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Dáil Éireann debate -
Thursday, 21 Apr 1983

Vol. 341 No. 8

Local Government (Financial Provisions) Bill, 1983-Second and Subsequent Stages .

: I move: "That the Bill be now read a Second Time".

This Bill is a technical one. Its purpose is to clarify the law in relation to the determination and making of rates by local authorities and to ensure the validity of rates determined or made in recent years. Perhaps Deputies would bear with me while I explain the background and details of the Bill.

Local authorities have raised questions recently about the timescale within which local authorities must make the rate. Section 29 of the Local Government Act, 1946, requires that a rate be made "either immediately prior to or at the beginning of each local financial year". A later enactment—the City and County Management (Amendment) Act, 1955 — reinforced this by requiring local authorities to prepare estimates prior to the beginning of the year to which they relate.

The derating of domestic dwellings and certain other property in 1978 created a different situation. Deputies will be aware that the Local Government (Financial Provisions) Act of that year gave a power of direction to the Minister for the Environment in regard to the level of rate poundage increases. The local authority estimates cycle therefore had to await decisions on national budgetary measures which were generally not made until the beginning of the calendar year and, in the exceptional circumstances of this year and last, until well into the year. The 1978 Act recognised this problem and purported to deal with it. Section 14 of that Act provided that a local authority could prepare an estimate in the financial year to which the estimate relates notwithstanding the contrary provisions of the 1955 Act. The 1978 Act went further. It allowed local authorities to spend up to one-half of the previous year's budget pending the adoption of the estimate and rate. The 1978 Act, therefore, clearly envisaged and provided for the estimates cycle taking place in the year to which the estimate relates. Moreover, local authorities must prepare their estimates in a period prescribed by the Minister by order. Ministerial orders in recent years have set estimates periods which have ended as late as 15 May. The preparation of estimates is an essential prelude to the making of the rate. Nevertheless, local authorities have asked that the law be clarified as regards consistency in the provisions relating to the preparation of estimates and the making of rates.

Part of the urgency in relation to the Bill arises from the fact that local authorities are already in the process of determining and making the rates for this year and it is desirable that the law be clarified urgently.

I should say that I would prefer that local authorities should be allowed to prepare estimates and make rates much earlier than in recent years — preferably before the commencement of the financial year. This makes for better budgetary planning and earlier flow of rates and other revenues. This Government have as an objective the bringing forward of the national estimates cycle and this will facilitate the setting of earlier estimates cycles for local authorities. The timing of the two most recent general elections has meant that this year and last the estimates cycles have been much later than one would have wished for. The main purpose of the Bill is to deal with that situation and to remove any doubt about the validity of the rates for those years. It will not in any way hinder the adoption of an earlier cycle for further years.

I commend the Bill to the House.

: We are prepared to accept this Bill without any divisions. We recognise that if legitimate doubts exist there is need to remove them as soon as possible. I understand the Department's attention was drawn to these doubts by the courts and that there is grave concern at any delay in implementing the provisions of the Bill which, as the Minister said, is designed to dispel doubts which may exist.

It would have serious consequences for local authorities if a case could be proved that rates made under the 1978 Act were not legally payable due to the technicality which the Minister has outlined. As the House will recall, the 1978 Act was introduced by a Fianna Fáil Government and we fully support that Act, the principle feature of which was to remove the obligation to pay domestic rates.

Section 14 of the 1978 Act overrides the 1955 Act, but if doubts have been expressed as to whether it also overrides the 1946 Act then we readily consent to this Bill which is designed to remove those doubts.

I do not intend to delay the House much longer but I would like to take this opportunity to ask the Minister to explain some procedural matters. It would be helpful if he could inform the House of the time scale for the adoption and making of rates. I would like him to give an assurance that section 1 of this Bill will not result in a local authority being able to postpone indefinitely the adoption of estimates and the consequent striking of the rate. Section 1 states that the power of a local authority to determine and make a rate shall be validly and effectually exercisable at any time in the local financial year to which the rate relates. That leaves the matter very open. Any time could mean the autumn or even up a very broad scope which is contrary to the principle which the Minister enunciated in his statement that he wishes to have local authority estimates prepared at a much earlier time. We all agree it would be preferable if the estimates could be prepared before the start of the financial year and we recognise the difficulties which have arisen in recent years because of the dates when general elections were held and the effect that had on Departmental Estimates.

