Amendment No. 2 is an alternative to amendment No. 1 and both may be discussed together. Is that agreed? Agreed. The Deputy responsible for amendment No. 1 is not present and I deem it not moved. I call on Deputy Dempsey to proceed with amendment No. 2.
Local Government (Financial Provisions) Bill, 1997: Committee Stage.
Section 1 agreed to.
SECTION 2.
Amendment No. 1 not moved.
I move amendment No. 2:
In page 5, subsection (3), line 25, after "provision." to insert the following:
"Every regulation made by the Minister under this section shall be laid before each House of the Oireachtas as soon as may be after it is made and on confirmation by the Oireachtas it shall become effective immediately.".
On Second Stage, the Minister advised that the wording of this section, including subsections (2) and (3) has been used previously. However, given the extraordinary nature of the wording and given that I have been advised that it is possibly unconstitutional that a Minister should, by regulation, change an Act, perhaps the Minister would consider this amendment. It would make it incumbent upon a Minister introducing regulations under the section to lay them before the House for debate if necessary. The amendment is proposed in a constructive spirit of co-operation in an attempt to avoid doubts that may arise in the future. In view of this, will the Minister consider accepting the amendment?
I am concerned about the manner in which section 2(3) has been drafted. It is far too wide and vague. On reading it I wondered what snakes were lurking in the grass? What powers are being sought to be given to any Minister in the future? Are we being asked to grant powers to introduce a poll tax or a community tax? If so, we should say so and debate the matter in this House.
The use of the word "expedient" in page 5, line 19 terrifies me. It may be a Freudian slip but expediency is the hallmark of the water charges issue.
Water charges were introduced by the leader of Minister Howlin's party, the Tánaiste, Deputy Spring. However, in recent days the Minister condemned those charges at length. He pointed out all the flaws in the old system which he proposes to abolish. This is despite the fact that the leader of his party introduced this faulty system. The Minister's party has failed in political terms to demonstrate a principled approach to water or service charges. It has taken an expedient approach and the Bill is a further example of expediency. I am not prepared to give a range of unspecified powers to any Minister and this is why I seek the deletion of section 1. The Minister should draft a much more definite section and introduce such a provision on Report Stage. This would ensure that Members are aware of the scope and nature of the law.
I wish to be associated with the glowing tributes paid to the Ceann Comhairle earlier. Such sentiments are shared by all Members given the natural way in which the Ceann Comhairle fits his office.
Has an election been called?
Glowing tributes were being paid to the Ceann Comhairle when I arrived in the House.
There was a hiatus in our proceedings.
The tributes were merited. Deputy Dempsey's initial contribution to this debate heartened me greatly. I felt we could do constructive business on this legislation as we have on many Bills in the last two and a half years. Unfortunately, my confidence in that was quickly shattered by Deputy Quill's contribution and her reference to snakes in the grass.
The Deputy is greatly concerned about this section but I remind her of the genesis of this snake in the grass. The section is modelled word for word on section 52(3) of the Local Government Act, 1991, which was introduced by my most venerable predecessor, former Deputy Flynn, as Minister for the Environment. He was ably assisted by the then Minister of State at the Department, Deputy Harney. I felt it would be meritorious to repeat those phrases in this legislation.I do not ascribe to those authors the malevolence Deputy Quill attributes to the phrases.
This enabling provision is replicated in a number of local government Acts. The drafting of section 52(3) of the Local Government Act, 1991, by former Deputy Flynn and Deputy Harney was so good that it was replicated in section 3(7) of the Local Government (Dublin) Act, 1993, section 66 of the Local Government Act, 1994, and section 3(7) of the Harbours Act, 1996.
Do we have Flynnstone mark II?
Perhaps it is another Harneyism. This short-term enabling provision tidies up other complex legislation, if that is required. It has none of the connotations ascribed to it for obvious base motives by Deputy Quill. Lest it is already included in a Progressive Democrats press release, I emphasis that the Government will not introduce a poll tax.
That is not in a press release.
The purpose of the provision is to ensure that any difficulties which arise can be addressed. I gave careful consideration to Deputy Dempsey's amendment because I tabled many amendments when I was in Opposition which were affirmative resolutions rather than annulling provisions. I am persuaded, perhaps badly, that this type of short-term measure, which will not apply after two years, is a tidying up mechanism. Issues may arise which could not be confirmed positively by resolutions of the House. I ask the Deputy to withdraw his amendment.
I am disappointed that the Minister will not accept the amendment. I thought he might say that it would not be feasible to bring every set of regulations before the House. The Office of Public Works has been operating for the past 160 years. Everybody thought this venerable organisation had the power to build structures all over the place.
That is true.
However, a matter was taken to court and it was found, 160 years later, the Office of Public Works did not have that power and that all Garda barracks, schools and Government buildings were illegal structures. Regardless of how venerable the Minister's predecessors, former Deputy Flynn and Deputy Harney were, the notion that we have got away with it so far is not a good reason to refuse to take the amendment on board.
Legal advice is similar to two-handed economists who give different views by saying on the one hand and then on the other. However, my advice is that if actions taken by the Minister under regulations in this section, particularly if they relate to changing an existing Act, of the Oireachtas, are challenged, they could be deemed unconstitutional. I wish to put down that marker but I will withdraw the amendment.
Amendment, by leave, withdrawn.
Section 2 agreed to.
