Vol. 438 No. 5
25 Ms Keogh asked the Minister for the Environment his views on whether the distribution of the rate support grant should be based on an assessment of local authorities' spending needs and taxable resources; the proposals, if any, he has to make a gradual transition to a new equalisation system; and if he will make a statement on the matter.
27 Mr. O'Donoghue asked the Minister for the Environment the criteria used in determining the rate support grants for local authorities.
100 Mr. Deenihan asked the Minister for the Environment if he intends to review the rates support grant scheme for county councils for 1995 in view of the adverse effects suffered by counties such as Kerry under the present scheme; and if he will make a statement on the matter.
I propose to take Questions Nos. 25, 27 and 100 together.
I have already notified local authorities of their rate support grant allocations for the current year; these were determined on the basis that each authority's allocation would be increased by 2.5 per cent. A report by the Institute of Fiscal Studies was commissioned in 1991 specifically to look into the distribution of the rate support grant. It outlined equalisation models, based on various assumptions, in an effort to make it possible to compare the effects of a range of possible indicators for the distribution of the grant by reference to needs and resources. The report is based on the use of statistical techniques and their application to selected criteria.
A number of grant distribution options were examined in the study, and each of these suggests significant redistribution of rate support grant between authorities — some would stand to gain and others to lose significantly. Most local authorities made observations on the report's findings, some favouring implementation of the recommendations in one form or another, and others wholly opposing them. This polarisation of views is directly related to the predicted outcome of a redistribution of grant allocations on the basis of the options outlined in the report.
Many authorities suggested that the report's findings, which were based on analysis of the 1991 spending estimates only, needed to be tested on more than one year's spending to establish more conclusive indications of the extent of redistribution that might arise. I accepted this view and asked my Department to undertake a further analysis of the distribution criteria by reference to the 1993 local authority estimates. The results of this further analysis suggest that the distribution criteria outlined in the report would lead to relatively unstable grant allocations from year to year, a factor which could give rise to further difficulty.
The present system of rate support grant allocations has evolved over a period of some 15 years. Adjustments of the system made over the years have generally been financially neutral for the local authorities. Where increased overall allocations for the grant have been made available in the Estimates for a particular year, the additional funds have generally been allocated on a pro-rata basis among the local authorities.
Any proposals for a new distribution system must take realistic account of the present allocations so as to ensure that no local authority suffers unnecessarily. Any new basis of allocation must also take account of the particular difficulties experienced by some local authorities. Where imbalances may exist under existing arrangements, they did not come about overnight and it would be imprudent to try to solve them otherwise than on a phased basis, possibly over a number of years. For these and other reasons, I am convinced that redistribution of the kind indicated by the IFS findings is inappropriate in present circumstances. I intend, however, to review the position on the basis of the most up-to-date information available to my Department before the 1995 allocations come to be made.
Does the Minister accept that as valuations are based on the 1977 figures that certain counties which have higher valuations now are discriminated against? Does the Minister agree that there is a need for a radical overhaul of the system of distribution because of the anomalies not the least of which is that counties which enjoy a higher take in commercial rates are getting a larger rate support grant than other counties? In turn this has led to the inability of certain counties with higher mileage of county road to invest in them compared with counties which have lesser miles of county road. Would he further agree that the present system of distribution means, in effect, that poorer counties are becoming poorer and richer counties are getting richer and that this is entirely inequitable?
I certainly agree with Deputy O'Donoghue that there are anomalies in the system. I do not think it is true to say that the richer counties are getting richer and the poorer counties are getting poorer.
One of the difficulties I faced when I examined this report in the context of its application was that there were both winners and losers and, unfortunately for me, some of the losers were already in financial difficulty. A further imbalance would make it even more difficult for those local authorities to survive. I have, however, taken steps to deal with some of the problems outlined by the Deputy. There are other ways open to me, as distinct from the rate support grant to deal with those imbalances and I am considering them.
Does the Minister accept that the report of the Institute of Fiscal Studies on the State funding of local authorities shows that the system that exists in this country is highly inequitable, that under this ad hoc system arbitrary decisions are made by him and his Department on an annual basis and that we have, in fact, the most inequitable method in Europe for funding local authorities? Does the Minister agree that this is intolerable and cannot be allowed to continue, particularly now that the evidence is available following this extensive expert study of our local authority system and the way it is funded by central government? The Minister has to accept that the present system — where no obvious criteria are applied but we have merely percentage increases each year — is unsatisfactory and unfair to some local authorities and over advantageous to others.
Brevity, please, Deputy.
In the interests of equity the Minister should put in place a better system of allocating State funds to local authorities.
I have already indicated that there are anomalies in the present system. However, I do not believe that these can be rectified, as the Deputy suggests, by implementing the report of the Institute of Fiscal Studies, as this would have serious consequences for at least five local authorities.
That is the way it is done in Europe.
Ways other than the rate support grant are open to me to rectify some of these anomalies in finding an ultimate solution which would be more equitable for all local authorities.
Even though the time available for questions is exhausted, I will allow Deputy Doyle a final supplementary.
Now that he has told us the local authorities have been notified of their block grant for this year, can the Minister tell us what criteria he intends to use in disbursing the £15 million from the tax amnesty proceeds announced in the budget for maintenance works on non-national and county roads? Will he please consider the possibility of using more of the £250 million raised by way of the tax amnesty to fill in the potholes and carry out resurfacing work on non-national roads to allow the compliant tax-payer to benefit from the tax amnesty?
If the Deputy had got her way we would not have the money raised by way of the tax amnesty.
The Minister should answer the question without giving us a lecture.
The money allocated from the proceeds of the tax amnesty on foot of a Government decision in the face of extreme opposition from Members across the floor will be used in an appropriate way.
Can you spare us from this sanctimonious preaching, a Leas-Cheann Comhairle?
I have gained as much as I can for roads, unless the Deputies opposite want to table a motion to prevent money being spent on health.
I want the money to be spent on county roads so that compliant taxpayers can benefit.
The Minister is worse than a bishop.
That concludes questions for today.
