Dáil Éireann debate -
Wednesday, 22 Jun 1983

Vol. 343 No. 11

Local Government (Financial Provisions) (No. 2) Bill, 1983: Second Stage (Resumed).

Minister of State at the Department of the Environment (Mr. Quinn)

A number of Opposition speakers did their utmost during the debate to misrepresent both their own position and the effects of this

Bill. Deputy Keating spelled out in detail the recorded intentions of the Fianna Fáil Government to provide local authorities with general powers to make charges for services. It cannot be questioned that this was the intention or that work was in hand in the Department on such legislation on the change of Government. The facts and stated intentions give the lie completely to the shallow posturings of Deputy Flynn and others against the Bill.

The need for a measure of this kind was recognised both by the previous Government and by this Government as a means of assisting the local authorities out of the serious financial position in which they found themselves. This situation came about because of the failure to provide and maintain an adequate alternative system of income for local authorities to make up for the abolition of domestic rates. That failure on the part of Fianna Fáil led to a situation in which the local authorities' financial position on current account——

Mr. Molloy

If the Minister is reading from the script we would be obliged if we could have a copy.

Mr. Quinn

I would be happy to facilitate the Deputy but I am reading from notes we prepared in relation to the various comments made by Deputies and because I am anxious to address myself to all the points made I will read from notes if that is acceptable.

Mr. Wilson

There is a fine distinction between notes and a speech.

Mr. Quinn

The failure on the part of the Fianna Fáil Government has led——

Mr. Molloy

Set the mood for the day.

Mr. Wilson

People were complaining about rates.

Mr. Tunney

Could the Minister not say that without notes?

An Ceann Comhairle

We should use the time available to the best advantage.

Mr. Quinn

It could be put to music.

Mr. Tunney

The Minister is a great man to look for speeches himself. It is very unfair of the Minister not to circulate his speech.

Mr. Quinn

I am prepared to co-operate with the House and get through a considerable volume of business. I would like to proceed. The failure on the part of the Fianna Fáil Government, as every member of a local authority in the House knows, since 1977-78 when rates were abolished resulted in a position where local authorities had a credit balance of £7 million. At the end of 1982 there was a deficit of £43 million. That trend had to be arrested. The Fianna Fáil Estimate proposals for 1983 made no provision for any increase for rate support grants for local authorities this year. If that situation had been allowed to stand — many Deputies on the opposite side were anxious to defend it — over £50 million would now have to be raised through the system of new charges which this legislation will provide for instead of the £20 million it is envisaged will be raised by virtue of this legislation being enacted.

This Government took immediate steps to provide an additional £31.5 million for the rate grants and in consequence the level of charges under this Bill is much less than would be the case if the policy and approach of the Opposition had been followed through. This is the main background and we can have a more constructive and relevant debate on the Bill if the Opposition will face it.

Deputy Mac Giolla seemed to misunderstand this Bill in a fundamental way. He implied that free water was guaranteed by the legislation of 1878 and 1962 and that this right was now being taken away. The Public Health (Ireland) Act, 1878, made provision for a separate rate to be levied on premises supplied with water. This was substituted for by a provision in the 1962 Act where water charges could be made except for domestic use in urban areas. The logic of this exception was that in urban areas the town or municipal rate included an element in respect of water supply. That was not the case in the counties because many houses there were not serviced by public water supply. A water charge was allowed for those domestic premises outside towns which were so supplied.

As Deputies will be aware, since most of the built-up town areas extend beyond the functional boundaries to the tune of approximately 30 per cent, there is an anomaly that people living in the town but in the functional area of the county council could be charged a water rate while their next door neighbour living just inside the boundary would not be charged a water rate. That anomaly had to be rectified. The abolition of domestic rates has resulted in a position where domestic water users in towns make no payment for it while those in the counties are liable for water charges. Bearing in mind that a large proportion of towns people, especially those living in the suburbs of the large and expanding towns, are in fact living in county council jurisdictions, this is a highly anomalous situation. I am sure Deputy Mac Giolla and all other Members agree that this should be rectified. This Bill enables that to be done.