SECTION 3.
Amendments Nos. 3 and 4 are related and may be discussed together. Is that agreed? Agreed.
I move amendment No. 3:
In page 6, line 5, after "revenue" to insert "and shall be used specifically for the repair, upkeep, maintenance and provision of non-national roads".
The purpose of the amendment is to make matters convenient for me when I occupy the Minister's position in five or six weeks.
That is a double presumption. The Deputy is being cheeky in suggesting I will be out but he is being doubly cheeky by suggesting he will be in.
Fianna Fáil's policy is that motor taxation revenue should not be used for the provision of local government services. It is bad precedent and a bad principle to expect one sector of the community to pay for the provision of local government services. The amendment provides that the motor taxation revenue which the Minister proposes to use to finance local government will be used specifically for the repair, upkeep, maintenance and provision of county roads and that the funding of local authorities should come from general taxation. It is important that motorists see their motor tax being expended on roads, county roads in particular.Despite the efforts undertaken over the past three or four years, and acknowledging the Minister's role over the past two years, for the repair and upkeep of county roads, a lot remains to be done. I am convinced motorists would prefer to see their motor tax being used specifically for the upkeep of our roads rather than go into the maw of central government. I ask the Minister to accept my amendment, thereby ensuring the remainder of local authorities' funding will come from general taxation.
My amendment reads: "An annual percentage of the said car tax moneys shall be specifically designated for road related works..."
I support the principle of motor tax collected locally being expended locally, closely aligned with which is another, that moneys contributed by motorists be spent specifically on their needs. Irish motorists are among the most highly taxed and worst served within Europe in that the condition of our roads generally, particularly county ones, remains deplorable.
City roads in particular have emerging needs vis-à-vis upgrading traffic management, traffic lights and generally their repair and reinstatement, many of which are on the point of disintegration and must be addressed. Among the most frequent annual complaints to Bord Fáilte by overseas tourists are those in respect of the quality of our roads, road safety, directional and traffic signs. As I said on Second Stage, there is an unacceptably high annual level of fatal accidents on our roads.
All this underlines the need for a substantial, specific investment in upgrading and reinstatement of road surfaces, particularly in cities and secondary or county roads, in upgrading traffic management and the promotion of greater road safety. For those reasons I ask the Minister to take account of the spirit of my amendment — although I was sorely tempted I did not stipulate a precise percentage — and respond positively. Within the context of the present proposal — providing that moneys contributed by motorists are expended locally — the very least we can do is set aside a percentage of motor taxation to be spent specifically on projects that would yield better value and return to its contributors.
As a member of two local authorities which have just concluded the business of my constituency — county council and urban council — I respectfully suggest that the Minister should not accept this amendment. It runs counter to the whole spirit of what has been communicated by management to local authorities and the figures presented this year for the running of our constituency, roads, water schemes and other services.Ring-fencing a particular percentage of funding from road tax for a specific purpose runs counter to the principle of the Minister's proposals for refinancing local authorities, through a specific allocation of funding, with the relevant equalisation clause.
It should also be remembered that the National Roads Authority allocations this year are the largest ever, to the extent of allowing some of next year's work to be undertaken this year. The record must be set straight, emphasising that for the first time more funds are being made available for primary and county roads, agreed by local authorities at their estimates and other area roads meetings.
Acceptance of these amendments would throw all local authorities into turmoil. I hope the movers of these amendments realise that their acceptance would create an awful lot of disturbance within local authorities' financial structures.
I hope it is not out of order to suggest that the Minister should not accept them for those reasons.
I support section 3 for much the same reasons just enunciated by Deputy Ferris, if only on a constituency basis. This Bill is very welcome in the Wicklow-Kildare constituency to become the Wicklow-Carlow.
Anybody familiar with local authority financing will be aware that a county like Wicklow has a very small commercial and industrial rate base, where there is in progress probably one of the largest local authority and private housebuilding programmes ever which, while very welcome, carries attendant problems. It must be borne in mind that the rate support grant has been gradually dwindling while the cost of maintaining services has risen consistently because of the greater numbers of people living in the county. Its population has grown from just under 60,000 when I first became a Member of this House in 1969, to well in excess of 100,000 and has exerted a great deal of pressure on existing commercial and industrial ratepayers since the introduction of water rates. I have heard comments to the effect that I introduced water rates. I want to set the record straight and say I did not, I merely implemented an earlier decision. When introduced they amounted to approximately £30 and have now risen to over £180. This means that each time Wicklow County Council wishes to provide services in the county it has two options open to it, to increase the commercial or industrial rate or increase water charges. Indeed it is somewhat galling to live in a county that produces most of the water for the city of Dublin and discover that, particularly within the area for which Dublin Corporation has responsibility, people did not have to pay water rates simply because of the huge commercial and industrial rate base in the county. It would probably be true to say that the valuation of one hotel in this city would be commensurate with the total valuation of all hotels in County Wicklow, including urban areas.
While greater numbers of people opted to live in County Wicklow, they made no direct contribution to any local or urban authority in Arklow, Bray or Wicklow, where the demand for services is constantly increasing.
