be a benefit for him under this Bill by getting part of his house derated. The end result might very well be that a man with a £50 valuation gets it apportioned this year and gets £30 on one half and £20 on the other, and next December the local authority will send the whole thing back to the Commissioner of Valuation for revision. When the list comes down next year the valuation of the business end of the premises could be £60 or £70.
From his own knowledge I do not think the Minister will seriously disagree with me when I say that is a very real possibility, a real probability. He may argue that if it were not entitled to be revised, it would not be revised. That is so, but the end result will be that the occupier will be worse off than he would have been if this derating had never been introduced. As well as paying his own rates on the business part of the premises, the valuation of which will have become £70 instead of £50, he will also be paying part of the rates for his neighbour down the street who did not bother to have his rate apportioned and kept quite and let sleeping dogs lie. His valuation can stay at £20 or £30.
If it was too low, would somebody else not have been paying his rates for years?
(Cavan-Monaghan): I agree, and that is part of the inequity in the rating system. I do not believe we should use a measure like this, which is supposed to be a relief measure, to make people pay more. Until the happy day when all valuations are revised and drawn on an equitable basis, there should be some assurance written into this legislation that local authorities will not list buildings for revision merely because they have been requested to apportion. That is a reasonable request. Otherwise people will be afraid to avail of their right to have these buildings apportioned. I go further and say that, even if they do not request an apportionment and even if they are satisfied to accept the one-third or £18, whichever is the lesser, they will still be brought to the notice of the rate collector, the rate inspector and the local authority and they will find their way to the Commissioner of Valuation who will revalue them. The end position for the occupier will be more rates instead of derating. I would like the Minister's view on that.
The maximum without an apportionment for derating purposes would be £18 or one-third. This undoubtedly could be very unjust. A ratepayer could have a reasonably sized building with a valuation of £100 and 75 per cent could be used for private dwellings. That person must be given the right to request an apportionment. The Deputy's fear is that local authorities will utilise this because it will be brought to their attention. These buildings to which he referred and said were undervalued were always there. It could have happened that they came to the notice of the local authority and this usually happens when the lists are made out at the end of the year. Lists are compiled of people who got grants or planning permission and are always available to local authorities. One thing certain is that the request for an apportionment must be confined to the existing valuation. That request can be made and carried out at any time during the year. It is not confined to the time when the ordinary lists are going up.
There is no good reason why local authorities would want to act the way Deputy Fitzpatrick said. I have confidence in our local authority officials, who try to treat people in an equitable and fair way. For example, even without derating, if somebody built up a business which has a big turnover and the premises are on an exceptionally low valuation, somebody else has been paying his share of the rates. In justice to other ratepayers his rates deserve to be revised. This was true even before derating was introduced. I have no reason to believe that simply because somebody applies for an apportionment the local authority will wait until the revision lists are issued and then take special note of it. There is no good reason why the local authorities would do that and I trust them not to.
I was surprised to hear the Minister's last comment. I can understand that local authorities would not be tempted to do such a thing if they were not continually stuck for cash——
Which they are not.
——but the reality is that, irrespective of who sits in the Minister's seat from now on, the amount of money local authorities will get will be determined by a principal officer in the Department of Finance. Say the three of us were in a local authority which was faced with demands for increased expenditure, living with the reality that we would get a percentage which would be announced before Christmas when the budget debate finally ended. If we wanted to meet the objectives of the council, the only way we could reasonably do it would be to increase the tax base. The way to increase the tax base would be to increase the value of the non-domestic valuations which would not be subject to the strictures of the Department of Finance.
Contrary to what the Minister says, I have every belief and trust in local authorities. I also believe in their ingenuity and astute management, of their cash resources, maximising the use of them. It is reasonable to assume that, once the application for apportionment comes in, a manager or his assistant will be at least subject to the temptation of saying that these apportionments are below what they would be if such a valuation was sought. If such a valuation was sought and resulted in an increase in the non-residential part of it, it stands to reason that those local authorities would increase their revenue above and beyond whatever increase was sanctioned by the principal officer in the Department of Finance. I think that was the reason Deputy Fitzpatrick raised the question. I do not know the law as well as I should, but can a local authority itself request a revaluation?