The Deputy suggested that water should be as free as air. It is free if one is not taking it through a pipe system. That would be nice but the reality of piped water, which is what we are talking about, is that the laying of new and extended water supplies is a heavy imposition on public funds. The capital provision this year alone for sanitary services is £103.6 million. I understand that the daily consumption of water in the Dublin area is 18 million gallons. That does not come free in anybody's book and, therefore, it must be paid for from the public purse. It is not unreasonable to request people to make a modest contribution towards the massive costs involved in paying for the development and maintenance of the system and the treatment of the water to keep it clear and pure.

It was suggested that the Tánaiste, as Minister for the Environment, would soon be directing local authorities as to what charges are to be levied, that somehow the Department of the Environment would fix the level of charges and direct local authorities to comply. This is completely false. The Minister for the Environment will have no power to do this under this Bill. Those who criticise imagined attacks on local authority powers should get their facts right. Decisions on charges, the amount of charges and the relating of charges to circumstances and the provision for the implementation of the hardship clause or waiver scheme are all matters which this Bill will leave entirely to the discretion of the local authority.

Mr. Molloy

The elected members?

Mr. Quinn

The local authority. The local authority comprises the elected members and the manager. I will deal with the point that Deputy Molloy is raising. I am aware of the concern, it is a valid concern but I will deal with it.

A number of Deputies expressed concern about trends which they see as threatening the powers and importance of local authorities in the life of the community. I am fully committed to doing all that I can, and indeed the Minister and this administration are fully committed to doing all that we can, to promote and enhance the standing of local authorities and to give them as much independence as can possibly be done. There are, of course, limits particularly in a situation in which the local authorities are so heavily dependent on the Exchequer for funding. There cannot be a blank cheque approach. That was never possible and it is completely ruled out now by the very difficult economic circumstances in which we find ourselves. From that point of view I see this Bill not as undermining the local authority position, but as introducing the possibility of greater financial and practical independence being achieved by them. A point made by Deputy Bruton, in a very interesting contribution on Second Stage, is very relevant here. This legislation is not just something which provides for the raising of funds. The new powers to impose charges will also open up new scope for more effective management and cost-effective operations in the provision and operation of local services. On the wider plane, I accept that the whole question of the structure and operation of local authorities is overdue for examination. This is a matter which has been raised and discussed on and off over the years but, in effect, nothing has come from all of it. As the Minister said in the course of the discussion on his Department's Estimate, he intends to review this entire situation and already steps have been taken to provide for effective reform of local government during the course of this Government's lifetime. This obviously will depend on the co-operation of the House but I can give on my own behalf an assurance that what the Minister said in relation to reviewing the structures and operations of local Government has begun with the serious intent of achieving the sort of progress we are committed to.

I agree with the view put forward by a number of speakers that there is a need to review fully the whole question of the future financing of the local government system. The Minister referred to it in his Estimate speech and when he was introducing this Bill. At present an examination is being carried out into the workings of the existing finance system and the options which are available for future financing taking into account the various needs of local authorities. They include the need to limit the Exchequer demand within manageable bounds, the need to ensure that local authorities will have adequate funds to carry out their responsibilities, the need to bring about a situation in which they will have a reasonable degree of financial independence. The review will cover the question of the extent to which local authorities should or must look to local charges for future income and, related to that, whether the extended system of charges provided for in this Bill will need to be maintained. It also covers a number of other points raised in the debate including the question of the various statutory and other financial demands which are made on local authorities and whether these, or some of them, should be modified or removed. I am not suggesting, and it would be foolish to expect, that this examination will come up with easy answers or that local authority financing and spending can be freed somehow from the constraints that arise from the realities of the national economic situation. What we have to try to do is to devise a system which will bring greater stability into local authority financing while going as far as possible to meet the various criteria to which I have referred. In the meantime, the Minister has secured agreement on a decision by which the Office of Public Works statutory demand for the current year will be limited now to 5 per cent compared with a 46 per cent increase which was being sought by the Office of Public Works. This is a substantial modification involving a saving of over £1.5 million from local authorities in this year alone.