Since most of those who have settled in County Wicklow are motorists, the increased allocations for the maintenance of our roads, including the improvements in progress on the N11 and N81 and county ones, are indeed welcome. It is my hope and no doubt that of the Leas-Cheann Comhairle — who I hope will continue to share the constituency with me for many years to come — that the problems encountered by the relevant local authorities will be alleviated, enabling them to provide the requisite services without having to impose increased water charges on house-holders in the county. I would be the first to agree that when those charges were introduced they were regarded as supplementary income to existing rates. It was assumed that the rate support grant would keep pace with the amount of building taking place, but that did not happen. Much private building has been undertaken in the county and that has not been taken into account since 1985.
The Bill is very welcome. Will the Minister say how much money will be transferred to the four local authorities in the county? In the urban council in Wicklow the £270,000 at present collected in water charges will in future be collected from elsewhere. We will always have car tax. I remember fighting the 1977 election — perhaps my memory of what happened under various Governments is too long — but at that time car tax was reduced to £5 per car. It was thought that would continue, but that did not happen. The Government of that time made a mistake. Since then car tax has increased to such an extent that I paid £300 last week.
The abolition of car tax would be very foolish. The proposed system is fair because, for example, the number of people who own cars in my constituency is very large whereas the number of people paying rates is very small. The Bill will be fair to counties such as Wicklow where £1 in rates on commercial and industrial buildings brings in £35 — in Kildare the figure is about £60 and in Meath it is between those two amounts. Each year when the Estimates are considered, cutbacks are made in services, repair of local authority houses and the provision of services, including those required for new housing estates. I hope the Opposition does not interfere with this Bill, if the opportunity arises in the near future. I would not like to have to explain to the people of Wicklow the damage that could do to the constituency.
I noticed the Leas-Cheann Comhairle's enthusiasm to support Deputy Kavanagh's interjection. We are talking about the meat of the Bill, section 3, which provides that car tax, instead of being remitted to the Exchequer, will henceforth be retained by local authorities. That thoroughly progressive and good move is welcomed by most people interested in the protection and enhancement of local government, a point very ably made by Deputies Ferris and Kavanagh.Practitioners on the ground, and I am sure some Deputies opposite, know it is time to make this substantial change. This ring-fenced pool of money, instead of being sucked into the Exchequer, should be available to local government, without central Government telling it in a patronising way that the money may be spent only at its direction. The money should be available to local government to spend as it chooses. That is what empowering local government means, and for that reason I cannot accept the amendments which dictate to local government how the money should be spent.
The whole thrust of Better Local Government — Programme for Change has been the empowerment of local government, to free it from the diktat of central Government. I have listened very carefully and I have heard no alternative proposal. The Fianna Fáil spokesman, Deputy Dempsey, posited a return to the old system, calling it a designated share of central taxation.In other words, take your chances on a renamed rate support grant, with a ring-fenced percentage on income tax. People believe that they pay enough income tax, but if we are to give new resources to local government under Deputy Dempsey's proposal, we would have to increase income tax, of which nobody is in favour. I have heard nobody say that income tax should be increased to pay for local government, and I do not believe the Progressive Democrats, the erstwhile partners of Fianna Fáil, would support that view. We have carefully considered a ring-fenced, buoyant system of taxation. We know that car tax will be available and is increasing in volume terms — the volume of car ownership increases as we become more prosperous as a people.
With more pollution.
In that sense it is a green tax. The Progressive Democrats will be very selective in supporting the ESRI in its comments on water charges, but those comments are very thought-provoking and I would not dismiss out of hand even those parts that run counter to Government policy.
How will buoyancy be maintained? There will be either more cars or higher tax.
There will be buoyancy. Deputy Quill lives in a city, but for most people the car is the only way to get around, and I will not ban cars, as some Deputies would favour. Like Deputy Kavanagh, I represent a rural constituency where there are no public transport options, nor will there be for a very long time. We have a disparate population, with the most recent census showing 3.6 million people, and long may that position remain. We do not want everybody concentrated into a few urban areas. We want to allow local populations and rural life to thrive, and this Government has done more than its share to encourage that — my Department supported the road restoration fund.
Deputy Quill made a very good point about road safety, on which she has a very strong view, which I share, and she has expressed it more than once. I am horrified at the tragedies of last weekend when many young people in particular lost their lives. We have tried to address many different aspects of road safety. I commissioned a full assessment of road safety policy last year and, bringing together all the agencies involved in road safety, I launched the national road safety together campaign, which has been very successful in increasing public awareness. By the end of last year almost £2 million was spent by the NRA on a programme of safety measures at high accident locations on the national road network and a further £1 million has been spent this year on that programme.
A programme of radio and television advertising was launched by the National Safety Council, targeting particular areas of concern such as drink driving, excessive and inappropriate speeds, alerting people to the danger to elderly pedestrians and encouraging the wearing of seat belts. I have involved local authorities in a much more proactive way in road safety and the Garda in training.A comprehensive traffic signs manual was published to ensure a single signing system throughout the country — that has issued to every local authority. In co-operation with the Department of Justice, I introduced, by regulation, on-the-spot fines for speeding, offences which came into effect on 1 December last. Many of us will have seen unmarked Garda cars patrolling the main national routes checking for speed — one or two of our colleagues here discovered that in recent times. Between 1 December 1996 and 15 February 1997, the most recent figures available, 1,816 such fines were imposed under this provision, and that is welcome.