Yes, at any time.
That being the case, within the context of this section becoming law is the Minister going to set up any monitoring procedure so that some astute official in a local authority is not put into a room by the manager, told to make a list of every application for apportionment and to make a parallel application for revaluation of those properties so that the tax base of the non-residential section of the local authority would increase? The local authority that can produce an extra £30,000 or £40,000 above and beyond what it would normally have is a local authority in which the manager and his officials have that much more leeway. Like the Minister, I have a high regard for the professionalism of our managers, but that possibility is there. In the administration and application of this section does the Minister foresee such a possibility occurring and, if so, does he have any proposals within the context of this legislation to monitor it? If so, what would those proposals be?
There is no way nor should there be any way in which I would deprive local authorities of a right they have always enjoyed with regard to revisions. The impression I get from Deputy Quinn is that suddenly managers will decide to send a clerical officer or some such official into a room where there is a list of all those who applied for apportionments, asking the official to ensure that everybody on the list is included in the next revised list. The manager has no control over what change might take place in valuations. That is a matter for the Valuation Office and the valuations could be either decreased or increased or they could be left unchanged.
(Cavan-Monaghan): The rates could be decreased, too, but that never happens.
The matter is one entirely for the Valuation Office. That has always been the case. For several weeks I have listened to the Labour Party criticising me. I was accused of stultifying local authorities, of interfering with their autonomy and I was told that I was only making rubber stamps of them but suddenly I am being asked to deprive them of rights they have always enjoyed.
If I might make a correction, I chose my words carefully. The phrase I used was "to monitor" and not "interfere with".
The question does not arise in regard to monitoring because local authorities submit lists at their discretion while the Valuation Office decide on the valuations. A tenant who is not satisfied with a valuation can ask for a different valuation officer or he can appeal to the Circuit Court. This happens quite often. Therefore, there is ample machinery to redress any unfairness that might be caused. Since rates and valuations are a form of taxation surely no one can justify exceptionally low valuations. If, say, Deputy Quinn has a low valuation, Deputy Fitzpatrick and I are paying his rates. Therefore, I do not understand how there can be any argument in this respect.
The Minister is endeavouring to attribute to me a suggestion that I did not make. Earlier to-day I expressed concern at the prospect of an already unsatisfactory and unequal tax base being distorted further by the provisions of section 2. In the absence of any explicit formula for the calculation of an increase in the rates due to local authorities, something we learned of last night, it stands to reason——
The Deputy did not learn that last night.
The record will speak for itself.
(Cavan-Monaghan): When are the local authorities to be told to strike a rate?
My concern is not so much with the abolition of domestic rates but with the local taxation base and with the Minister's specific responsibility in making a major contribution to local taxation on the basis of replacing by way of direct grant the revenue that would be due in respect of domestic properties.
What I want to find out is whether, if the tax base of a local authority is significantly altered by way of using the provision in this section, combined with the existing rights enjoyed by local authorities in terms of valuations, there are any proposals to monitor the situation in respect of calculating the overall requirement of a local authority's needs for of a common year? I am not suggesting that the rights should be interfered with in any way. I simply wish to know whether the Minister will be doing the job in the Custom House that he is supposed to do, whether he will know the tax base for each local authority and also if he will monitor any significant change that may occur in the base.
Details of the changes in total valuations are available each year.
But will the Minister be monitoring specific changes in that area? I know about the gross changes. They would include new dwellings, for example.
I will not be monitoring the changes.
I am aware that changes take place each year and that these are put forward as a gross figure for each local authority but it is in this area that there will be another possibility of the tax base being distorted further. The Minister has answered my question by indicating that he will not be giving to these changes the detailed attention that will be needed.
(Cavan-Monaghan): Simply because a person wishes to avail of the derating provision of this Bill in respect of private dwellings, he should not be listed for revision. I am not suggesting that local authorities should fail to list people for revision. It is their business to do so and I was surprised to hear the Minister say that he trusted the local authorities not to list such people.
An apportionment will not change the total valuation. The situation is hypothetical.