I would also like the Minister to clarify the position of local authorities who may refuse to impose what they consider to be penal charges which are now being reccommended by county managers. Of course, these recommendations are being made by the managers at the behest of the Minister for the Environment. Cork Corporation have already refused to accept the charges proposed by the manager there. Limerick Corporation are in a similar position. Many local authorities have not yet got to the stage where they are obliged to make decisions on the estimates being brought before them. I would like the Minister to clarify whether, in present circumstances, a county manager can threaten the members of his local authority that they can be dissolved by ministerial order if they do not comply with the charges which he is suggesting. I would like the Minister to spend some time on that as I do not believe the manager has the power to impose such charges at present, certainly in regard to charges for the supply of water in urban areas.

The Minister informed me this week in reply to a parliamentary question that no power exists under which local authorities could charge for the supply of water to households in the urban authority area although we know that county councils have been charging in most cases up to now for that service. Why is it necessary to impose new charges? Surely the Minister has an obligation under existing legislation to recoup local authorities fully for the domestic rate relief that they are required to give. The last Coalition Government in their 1982 Estimates left the local authorities short by about £12 million of the amount necessary to recoup fully the rate reliefs which they were required to give. In reply to Question No. 673 of 19 April 1983 the Minister stated that the allocation to local authorities in 1983 is adequate for their continuation of normal services. Why, therefore, if no shortfall exists in these allocations, is it necessary for local authorities to introduce new charges in 1983? Everybody is well aware of the heavy impositions on the community through PAYE, PRSI, VAT and many other forms of charges which the Government have sought to introduce. We have seen the community's reaction already on the streets to these high levels of taxation. The Minister must be aware that the charges which he is imposing will be very strenuously resisted at local authority level. It is a matter, of course, for each local authority to decide on the financing of the services within their area, taking into account the State subvention and the obligation on the Minister to recoup local authorities the domestic rate reliefs and also the agricultural rate.

The House will recognise that there is a temptation to open this whole area but I expect we will have an opportunity to do that when the Minister introduces his promised Bill in regard to extending the powers of local authorities.

: In reply to Deputy Molloy's request in relation to the striking of the rate, I assure the Deputy that local authorities will wish to strike a rate as early as possible because this will result in a better and earlier cash flow for the local authorities. This Bill deals mainly with the exceptional circumstances of the past two years where there have been delays in striking rates. In relation to the making of the rate, the normal procedure is that the estimate is prepared by the manager to be adopted at the estimates' meeting of the council. This meeting must be held within a period prescribed by ministerial order but it can be adjourned to any date which is within 21 days of the date of the initial meeting. this means that the rate will have been determined either within the period prescribed by the Minister or at least 21 days after the end of that period. I do not see any possibility of the striking of the rates being adjourned ad infinitum. As it is in the interests of councils and local authorities to strike a rate at the earliest possible date, I am sure this will be achieved.

Deputy Molloy went into the wider area of local charges for the provision of services. I do not intend to go into this in great detail today because we will be repeating the discussion within a matter of weeks as I hope to have a Bill before the House at a very early date giving wider powers to local authorities in relation to their raising of charges. I am somewhat amazed to hear Deputy Molloy questioning the proposed legislation to allow for charges and I would like to restate the situation for his benefit——

: I questioned the level of charges and why it is necessary to introduce any further charges at this stage.

: It was necessary to introduce charges because of the shortfall in the provision of the Estimates which were made by the outgoing Government last November. The Deputy is aware that a sum of £97 million was not provided for in the Department of the Environment and it was necessary, in the course of this budget, to provide an extra £31 million. The normal charges which would be increased in the annual cycle will be raised as usual and the power and discretion for urban authorities to charge for water will be in the new Bill which will be before the House in a matter of weeks. In the course of the introduction of that Bill, we will have a wider opportunity to discuss the whole question of local authority finances and the long-term proposals which I have in mind for those.

Question put and agreed to.
Bill put through Committee, reported without amendment, and passed.

: I appreciate the co-operation of all Deputies in this matter.