I know from speaking to people that if stopped once, especially by an unmarked police car, it impacts on them. We need to keep reviewing the matter. I am extremely worried at the number of young people who are killed in the middle of the night, particularly from motorcycles. Unfortunately I do not have an instant solution to this problem but I mention it because we will have to think out some basic way of dealing with it. We cannot allow the death toll accident toll to increase ever more. We have expended quite an amount of money on it but it must go beyond money. It may be that we will have to be draconian in issuing licences, particularly to those more vulnerable. It does not come under this Bill but it is the gist of what is encompassed in Deputy Quill's amendment, in which she has a particular interest.
What I have said runs counter to the heart of the programme of funding local government, to take funding away from them. I have no intention of doing that. I want to give them the freedom to spend this new buoyant source of funding. I want to have it enshrined in law and free from the control of my Department and the Department of Finance. This is the first time a ring fenced source of funding will be available to local authorities, 80 per cent of which they will keep. The other 20 per cent will come under the control of the equalisation council which I will establish and they will determine its expenditure. They will be able to use it not only for funding good local government but for taking particular initiatives on quality which resonates through the Local Government (Financial Provisions) Bill. For those reasons I am not prepared to accept the amendments.
I agree it is time to make a change in financing local government but I disagree fundamentally with the change the Minister is making. I do not believe the whole system of local government should be towed behind the family car. It is sending out all the wrong signals that local government services should be provided by the motorists. That is the perception. The Minister said he had heard no other proposal but he proceeded to talk about the Fianna Fáil proposals in relation to local government. It is obvious he heard of them but I am not sure he understands them fully and I will not go into any detail in explaining them to him.
Increasing income tax is not the solution.
The Minister does not understand them since he is talking about increasing income tax. The Minister has talked incessantly about the buoyancy in the motor tax. Did he ever hear of buoyancy in income tax?
I am hoping to reduce it.
If in the past two years the Government had kept its promise in the Programme for Government it would have about £1 billion which it could have given back to taxpayers.
What services would the Deputy have cut?
None. It would not be necessary to cut services if the Government kept its expenditure within the limits and did not introduce many new expenditures. Under the Fianna Fáil proposal, on the basis of net tax receipts, the buoyancy between 1995 and 1996 would be £50 million extra that would have been available to local authorities. We continually hear from the Government about the good economy and how things are booming and so on but we hear less about why they are booming. It is booming because people took decisions when they had to take them to put us in that position. Even reducing by the miserable 1p in the pound, which the Government did this year, from 27p to 26p, the take from income tax will increase substantially. The record for every year over the past 30 years, including the years when Fianna Fáil and later with the Progressive Democrats reduced income tax from the top rate of 65 per cent to 48 per cent and at the lower rate from 35 per cent to 27 per cent, shows that income from income tax increased. That is buoyancy. That is what I propose, a ring fenced percentage of income tax to local authorities which they would be able to spend. This is more buoyant and allows more flexibility for local government and local government expenditure.
Given that the Minister has indicated there is no way he will change this, I do not propose to delay. I know from my contacts in local authorities — there are some here who can contradict me if I am wrong — that up to the end of April most local authorities were substantially down in their income. I do not propose to delay this Bill but I put down the marker that it will be changed when we go into Government. I will withdraw my amendment.
I am not prepared to withdraw my amendment. I agree with the principle that moneys collected locally should be spent locally. A refinement of that principle would be that the charge relates to the activity. If we collect moneys for water they should be spent on water related projects; if we collect moneys from environmental taxes they should be spent on promoting environment protection; if we collect moneys from road tax, at least a set proportion should be spent on road related matters.
It still is at the discretion of the council.
I do not need to be prompted. This is not the muppet show.
We know what we are talking about.
We are making a substantial change here in terms of the principle of keeping tax which I support and welcome. We are enlightened enough to put in place the principle of relating a charge to a service so that people know what they are paying for. They can determine——
On that basis, who pays for the mentally handicapped and the critically ill?
That is what is known in Latin as reductio ad absurdum.
Absurdum.
Absurdum from the Minister. For example, in local authority areas where there was a reluctance to pay domestic refuse charges, when the tag per bag was imposed, everybody saw what they were paying for, the reluctance began to diminish and people put a value on the service delivered to them and were prepared to pay. That is the road down which this country will have to go. As a consumer society we are more consumer conscious and more value conscious than ever before. I would like our laws to respond accordingly.
I ask the Minister not to reject out of hand the principle of my amendment but to keep it in place as a worthwhile principle that should be embodied at the outset, that local authorities, at least, would be advised to spend a portion of the money from road tax on road related projects. The Minister said much today and recently about rural areas but cities have particular needs. In my city, the road on which I live is on the point of disintegration. The traffic lights are obsolete by about six years and there is no money to replace them, neither is there a modern traffic management system. The Minister should accept the principle that a proportion of this money should be retained for road improvement and road safety improvement measures. That would be a positive step in the new approach to funding local authorities.
I respect what the Minister is attempting to do in promoting better road safety but it is not delivering the results. More needs to be done and more investment must be made. A self-respecting country would not tolerate the level of carnage which takes place on our roads with the consequent loss of life and grief caused to families.There is also a cost to motorists in terms of increasing insurance premia which arises directly from the number of accidents. The safety issue must be tackled in a more systematic way. There is an opportunity to take these actions in the context of my amendment.
I am glad Deputy Dempsey has the wisdom to withdraw his amendment. I happened to drive throughout County Meath over the weekend and I have not seen such an improvement in road surfaces such as that in County Meath over the last two years.