Confronted with the extreme situation which I have described, this Government's first step was to inject £31.5 million into the local authorities current accounts this year reducing the total gap from £96.5 million to £65 million. The next step that was necessary was to confer a discretion on local authorities in the amount that they would ask commercial and industrial ratepayers to contribute through a rate increase. This was the first time since 1977-78 that local authorities had the discretion to decide what the commercial and industrial rate would be in their local authorities, the discretion having been taken away from them with the abolition of domestic rates in 1977. This Bill widens the discretion of local authorities to apply charges for local services and enables them to remedy the anomaly in the existing provisions as they affect, for example, the domestic water users in towns and outside them. I believe these are necessary and important steps and that collectively they will make a significant contribution towards maintaining the solvency of the local authority financial position while the examination of the future system proceeds.

I want to turn to the functions under the Bill and this brings us to what is the main point of contention in relation to the Bill, namely whether the local authority powers relating to charges should rest with the elected council members or with the managers as an executive responsibility. The Minister explained the proposals and the logic of the proposals in his opening statement. A certain amount of confusion, and I accept it as bona fide confusion, has been brought about by statements made in the course of the debate. Indeed the creation of confusion was possibly the objective of some, not all, of the contributions but in a spirit of co-operation let me again try to explain our approach to this matter.

The amount of money to be raised by a local authority in charges is governed by the estimate which is adopted by the authority and the adoption of the estimate is exclusively the function of the elected members. It is a reserved function. The total amount of money to be raised by that local authority is done by way of the estimate and that estimate has to be voted upon, as a reserved function, by local authority members. By the exercise of this function elected members can determine the policy which the manager will have to follow in regard to the charges and the limits within which he will have to work. They can set the outside amount of money that has to be raised by recourse to charges. The implementation of that policy within the limits of the estimates provision will be an executive function of the manager. It has been represented that this means a shift in responsibility from the elected council to the manager. In our view that is simply not the case. Existing charges, including the charges for water in county areas, which are operated by virtually all county councils with the exception of County Louth, are fixed by the manager within the estimates limitation. Local authority members establish the amount that has to be collected and it is the manager who suggests the amount of money that has to be collected by way of local rate. Those are the traditional lines of the division of function within the local authority. As far as I know, the situation has not given rise to serious difficulties for members over the years. Since we came into office we have not had any complaints about the way in which it works. Another suggestion is that the estimates control is not sufficient, that members hands are tied by what managers put before them at estimates time. I do not accept this as so nor that it should be so. As a former member of Dublin Corporation I know that was not the case. Members have a wide discretion under existing local government legislation to vary the estimates, so long as the discharge of responsibilities is provided for and the balance maintained between income and spending. But if councils want a greater influence in the preparation of estimates there is a remedy in their own hands. Some of the larger local authorities operate an estimates committees procedure whereby they study the draft estimates and query with the managers and the officials why certain moneys are required and what revenue is to be raised in certain areas. However, not all the councils do that and they are simply presented at the end of the day in full council with the estimates, having little or no chance at that stage to alter the breakdown of moneys.

The law provides for the appointment of an estimates committee of the local authority. If this is established in sufficient time within the local authority there is considerable discretion to local members to direct and suggest that the profile, the structure and the allocation of moneys within the estimates be varied. This is a power that rests with local authority members and it will not be interfered with in any way by this legislation.

Mr. Fitzsimons

I wonder if it would be welcomed by county managers.

Mr. Quinn

Many county managers would be more than happy to welcome constructive co-operation between themselves and the elected members. Councillors have other ways also of monitoring how the manager performs his executive functions. Under existing law, the council may require by resolution, to be informed in advance of the way an executive function is to be operated. They may use this power if they so wish to monitor how the manager intends to pursue the question of charges and waivers.