(Cavan-Monaghan): I accept that. If there were the happy state of affairs in which the local authorities listed everybody, where all the valuations were up to date, there would be more equity in the rating system but we know that not everybody is listed, that people are listed on a hit-and-miss basis. People are listed because their premises are brought to the attention of local authorities, usually by rate collectors or perhaps by some jealous neighbour but it is unreasonable that simply because a ratepayer wishes to avail of the Fianna Fáil manifesto promise, as implemented by this Bill, he should be listed for revision and have his valuation increased substantially. Indeed, I do not know how local authorities will avoid listing such people for revision but I will go further and say that failure to do so would be a dereliction of duty.
Why list them? Is it not because they apply for apportionment?
(Cavan-Monaghan): They will be listed because their premises have been brought to notice and because, perhaps, a new front has been added to premises or a lounge bar has replaced a snug at a licensed premises without the changes being brought to the attention of the local authorities. The listing of such cases is the end result of the Fianna Fáil manifesto and I do not think the Minister should make any apology for any local authority if it is considered that such people should be listed.
I have no intention of making any apology for that.
(Cavan-Monaghan): It is unfair to people who have been revised that other people who should have been revised have escaped the net because of being able to keep hidden changes in premises that warrant revision. In that situation it is unfair that people who avail of the right conferred on them to have portion of their buildings exempt from rates should finish up being brought to the notice of the local authority and having their premises listed for revision so that in effect the rates payable would be more than applied before. There should be some way around that. There is some provision, for instance, whereby a person who goes to the Garda for the purpose of invoking the law against somebody who has committed a major crime and while there brings to the notice of the Garda that he himself has committed a less serious crime is not prosecuted. In other words, if in the course of notifying a crime a person brings to the notice of the Garda some small crime that he has committed, I think there is some rule or etiquette or something like that which provides that he is not prosecuted. I have something like that in mind here.
If you get planning permission for an extension and get a grant you are not subject to revaluation for seven years.
(Cavan-Monaghan): That is revision. Will that go now too? I suppose it will go under one of these Acts that were in section 5 if the order is made. I might be making myself clear enough but the Minister may not want to understand me. I am trying to bring to the notice of the House and the country the effects of partially derating a mixed hereditament.
The only people Deputy Fitzpatrick can possibly be defending or worried or concerned about are people who are not paying their fair share. He is not worried about the people who are overpaying but the people who would suddenly have their valuation raised, which could have happened at any time. There is no way that any of us should try to justify this. If a person has a ridiculously low valuation compared with his neighbour or neighbours, that person is not paying a fair share of rates, which is a local taxation. I do not know why Deputy Fitzpatrick is so worried about them. They could be revised at any time without any apportionment whatsoever and the apportionment itself will not revise them up or down. What the local authority do to make the whole system of rates on properties—commercial now since the domestic is gone— more equitable, should not be criticised. It should be fair for everyone.
(Cavan-Monaghan): I will tell the Minister why I am concerned if he does not understand. Two people, A and B, are living in the same street in the same town. Person A has a valuation of £30 and B has a valuation of £30. A has a lockup shop; B has a mixed hereditament. B thinks that there should be only £20 on the business part of his mixed hereditament and £10 on the dwelling part. He goes to the county council, he has to bring that to their notice and it goes in 18 months' or two years' time to the Commissioner of Valuation. The end result for B is that he ends up with £10 on the dwelling portion of his house and £50 on the shop portion. Person A sits nice and quietly, does not do anything and he has a valuation of £30 all the time. That is what I am objecting to.
I would have no concern or worry if everybody was paying what he should be paying and if everybody's valuation was being brought up to date. I have always objected to the hit and miss system of revision. I object now to the provisions of this Bill which will intensify that hit and miss system of revision, as the Minister and the Minister of State, both of whom are well familiar with that I am talking about, know and they cannot deny that what I am saying is not alone possible but probable. I am not in favour of an unjust system of taxation. I have always been in favour of a just system. I am not in favour of one person paying another man's rates, but I am against this hit and miss system of revision.
There is a long-established principle going down through the law and the courts that some person who seeks justly to avail of a relief in taxation or rates should not end up by having to pay more, as would happen here. That is the principle I want to establish and there is nothing in it that I have to be ashamed of or to apologise to anybody for.
If he was underpaying for years he should not get a relief now in principle.