Coming from a low base.
Did County Louth get the same treatment?
The Trim-Longwood road is as smooth as a billiard table yet it was littered with potholes two years ago.
It was not. That road was done in 1992.
I have not seen such an improvement in the past. There has been an improvement in the roads in County Louth such as has not been seen in the last 20 years. These improvements are due to the promises made by the Minister for the Environment to counties Louth and Meath and on which he has delivered. I visited County Cork recently and there has been a major improvement in the roads there.
The surfaces of the national primary routes have improved——
I am talking about the county roads, especially in County Meath. Deputy Dempsey must accept the facts.
The Deputy should name a few more roads and I will tell him who had them done.
My colleague, Deputy Brian Fitzgerald, is pleased with the progress in County Meath and I am pleased with the progress in County Louth.
Car tax receipts should not be transferred to fund the upkeep of county roads. If that was done there would still be potholes because the car tax receipts would not cover a quarter of the expense of the county roads structure, as Deputy Dempsey is aware. Funds from the car tax would not cover the cost of repairing the damage to the county roads. Members of Deputy Dempsey's party have held the post of Minister for the Environment for the most part of the last ten years. Local authorities were starved of finance by successive Fianna Fáil Governments, in particular when in coalition with the Progressive Democrats. Not alone were those Governments not funding roads, they were not building houses. In six years only 28 local authority houses were built in Drogheda, whereas during the period of the present Minister's tenure 300 to 400 houses have been built there.
It is rubbish to talk about transferring car tax to the upkeep of the county roads because the receipts would not come within an ass's roar of being sufficient to repair them, never mind reinstating them. I am glad the Deputy will withdraw his amendment. I suggest Deputy Quill should do likewise with her's.
I would not like my colleague from County Louth to labour under a misapprehension.The take from road tax is about £247 million. Generous as I have said it has been, the amount the Government has given is about £100 million less than that figure this year. For the benefit of the Deputy I would point out that the Trim-Longwood road was done in the period from 1991-94. Somebody had better put out the message that Deputy Brian Fitzgerald had some input because the Taoiseach is claiming all the credit in County Meath.
Amendment, by leave, withdrawn.
Section 3 agreed to.
NEW SECTION.
I move amendment No. 4:
In page 6, before section 4, to insert the following new section:
"4.—An annual percentage of the said car tax moneys shall be specifically designated for road related works, namely, road surface improvements, upgrading road safety and effective traffic management systems.".
Amendment put and declared lost.
Section 4 agreed to.
SECTION 5.
I move amendment No. 5:
In page 6, subsection (2) (a), lines 38 to 40, to delete all words from and including "or" in line 38 down to and including "authority," in line 40.
This amendment goes more to the heart of the Minister's intentions than any other. It would remove the Minister's power to change by regulation the amount of money he takes to put into the equalisation fund. Such a power does not fit with what the Minister said about discretion in the extra powers being given to local authorities and ring-fencing the extra amounts being given to them. It is easy to ring-fence amounts for one year if there is a possibility to change the amounts by regulation a year later.
I remind the Minister that when Fianna Fáil removed domestic rates in 1978, the legislation guaranteed the amount that would be paid in the rate support grant to local authorities. In 1983 the then Minister for the Environment, Deputy Spring, changed the regulations to force local authorities to provide funds from their own finances. The Minister's sincerity about ring-fencing funds for local authorities stands or falls on whether he will accept this amendment.
Local authorities deserve to know for the foreseeable future how much they will get from a particular tax. If the Minister retains the power to change the percentage a future Minister may decide to increase it to 30 or 40 per cent and if that were to happen the amount available directly to local authorities would be reduced. I ask the Minister, therefore, as an earnest of his intent and good faith in providing the maximum amount of money for local authorities, to accept the amendment.
I strongly support the amendment for the reasons given by Deputy Dempsey in the first instance but also because I suspect there will be a greater than 20 per cent car tax take from Clare County Council. The Minister has probably forgotten, but shortly after his appointment I made my final attempt during the Adjournment debate to have the rate support grant to Clare County Council substantially increased on the basis that under the system operated by him and his predecessors it was the only local authority in the country to receive less than it would have received by way of rates on Government property in the county. The Minister's officials know the reasons for this. If the Minister retains the right to take more than 20 per cent, it is likely that Clare County Council and at least two others that I can think of will suffer. I, therefore, have a selfish interest in the amendment.
Local authorities should know the percentage of the car tax take they may retain. Under section 7 they will have discretion to increase the take. However, local authorities which believe that more than 20 per cent may be taken from them will have no incentive to do so. As the Minister will be able to take what he likes off the top, there will be no advantage to the local authority in question. I, therefore, urge him to accept the amendment.
The first principle is that all of the money raised by way of motor taxation will be retained by local government, a percentage will be taken off the top to ensure nobody will be disadvantaged under the new regime. No local authority, either town or county council, will be worse off. I promise that everybody will be better off and the promise will be delivered. There are large numbers of cars registered in the functional areas of the Dublin local authorities. On the other hand, the motor tax base in counties such as Leitrim is small. There is a need, therefore, for an equalisation fund. As Minister for Health, I looked at the principle of equalisation in health insurance. There is a good model in Australia. It has been replicated in this proposal which is a fair one.