All in all we are satisfied that the existing law provides adequate powers to elected members to control the policy to be pursued in relation to charges. In other words, by way of resolution, a council may request the manager to come forward with the structure and the profile as to how, in this instance, he proposes to operate the water charges and as to what the system of waivers is to be because the system of waivers must vary as between one local authority and another, the needs in rural areas being different from those in urban areas and also some parts of rural Ireland being different in characteristics from others by virtue of the nature of the business engaged in and the kind of agricultural structure in the various areas.

It is regrettable that there has been so much stress on the legalities of the system. One of the strengths of our system compared with other systems of local government in Europe is that there is a high degree of co-operation and consultation between councils and managers. We expect that that co-operative spirit and practice will continue to govern relations between them in the implementation of the provisions of this Bill.

We were impressed by the weight of some of the contributions from both sides of the House and by the fact that Members come here with experience as members of local authorities. Therefore, we are prepared to accept that, if the co-operation and consultation between councils and managers which we have in mind does not materialise, if the views of the elected members should not be taken into account, or if other serious problems should arise for elected members from the operation of the scheme, we should be and would be then open to changing the system and to making it entirely a council function in respect of schemes of charges and of waivers.

In other words, if the traditional form of co-operation does not continue to operate satisfactorily, we will be prepared at the end of the day to transfer to elected members the entire responsibility for the total amounts and for the design of the waiver charges schemes.

Deputy Avril Doyle and others suggested that there may be a two-year life span for this legislation. The Minister has referred already to the fact that the principle of charges will be included in the general review of local authority financing which is being undertaken at the moment. To that extent this legislation must be regarded as an interim measure. The only point at issue in relation to the concern expressed by various Deputies was the question of a split between executive and managerial functions. In the legislation that this House has passed we have power to enable the Minister by way of order to transfer the functions of making the charges, of setting the levels and of the design of waiver schemes from an executive to a reserve function.

The Minister is prepared further to undertake to examine the operation of the system provided for in the Bill within two years with reference to this area of the balance of power and how it works out and to make whatever changes are found to be justified. Under the County Management Acts we have the power to add by order to the list of reserved functions. I would say to the House and in particular to the senior members of the Opposition that we hope this compromise and undertaking will be accepted as indicating our concern to ensure that the rights of councillors as the elected representatives are properly brought to bear in the implementation of this legislation.

I should like to turn now to some of the points raised in the course of the debate. Deputy Molloy asked how it is proposed to distribute the domestic rate grant to local authorities. It is estimated that in all the £163.5 million provided for domestic rate grant in 1983 will allow local authorities to be compensated for rate increases of up to about 5½ per cent on current domestic valuations and not the 3 per cent which was mentioned by Deputy Molloy. The estimates we have given already to local authorities are calculated on the basis of 5½ per cent. The final payments which will be determined when claims are received from local authorities and audited may vary slightly up or down on the estimates.

If the provision of £138 million for domestic rate grant which was included in the Estimates published by Fianna Fáil had been allowed to stand, instead of an increase of 5½ per cent in rates on domestic properties local authorities would have suffered a rate reduction on domestic valuations of 11 per cent. These figures are published and the House may do its own calculations if it so wishes.

Deputy Molloy pointed out rightly that section 9 of the Bill is not specific as to the basis on which the grant will be distributed. This is deliberate. While I have described how the 1983 provision of £163.5 million is to be distributed, it may be that for future years, different or additional criteria may become relevant.

Deputies Bruton and Molony touched on this matter during their contributions. The question of the basis for central subvention to local authorities will be one of the matters considered in the review of local finances. Therefore, it is necessary to have a flexible provision in the Bill on this point. Deputy Molloy was critical also of what he read as a power of direction to be given to the Minister in section 9 (2) which would allow local authorities to be told what charges to introduce. I said earlier that we have rejected this notion. The power of direction contained in this subsection is a technical one which will affect only the format of local authority estimates. It has nothing to do with the level of charges. What I have said in relation to the operation of the charges stands.