(Cavan-Monaghan): I know, but in principle you are offering him a relief. I have given the example of A and B. It happens in certain towns that there are two pubs with small valuations and the owner of one, say, puts in a plate glass window, puts up a sign, fixes his roof or something like that, and he is revised and the other man is not.
In practice only if he gets a grant is he subject to revision.
(Cavan-Monaghan): If he never got a grant. It is not necessary, and the Minister knows that.
It is not necessary to get a grant to be revised but in practice——
(Cavan-Monaghan): The Minister knows well that it all depends on the rate collector in 99 cases out of 100.
The Chair thinks we have fully discussed this section.
(Cavan-Monaghan): The Chair is a seat of wisdom and I do not want to disagree with him very much. It is not that the Minister is not taking in what I am saying. Of course he is, but what is he going to do about it? A person should not be listed for revision simply and solely because he applies for a division of his rate and in that way is brought to the notice of the rating authority. I want to go on record as saying that because it is logical and only fair play.
The Deputy is asking me to give immunity to the people he is talking about. There is no way that I can give a guarantee of immunity, nor would I attempt to do it.
(Cavan-Monaghan): They would be well advised to ignore the manifesto and the Bill and go on as they were. A lot of them would be cute enough to do that.
They will still get a third.
(Cavan-Monaghan): Even that would draw their attention to it.
Why would it? If a county manager drives around the county that draws attention, if you go that far.
(Cavan-Monaghan): May be they do not list them in Clare at all.
They do all right.
Question put and agreed to.
SECTION 8.
I move amendment No. 37:
In page 14, paragraph (a), lines 48 to 50, to delete "by a Justice of the District Court or the Commissioner the application is allowed, the authority shall" and substitute "the application is allowed, the authority shall, as soon as may be after the determination comes into force,".
This is a wording improvement suggested by the parliamentary draftsman. It is not now considered necessary to make particular reference to the person determining an application. The original draftsman was, in any case, less than accurate in that a judge of the Circuit Court might also be involved in this.
Amendment agreed to.
I move amendment No. 38:
In page 15, paragraph (b), line 7, before "appeal", to insert "the application or".
This amendment simply brings the wording of the latter part of paragraph (b) into line with that of the earlier part.
Amendment agreed to.
Question proposed: "That section 8, as amended, stand part of the Bill."
(Cavan-Monaghan): There is nothing very new in this section. Heretofore if a person applied for a revision he paid his rates in the ordinary way and got a refund if the rate was reduced.
That is correct.
(Cavan-Monaghan): Is that what is being reenacted here?
That is right.
It is a good section. There is no incentive to delay in that.
Question put and agreed to.
SECTION 9.
I move amendment No. 39:
In page 15, subsection (1), line 13, to delete "authority," and substitute "authority".
This amendment deletes a comma.
It is a drafting amendment.
Amendment agreed to.
Amendment No. 40 is out of order because it seeks to put a charge on the revenue.
Question proposed: "That section 9, as amended, stand part of the Bill."
The difficulty about attempting to act responsibly as an Opposition and to put down amendments has just been illustrated by the Chair who, without discretion, simply has to rule it out of order because it may incur additional expenditure. In looking at this provision in subsection (2) and, consequently, subsection (3) we felt that it really was a niggardly approach by the Minister. I would really like to know why the Minister wants to have subsection (2) included.
Subsection (2) allows the Minister to reduce the amount of the grant payable to a rating authority to take account of refunds on unoccupied property which, on the Minister's reasonable estimate, the authority would have to make but for this Bill. The enactments dealing with refunds of rates on unoccupied property are set out in subsection (3).
Earlier to-day we were told that for administrative convenience it is not really worthwhile doing certain things like statistical studies on certain aspects of the matter or possibly equalising the land available to a house that would benefit from the abolition of rates on domestic dwellings. Yet clearly we have here an instance where each local authority is going to be subjected to a detailed scrutiny by some official in the Department of the Environment to calculate the amount of refund that they would get by virtue of those properties that would have been vacant during the year and which consequently would not have had to pay the full rates. I think I am right in reading it that way. That being the case, I cannot understand how the Minister is reconciling a plea of administrative inconvenience in one part of the process of this legislation with his acceptance that there is going to be an administrative inconvenience in this instance, because obviously it must take some time for the Department to administer this particular section. Has any cost-benefit analysis been done as to what the benefit in terms of money that would be returned or saved to the local authority?