Deputy Dempsey wants me to carve the ratio of 80:20 in stone. There is a certain irony in this. On Second Stage he queried its basis. No local authority will be worse off. Everybody should be better off. If there are anomalies, I want to have discretion, not to take money from local government — this cannot happen because the entire fund is being ring-fenced for local government — but to adjust the percentage to ensure there is no windfall. It would be in no one's interests to allow one local authority to thrive at the expense of another. I do not believe this provision will be abused by me or any of my potential successors in five, ten or 15 years time, whenever there is a change of personnel in the Custom House. There is a need for flexibility but it would be a bad day's work to carve the ratio in stone. I work on the basis of the socialist principles that the meek should inherit the earth and the strong should not gain everything. We need to ensure that everybody thrives under these proposals. The money will be distributed in such a way that everybody will get a reasonable share. That is a principle the Deputies opposite, on reflection, could support.
The Minister is opposed to the amendment because he claims there is a need for flexibility. He referred to the Dublin local authorities in whose functional areas large numbers of vehicles are registered but they would look at it the other way around. The Minister said nobody will lose, but, according to their figures, the Dublin local authorities believe they will.
They will not lose.
The Minister may wish to take 22 per cent to 23 per cent from them in future.
I did not say that.
Senior officials of the Dublin local authorities have produced figures which I understand have been passed on to the Minister. They have also sought the advice of their legal departments.
I have written to them.
They are convinced the Minister's promise that nobody will lose is false. They believe they will lose £8 million. Will the Minister explain why they are wrong and why he believes they and their legal advisers are misreading the Bill? I am very concerned about his agenda if he is opposed to the amendment because he may want to take more from the Dublin local authorities in future. I am aware this Bill was introduced to save a seat in Dublin West but the Minister should make the position much clearer. Is it the case that those who represent city constituencies will lose heavily?
The total amount in the motor tax pool is considerably greater than the amount allocated by way of the rate support grant and the income raised by way of charges. The total pool to be distributed ab initio is bigger. It will be distributed in such a way that nobody will be worse off. The Dublin local authorities want to retain their entire take from motor tax.
They are not saying that. They want a guarantee that they will not lose.
I am giving them that guarantee.
Where?
They will not lose. The total amount in the motor tax kitty is greater than the amounts raised from the other two sources of income mentioned and it will be distributed in such a way that nobody will be worse off. That is not very complicated. My officials have issued a detailed response to the letter received. Some local authorities believe they have a right to retain all of the money but that would be unacceptable. There is a need for fairness. The issues are basic. A fund will be created and it will be distributed fairly across the board. No local authority will be worse off.
The Minister has not put my mind at rest.
That would be difficult to do.
The Bill does not give the guarantee given by the Minister. Dublin local authorities are looking for a guarantee. The Minister said he will see to it that they are fairly treated, yet the Bill refers to an equalisation council. I do not know if next year the decision will be made by the Minister, whoever he or she may be, or a quango set up by the Minister. Dublin local authorities want a guarantee that they will not lose out under the fund.
I have given that guarantee.
It is not given in the Bill. They want a guarantee that the amount they receive will be in excess of the rate support grant.
This is a simple matter.
Where is the guarantee?
I will explain it again as there are none so blind as those who will not see. There has been some confusion about the issue up to now. Every local authority will be required to rebate money into the equalisation fund and they will be paid back out of it.
The Minister may get it back.
It is a matter for the Minister of the day.
The pool is buoyant and they will get a fair percentage of it back this year. There will be more focused measuring criteria based on the audit and efficiency principles in the programme for local government which has been heartily welcomed by the Deputy's party and the Progressive Democrats. These principles will determine payments in the future. This is as it should be as the one thing I discovered on taking office is that inefficient local authorities come cap in hand to the Department demanding more rate support grants to bail them out, while those who run their affairs well, effectively and efficiently do not come cap in hand seeking help. There is an almost inbuilt incentive to help those authorities who are not good and this must be changed. The procedures set out in the local government strategy for value, efficiency and performance audits, tables of performance and a bill of rights for individual citizens will ensure efficiency and effectiveness.I want some of the money available under the equalisation fund to go to specific quality initiatives.
Nobody will be worse off under this proposal unless something dramatic happens some time in the distant future in regard to the funding which we cannot foresee. This is why I want flexibility. The amendment will set the 80-20 per cent divide in stone. The entire 100 per cent is available for local government and I want flexibility to ensure that anomalies which arise in the future can be addressed without us having to introduce primary legislation.
Dublin is not a self-contained city and its citizens, including motorists, expect to be able to travel to the country. Members of local authorities know there has to be an equalisation fund as otherwise counties such as Leitrim and Clare would not be able to raise the same amount of funding through car registration as larger counties.Dublin Deputies seem to think the Minister is anti the city. However, during the debates on the water charges it was stated that he was anti the country. We have a good Minister who is pro everything.
Or anti everything.
However, it is now being suggested for political reasons that he is anti everything.
Opposition Deputies find it difficult to accept that the Government is ensuring for the first time that local authorities have some discretion in terms of how they spend their money. Up to now local authorities raised funding by way of charges, some of which could not be collected, and rate support grants which did not keep pace with the promises given. However, under this proposal they will know where the money is coming from.
Will the Minister confirm that if a ministerial order has to be introduced it will be brought before the House so that it can be debated and he can set out the reasons the percentage must be altered. Local authorities have done better so far this year under this principle. However, if this does not continue and some changes are necessary because of a lack of equalisation in certain areas then the Minister or his successor will come into the House and debate the regulation.