Regarding the liability to pay charges, I assure Deputies Molloy, Doyle, Flynn and Mac Giolla that a charge can be made only under the terms of the Bill where a services is provided. Moreover, services provided on a general or community-wide basis, such as street cleaning, are outside the scope of this Bill. In the case of services provided to premises such as refuse collection, we are advised that if a service is available in respect of a premises then the charge is payable by the occupier, irrespective of whether or not the service is availed of. This is in reality the only way the system can work in the case of services which relate to premises.

Deputy Molloy also raised the question of collection of water charges in urban areas. Local authorities in these areas will have exactly the same powers of enforcement and collection as county councils have operated satisfactorily for years.

With regard to the payment of charges by institutions such as hospitals, such institutions are liable for water charges under the existing legislation, whether located in urban or non-urban areas.

A number of Deputies spoke about planning charges and particular reference was made to community centres and similar kinds of development. Deputy Walsh mentioned planning fees for community halls. Planning charges are a separate system and are not affected by this Bill. That said, we do intend to review the operation of the planning charges when we have gained sufficient experience of the operation of the system to enable us to evaluate it and we will take into account points that have been made here and elsewhere.

Deputy O'Leary suggested that there should be central guidelines from the Minister as to how the charges should be levied and collected. Deputy Molloy, on the other hand, said that his party is all for more discretion for local authorities and, on this point at least, I find myself in agreement with him. I believe that in matters of this kind as much discretion as possible should be left to be exercised locally. If the Department can help with advice without infringing this principle, they will of course be ready to do so. The principle stands that as much power and discretion as is possible within the constraints of operation will be conferred on local authorities under this administration.

Various Deputies referred to the administrative arrangements necessary to collect charges and implied that the cost of collection would be enormous. I am satisfied that this should not be the case. Local authorities already collect a variety of revenues for a wide range of services through rates, rents, water charges and so on. Various methods of collection have evolved to suit circumstances in different areas. It would be quite wrong to seek to impose a standard pattern when it comes to collecting charges under this Bill. I am sure that the best and most economic arrangement for this is something which the local authorities can best decide for themselves.

Deputy Flynn, in a colourful speech, saw the payment of charges by instalments leading to all kinds of difficulties. It will be for the local authorities to decide whether or not to have a system of instalments. It will be up to them to devise and operate a system and we have enough confidence in the elected members of local authorities and the managers to believe that the task will be well within their grasp.

I hope I have covered points raised by Deputies. Many of them are members of local authorities and are rightly concerned. We took some care in the preparation of notes for this speech but if there are some points which have not been properly clarified then the Minister will deal with them on Committee Stage. I commend the Bill to the House.

Mr. Wyse

The Minister did not reply to my query concerning the estimates meeting of Cork Corporation.

An Ceann Comhairle

Perhaps the Deputy could raise it on Committee Stage.

Mr. Wyse

The Minister promised to answer my question.

An Ceann Comhairle

The Deputy may ask a question but may not make a speech.

Mr. Wyse

During the estimates meeting of Cork Corporation the manager recommended the creation of a service charge for the collection of refuse and the supply of water. When a vote was taken the majority of members rejected this suggestion. Can the manager now override the members on this matter?

Mr. Quinn

The elected members of Cork Corporation decided to fix a certain commercial rate to be raised from industrial and commercial property. The balance of the money needed for the provision of services and employment must be raised by local charges. It was the executive function of the manager to decide the manner in which that money should be raised but the amount of money was determined in the first instance by the elected members. The manager put forward his proposal because this was an executive function. It appears from what Deputy Wyse is saying that the discretion of the members had been removed because they had left so much money to be raised by the manager through the imposition of charges. I will make inquiries and get more detailed information for the Deputy.

Question put and agreed to.