In practice they will be based on the level of refunds made in the years preceding domestic derating.
All I can say is if the Minister is seriously arguing that he is creating laws on that basis, then the financial constraints within which this legislation has been drafted must be even more severe than we realised on this side of the House as indeed must be the financial constraints within which the Minister is operating at the moment and within which he will have to operate in 1979. The Minister's party colleagues in Dublin Corporation, when I was a member of the City Council, were very loud and vociferous about the inequity of the clawback with regard to the sale of local authority houses to individual tenant purchasers. Is this not a clawback of a kind? How is the Minister really reconciling this? What kind of money is being saved as a percentage of the total amount of money that would be directly given to local authorities?
There is no clawback whatsoever.
Well there is in effect a clawback. Let us say, for argument's sake that the residential valuation base is 100 units; on a grant of £10 they were getting £1,000 and the average refund over the previous few years was less than that by 2 or 3 per cent. The Minister is then clawing back that amount of money in the sense that he is denying it to them in the first instance. What are the figures involved in this? How much money would it cost to delete this section on the basis of the experience of previous years?
It makes absolutely no difference because the local authority will either have never collected this money or they would have had to refund it. It makes no difference and in this year it has presented no difficulty whatsoever.
We are getting into the most extraordinary nonsensical situation with regard to the local government taxation base. Here is another example of it. The basis of a previous system of local taxation was that properties not being used by organisations or individuals and therefore not subject to the full rates were not obliged to pay their money. Now that the State will be paying for the funds in respect of a portion of the domestic dwellings we are going to have another distortion in the taxation base. This will have to be calculated. Unless we take the gross valuation of a local authority and reduce it by a percentage which would average the normal refund or the normal vacancy rate, or whatever description it is given within the Department, we are going to now have two figures.
So far as the calculation of revenue is concerned for any local authority, there is going to be a gross valuation for non-residential property and residential property. There will also be a net valuation, which will be the factor which will be the multiplier for whatever sum it is decided each year by the Government to allocate. I know there is no additional cost, because we are talking about money that a local authority never got in the past simply because people did not claim it. The Olympia Theatre was involved in this and so I am somewhat familiar with the procedure and the processing of claims and so on. In this instance we are having another section put into the legislation that will introduce a permanent distortion in the tax base. The Minister could quite simply get over it in the first year by adjusting the percentage of increase that he would give to a local authority. He could say the tax base is 100 units but that normally the effective tax base is only 95 units because of this vacancy factor or this refund factor, so in this year the amount of money given will be based on that but it will be moved up to the full taxation base in the following year.
This is another piece of unnecessary complication. The laws of this country are becoming increasingly complex, increasingly requiring the skilled services of professionals to interpret what is going on. This legislation is a classic example of it. In section 5 we have the most complex proposals for conferring benefits on tenants, as we discussed at length. We now have another proposal the net effect of which is to permanently freeze the net valuation of the tax base of a local authority taking into account the normal vacancy rates that occurred in the property of that area. I do not see why it had to be done. The Minister had other alternatives to vary the amount of money that was to be allocated in the first place. We are not talking about any extra money. We are simply reducing one factor or leaving it stand. Either way the same amount of money will be paid out. My contention is that this is an unnecessary complication of the law of the land and consequently is bad law on the grounds that we have too many complicated laws that simply add to the confusion of the ordinary person. We are only building up a job for people in Deputy Fitzpatrick's profession, the lawyers of this country, who get paid to interpret this kind of thing, when it is we who are responsible for putting it into the law in the first place.
It is not necessary. The Minister has discretion to adjust the amount of money he will allocate in any one year. In the period of transition from the original process of local government financing to this one an adjustment could have been made to take account of the gross and net valuation tax base. For the Minister to say we are simply continuing the old system is not adequate. The Minister is permanently building into this legislation, which does not really deal with the abolition of rates, new measures governing the system of local government finance of which the abolition of rates is only one part. We have an old complication permanently built into new legislation when the opportunity presents itself to the Minister to streamline it. I would contend, Sir, that, while you have little discretion in this matter, it does not necessarily imply an extra charge on the Exchequer. Here is an opportunity for a simplification of the law, but instead the Minister has seen fit to obscure it.