I have some sympathy with the points made by the Minister about the 20 per cent rate and the equalisation fund. Is it his intention that the percentage, whether it is 15, 25 or 30 per cent, will apply to all local authorities or will there be a variable percentage for certain authorities?
There will be a case by case analysis.
That is what I was afraid of.
Dublin Deputies want to ensure Dublin gets its fair share. I do not think any of us would argue that it should get more than that. Deputy Ferris underlined that point in his statement.
The equalisation fund is essential in ensuring all local authorities get a fair share of the funding. Concern has been expressed by Dublin Corporation officials that they will receive less under the equalisation fund than they have received up to now. However, I am happy to accept the Minister's assurance that this will not be the case. The formula used by the Minister is an excellent one and I am glad we have finally found a reliable permanent means of funding local authorities which will stand the test of time. Many of those who are critical of the fund were afraid to grasp this nettle. They are trying to find loopholes in this procedure. I understand that since 1988 the rates on the Moneypoint power station have been paid directly to Clare County Council.
Does the Deputy want them to be paid to a local authority in Dublin?
Will this continue to be the case irrespective of the equalisation principle enunciated in the Bill?
That is a red herring.
I intend to press my amendment as I am worried the rate may be varied depending on the local authority. This will defeat the concept of equalisation. The Minister may decide to take 40 per cent from one local authority and 20 per cent from another.
There will not be a variety of rates. If there are one or two glaring anomalies where some authorities get a windfall there might be a need to vary the percentage for them without varying the percentage for all authorities. It would make a nonsense of the fund if the percentage for all authorities had to be adjusted en bloc. As its title suggests, everybody will be treated equally under the equalisation fund. Authorities will not be able by virtue of geographical or other factors to get a windfall under this mechanism to the disadvantage of others. There has to be some sharing of the buoyancy. There may be no change in the 80-20 per cent divide this year but funds are buoyant. As the Deputy knows, I allocated £100 million to local authorities in rate support grants on a temporary basis. One hundred million pounds has already been paid in motor tax and rebated to the State to pay for money the local authorities already received, and a pool for distribution is already gathering. I signed an order to the Central Bank instructing it that when the £100 million already paid out was reached in motor tax revenue, we would build the pool. That pool is already building, waiting for this legislation to be available to local authorities. The system this year will be relatively crude, namely, a percentage increase on last year based on the total volume of money available. Nobody will be disadvantaged.We want to fine tune that in the future and discuss it with the practitioners, the General Council of County Councils, the Association of Municipal Authorities of Ireland and the county managers' association. A number of working groups of those associations are currently working on the various components of the plan for better Government. At the end of the day we will have a stronger, more independent and vibrant system of local government than we had heretofore.That is my ambition and that will be the result of the entire programme when it is put in place in the coming years. The programme will require further legislation. I promise to have that enacted next year to meet the centenary of the local government system. I hope that will be a major advance on the establishment of a much more vigorous, independent and autonomous local government system. We must take more steps along that path but this enactment is the first significant step in regard to funding we have taken for 20 years. We need the flexibility this section provides and I ask Deputies to reflect on the real needs of local government, and not to introduce red herrings.
Amendment put and declared lost.
Section 5 agreed to.
Section 6 agreed to.
SECTION 7
An Leas-Cheann Comhairle
Amendment No. 6 is in the name of Deputy Dempsey. It is noted that amendment No. 7 is related and the suggestion is that we discuss Nos. 6 and 7 together, if that is satisfactory. Agreed.
I move amendment No. 6:
In page 8, subsection (3), line 38, after "member" to insert "or ex-member".
The amendment is self-explanatory. The Minister has indicated that current members and officers of local authorities should serve on this body. There might be some merit in specifically including former members and officers of local authorities in this section. I ask the Minister to accept the amendment.
There is flexibility in relation to this matter in the section, but there is merit in being explicit and I accept the amendment.
Amendment agreed to.
I move amendment No. 7:
In page 8, subsection (3), line 38, after "officer" to insert "or ex-officer".
Amendment agreed to.
I move amendment No. 8:
In page 9, subsection (4) (c), line 2, to delete "fund" and substitute "Fund".
Section 7 enables the Minister by order to establish a local government equalisation council — this is the independent council at arm's length from the Department of the Environment and, more especially, from the Department of Finance — to manage the equalisation fund, decide payments from it and carry out other functions in relation to the Bill which are allocated in law to the new council. This amendment simply corrects a typographical error in that "fund" should have a capital F.
Amendment agreed to.
I move amendment No. 9:
In page 9, between lines 24 and 25, to insert the following subsection:
"(7) An order under subsection (4) that confers on the Council the functions referred to in paragraph (c) of that subsection may provide that the said functions shall be performed by the Council subject to such conditions as are specified in the order, being conditions requiring the payment out of the Fund, in such amounts and at such times as are specified in a direction given by the Minister for the purposes of those conditions, of moneys referred to in subsection (2) or (3) of section 6.".
This amendment provides that an order under section 7(4) (c) relating to the functions under section 6(2) and (3) as relates to the payment of equalisation fund moneys under those sections shall be performed by the equalisation council in accordance with conditions specified in the direction given by the Minister.
Amendment agreed to.
Section 7, as amended, agreed to.
Section 8 agreed to.
