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Dáil Éireann debate -
Thursday, 1 Jun 1995

Vol. 453 No. 8

Ceisteanna — Questions. Oral Answers. - Local Authority Funding.

Noel Dempsey


1 Mr. Dempsey asked the Minister for the Environment the plans, if any, he has for the future funding of local authorities. [10108/95]

Bertie Ahern


11 Mr. B. Ahern asked the Minister for the Environment the Government's position with regard to service charges; and the changes, if any, he intends to introduce in the present funding of local authorities. [6838/95]

Peadar Clohessy


17 Mr. Clohessy asked the Minister for the Environment the interim arrangements, if any, he will be making to fund local authorities pending the outcome of the promised analysis of local government funding. [10031/95]

Eric J. Byrne


26 Mr. E. Byrne asked the Minister for the Environment the terms of reference of the study of local government financing due to commence shortly; when he expects to publish a White Paper incorporating the study's findings; and if he will make a statement on the matter. [9986/95]

Tom Moffatt


29 Dr. Moffatt asked the Minister for the Environment the terms of reference, if any, given to the outside group of consultants appointed to study the financing of local authorities; the time scale envisaged for the completion of the report; and if he will make a statement on the matter. [7252/95]

Mary Harney


30 Miss Harney asked the Minister for the Environment the interim arrangements, if any, his Department will be making to fund local authorities pending the outcome of the promised analysis of local government funding. [5059/95]

Martin Cullen


50 Mr. Cullen asked the Minister for the Environment the proposals, if any, he has to reintroduce rateable valuation for houses; or if he will introduce an alternative system. [6952/95]

Martin Cullen


58 Mr. Cullen asked the Minister for the Environment the plans, if any, he has to replace the current yield to local authorities of approximately £55 million from service charges by direct Exchequer funding. [9415/95]

Pat Upton


100 Dr. Upton asked the Minister for the Environment the cost of the study on the financing of local authorities. [9236/95]

I propose to take Questions Nos. 1, 11, 17, 26, 29, 30, 50, 58 and 100 together.

Last month, my Department sought proposals by way of public advertisement from suitably qualified consultants or other organisations for the carrying out of a major professional study on local government funding. The proposals received are now being examined by my Department and, following interviews this week, I expect to be able to make an early announcement as to the firm or organisation to which the commission will be given.

An outline of the proposed study, which is to be carried out in two stages, is contained in a Request for Proposals, copies of which are in the Oireachtas Library. This document outlines issues to be considered in the first stage of the study which should be completed towards the end of this year.

It is not possible to indicate the cost of the first stage until an appointment is made and terms are agreed. Because the work to be undertaken in the second stage will be dependent on the results of the first stage, the overall cost cannot be fully determined at this point.

The existing system of local authority funding is based on a range of Exchequer grants, combined with a variety of local income sources; including service charges. No basic change is envisaged in this system pending the outcome of the professional study.

The law allows all local authorities to decide, at their absolute discretion whether to levy charges for services provided by them and the level of such charges. This year's Finance Bill includes provision to implement the commitment in the policy agreement, A Government of Renewal, to introduce a special tax allowance for those who can show they have paid their service charges on time. In addition, it is my intention shortly to introduce legislation to delimit the power of local authorities to disconnect domestic water supplies where service charges are unpaid. Service charges will, of course, be further considered as part of the professional study on local authority funding.

Why did the Minister believe it was necessary to undertake what will probably be another costly survey of the options for local government financing? I think the Minister will agree the options are limited and obvious. It is a matter of having the political will to introduce one system or other and grasp the nettle. Why delay further in studying the various options when we all know they are basically grants of a specific or block nature, property tax, commercial rates, income tax, poll tax, land tax and charges for services and goods?

I must dissuade the Deputy from making a speech.

Why is there need for another study that will last until the end of this year, putting the matter on the long finger again?

There is a range of options available. I am anxious that, for the first time probably since the abolition of rates, local authority funding will be addressed in a realistic way. That is one of my two priorities in the Department. I am not trying to reinvent the wheel. In the special study I am commissioning I have asked that all existing data be compiled in a comprehensive way and that best practice internationally be considered so that realistic proposals can be made which at the end of the day will be the subject of discussions, particularly with local authority members. I want to build, in so far as possible, a consensus on the way forward for local authority funding. If we address this issue in a forthright way in the next two years we can have an effective and meaningful tier of local government. It is my fear that if we do not do so in the immediate future local government will continue to limp along ineffectively and we will still have a very centralised administration system. I am determined to make as much advance in as tight a timeframe as possible, consistent with making the right decision at the end of the day and building the broadest possible consensus.

I commend the Minister for his verbal commitment to address the problem and achieve the maximum consensus on it. The Government has embarked on what can only be described as a disastrous policy in terms of the sole means of financing of local authorities, namely, service charges. The Minister intends to introduce legislation forbidding councils from asking people to discharge a properly constituted and legal debt by removing the one means they have of doing so. In keeping with the Minister's commitment on local authority financing, will he consult with councillors before introducing the Bill? Otherwise, it will be a disaster.

Service charges are not the main source of funding for local authorities — some have no service charges — but it is at their absolute discretion whether such charges exist and the level of their existance. Rate support grants remain an essential part of funding and a number of other grants-in-aid given by my Department to local authorities are also significant. For instance, in local authority social housing the provision has increased to 18 per cent this year, on road improvements and maintenance the provision has been increased to 5 per cent, on library services there has been an increase of 128 per cent this year over last year, on fire service grants there has been an increase of 13 per cent and on swimming pools there has been an increase of 54 per cent. That indicates that in terms of existing structures I am committed to maintain local authorities. I accept that we need to look afresh at the whole funding mechanism for local authorities and that is why I am embarking on this process which, at the end of the day, will result in a White Paper and a debate on the issues.

On the comment about the Bill which I propose to introduce, it is right and fair that people should not be deprived of an essential service such as water unless a very strict regime is followed, and I am setting out such a regime. It will be open to local authorities to apply to the courts to have a supply cut off in cases where people are clearly in a position to pay but refuse to do so. In all other cases, it would be improper for a local authority to cut off precipitously such an important supply.

Not many councillors, even of the Minister's party, will agree there has been a 5 per cent increase in road maintenance grants; the reality is much different. Will the Minister consider introducing measures to improve the financial position of local authorities, to speed up payments from central Government to local authorities where they are due, to speed up payment from the National Roads Authority, ask the Department of Social Welfare to make up the amounts granted in waivers to local authorities, because that is its responsibility rather than that of local authorities, and to pay councils for agency services? Will he consider these issues in the interim because most councils are in serious financial difficulty?

There is merit in some of the points made by the Deputy. When Minister for Health I was most anxious that we enforce a measure whereby debts due by one State agency to another would be met. Part of the refunding package I put in place for health agencies and health boards made it a requirement, by regulation, that all invoiced accounts would be met within 30 days. It is part of Government policy to ensure that is done throughout the public service. I will do everything within my power to facilitate early payment of all moneys due by one agency to another.