I do not know if the Deputy realises the impact of what he is putting forward. If this was not embodied in the Bill it would mean that the taxpayer would be paying in the total grant a sum of money for rates that would never have been collected by the local authority. That is exactly what the position would be if we excluded this provision. Is the Deputy serious when he suggests that that should be the case? It is the aggregate of the properties for each local authority with regard to the grant. It is very easy to identify those at local level. As the demand note goes out a lot of those are permanently vacant and are listed as vacant, dilapidated and so forth. There are all sorts of ways of listing properties which are easily identifiable. If we had not this provision, the taxpayer, through the medium of the grant going to local authorities, would be liable to pay a sum for rates which would never have been collected by that local authority.
That might well be the case if the taxpayer was paying it in the way the Minister is suggesting. I am simply trying to establish a clear and uncomplicated local government taxation base. The amount of money that any local authority will get from the State will be derived by the multiplication of two factors. The first of those is the percentage rate in the £ that the Government of the day will decide they can make available and that percentage figure is multiplied by the taxation base in each local authority. If one is increased and the other reduced or vice versa each of those components can still be varied to arrive at the same result. If that is the case why do we need to complicate it by adding in this provision? Why can we not say that the taxation base in any local authority is the sum total of the valuation of the property there and use it in absolute terms?
And include buildings that there would never have been rates for? There is a valuation on those buildings.
It will then be necessary to go to each local authority and list those. If the amount of money made available to each local authority is reduced and the taxation base is increased, they are being given the same amount of money. It will not cost the taxpayer any extra money but it will simplify the law. It is because of my concern with the simplification of the process that I am speaking on this and not with having every clerk going down to list all those properties that become vacant.
I also object to this because it freezes a particular state of dilapidation in every local authority. Cities and urban areas are not static. Some areas undergo periods of dereliction and dilapidation. That process is likely to continue and even increase in some areas rather than cease. The Minister is not even stating that each year there will be a net assessment of the amount of dilapidated property. He is saying that it is calculated on an average over the previous three years. It is not even an accurate assessment, on the Minister's admission, but simply an aggregate of what it was in the past.
How does that take into account areas like Dublin city and Cork where certain parts of those cities undergo periods of change, where the process of renewal and redevelopment coupled with an economic recession or a property recession can produce dereliction and vacant sites? If the Minister was to say that each year it would be worthwhile if local authorities established their active taxation base, that is those properties for which they could reasonably have got rates, and it is on that net figure that the multiplier would be applied, we would accept that. But he is not saying that. He is saying that the average net figure is the one that will be applied, so it does not take into account what the base is in any local authority.
There does not need to be any increased expenditure by the Exchequer. The Minister simply reduces the amount of money made available and multiplies it subsequently by a larger tax figure, which includes derelict buildings, many of which would have been derelict for a long time. The valuation is constant in terms of buildings which already exist and is only added to by new buildings in succeeding years. I may not have adequate experience to see all the pitfalls of that and I certainly do not have administrative experience to see them. As a lawmaker from this side of the House, whose only responsibility is making laws, it appears to me that it is certainly a cleaner, neater and more straightforward way of making laws. That is the only purpose somebody on this side of the House can have. It does not necessarily cost the Minister more money if he deletes the section, but it makes for neater and cleaner law.
If I delete the section it means that the taxpayer will be paying portion of that grant for rates on property which would never have been collected, as I already said. The aggregate for each local authority will be agreed with each local authority each year. They will be consulted each year. This is the first year we have had it and to date there has been no difficulty in reaching agreement with local authorities.
The Deputy mentioned Dublin and Cork, where more buildings might become derelict. In the ordinary course of events, even if we never had derating they should have been put in the revision list and the valuation taken off or reduced drastically when they become derelict, which is the right of whoever is rated. Without this the taxpayer could find himself paying rates that the local authority would never have got on vacant or derelict buildings. It is necessary to have it.
The Minister has introduced another factor into this. He has now informed the House that each year there will be consultations between every rating authority and officials from his Department to establish the net amount of domestic properties. We are only talking about domestic properties, because industrial derelict buildings do not even enter into the picture.
We will always have consultation with local authorities.
I am trying to make the job of the Minister and that of his officials much easier. If we can cut out administrative nonsense, such as that which is implicit in this Bill, so that the Minister and his officials can get on with the job of reform and renewal like the local government reform they have had to postpone——
Will the Deputy tell me how valuations on vacant buildings can be cut out where local authorities would never have got rates without making provision for this in the Bill?
The Minister is suggesting that taxpayers will specifically be making contributions to local authorities on the basis of property, on some of which rates would never have been collected before. While that is factually correct in a legalistic sense, it distorts the picture. As far as the taxpayers are concerned local authorities will get, every two months, cheques from the Minister's Department representing the total amounts they are due. This is calculated by a taxation base. I do not believe we are likely to agree on this, but it seems to me that in a Department which are way behind in their declared legislative reform programme, in a Department which are too busy to do the studies of statistical details relating to either flat dwellers and other areas, the Minister is telling me——
That was the fault of the Coalition Government who did not hold the census.
Deputy Quinn on the section.
It is not. I am trying to suggest that additional administrative work is being generated by this section. The Minister has admitted this.
I have not admitted that.
The Minister said that each year his officials will consult with representatives of local authorities specifically to establish——
I said it will be part of the discussions my officials will have with each local authority before payment of the grant.
Our job with regard to this section would be made much easier if we had some understanding of the real way in which the rates for each local authority will be calculated. This is critical. I will be quite happy if the Minister is saying that in establishing the amount of money to be paid to each local authority he will discuss with each authority their net and gross taxation base and their overall requirements and that there would be a differential rate based on the needs of each local authority. I shudder to think of the amount of time that would take. Being a member of a local authority, I know what is involved in an estimates committee meeting. Is the Minister suggesting that the discussion will be carried on between local authorities and officials of the Department on a parallel basis?
I did not suggest that.
There is a difficulty here. The Minister's objection to deleting this section is that the taxpayer would be paying extra money on the basis of valuations which could not, if there were no change in the law, generate the rate for the local authority. The other component is the percentage increase and by varying this the amount of money will remain the same. A block grant will be given to the local authority and the valuations are simply a device for calculating the revenue for a local authority.
I maintain my claim that this will add an unnecessary complication to the law and put an administrative burden on a Department which, as the Minister has twice admitted today, have not the time, resources or inclination to do certain specific studies in relation to flatdwelling statistics which would not normally have been part of the census.
In regard to derating, I am standing in the shoes of the ratepayer where domestic property is concerned and the other headings which have been derated.
The Minister has a little more authority.
It is proper that the law should at least make it clear that the taxpayer will not be made liable for something which the ratepayer would never have had to pay anyway. The law should make this crystal clear and this is exactly what the subsection is doing.
The Minister is not standing in the shoes of the ratepayer to the extent that the ratepayers were not subject to a flat rate throughout the country, to which they will now be subject when this legislation becomes law. Ratepayers in each local authority area had direct access to their public representatives.
They still have.
But those representatives have no function in effectively determining what the rate will be in their local authority area.
They have complete control and 16 local authorities did not need the 11 per cent last year.
They had savings.
(Cavan-Monaghan): They were collecting arrears of rates and were instructed to collect them ruthlessly.
An Leas-Ceann Comhairle
Deputy Quinn is in possession.
The defence of the Minister in refusing to consider deleting this section is not altogether straightforward. He has been factually and legalistically correct in saying that property which was derelict will now generate revenue for the local authority, which it would not have done in the past. I accept that, but the total transformation of local government finance is such that each local authority will now receive a direct grant from the State through the Minister for the Environment. This section proposes to establish the entitlement to that grant.
They get their money a lot quicker than they did under the rating system. Overdrafts are lower and there is less interest to pay. Local authorities have complete control over the distribution of that money.
Question put and declared carried.
SECTION 10.
I move amendment No. 41:
In page 15, subsection (2) (a), line 41, after "rates", to insert "in the pound".
Progress reported; Committee to sit again.