SECTION 9.
An Leas-Cheann Comhairle
Amendment No. 10 is in the name of the Minister. Amendments Nos. 10 to 14, inclusive, form a composite proposal and it is suggested, therefore, that we discuss amendments Nos. 10 to 14, inclusive, together. Agreed.
I move amendment No. 10:
In page 11, subsection (3), line 8, after "authority" to insert "or authorities".
Section 9 empowers local authorities who collect motor tax, county councils and county borough corporations, to increase the national rate of taxation of cars and motorcycles to a maximum of 3 per cent next year and to a maximum of 6 per cent thereafter at the discretion of local authorities, and they cannot increase it thereafter unless the base is increased. The variation, therefore, is a maximum of 6 per cent from the base. This section also provides for consultation as regards any variation in rates between county councils and urban district councils and local authorities where one collects on behalf of another. Amendments Nos. 10 to 14 should be examined together. By way of simple explanation, the Bill as drafted would only allow local authorities establish themselves together as independent motor taxation authorities, whereas the import of this series of amendments is to allow individual local authorities in the Dublin region become motor taxation authorities if they so choose without having to wait for every local authority to so do.
I oppose this section. We oppose the principle of allowing increases in motor taxation to finance local government services, for the reasons I outlined earlier.
This matter has been referred to at many meetings of my local authority and by various Opposition spokespersons. I do not see any compulsion in this section.
No.
The Deputy seems to be saying that the Minister is imposing a 3 per cent increase in motor taxation. He is not doing that. He is capping motor taxation at 3 per cent, but if local authorities want to put a zero rating on increases on an annual basis, they are free to do so. There is nothing in this section which compels local authorities to apply an increase in motor taxation.
That is true.
People are interpreting this to mean it is compulsory on local authorities to increase motor taxation. That is not stated in the section. If local authorities do not believe there is any need to increase motor taxation, they do not have to do that. I ask the Minister to confirm that my interpretation of this section is correct.
I confirm this is simply an enabling provision. Various recommendations and studies have indicated that there should be some local flexibility. That is the reason I included this in the proposition to Government and why it is now before the House. If we are to give local authorities any flexibility, we have to enable them to vary a taxation base. If one local authority decides to cut its cloth according to measure and not increase motor taxation, and another decides to take full advantage and increase motor taxation by 3 per cent this year and 3 per cent the following year for a specified purpose, such democratic decisions will be made locally, and there will be no imposition from the centre. Deputy Bell's interpretation of the section is quite right. It is totally voluntary.
Some time ago I read the debate on the Local Government (Financial Provisions) Act, 1983 which contained the same argument. Deputy Bell stated on local radio on a number of occasions that he did not vote for service charges in this House. Even with the equalisation fund, and motor taxation totalling approximately £150 million going directly to local authorities, they will still need money from central Government. There is no legal imperative on local authorities to increase motor taxation, but this Bill will allow a future Minister to put the squeeze on local authorities; the Department can simply cut local authority funding, and when local authorities need money for some reason, they will be told they have the power to increase motor taxation by 3 per cent or 6 per cent. I am just sounding a warning note.
The Deputy is quite wrong. This is not like the Local Government (Financial Provisions) Act that gave powers without limit to set charges without ceilings. This is a capping. The maximum variation that can be allowed next year is 3 per cent, and the maximum variation that can be allowed in total under this Act is 6 per cent. The average motor tax is £186 a year. This means a 3 per cent increase is £6 a year and a 6 per cent increase is £12 a year. That is not a horrendous taxation imposition. We have abolished residential property tax this year, and we have abolished water charges for the domestic consumer, so virtually every citizen is better off and will be better off next year even if every local authority increases motor taxation. I am heartened by Deputy Dempsey's prediction that there will be a coalition Minister here next year and the year after implementing these provisions that he has promised to repeal. I am glad he does not envisage himself being in a position to do anything about it for the foreseeable future. The reality is that even if every local authority increased motor taxation by 3 per cent next year everybody would still be better off than they were before these provisions were introduced, and they would be better off the year after and the year after. That is self-evident.
Not when a Minister comes in and facilitates increases by regulation year after year.
The Deputy has not read the Bill. The 6 per cent variation is not subject to amendment by regulation. That is enshrined in the basic legislation. If any future Minister wanted to do that he would have to introduce a new primary Bill.
Or amend this one.
Any Minister can persuade the House to enact legislation. One can do anything on that basis.
He does not have to persuade the House if he has a majority.
He has to persuade the majority to support him. I do not know how the Deputy's party operates but our party operates on the basis of doing things that are supported by our parliamentary colleagues and not doing things that are not supported by our parliamentary colleagues. That has worked extremely well up to this. There has been a great deal of smoke in regard to this, but it is a very simple provision. It seeks local, modest, variable powers for local authorities which are totally discretionary, but the main thrust of this is to give them their own ring-fenced untouchable fund for the first time in history.
I do not disagree with Deputy Dempsey's emphasis. One of the reasons I consistently led the charge against service charges over 12 years or more in my county was because of the variation in charges between different counties. In Drogheda where charges were being opposed they amounted to £75. When they were not opposed in Dundalk they were double that, and it was also double in the county council because Fine Gael and Fianna Fáil combined voted the charges in with no opposition except from two or three councillors, including the two Labour councillors.It was opposition that kept the increases to a minimum. When they were not opposed they got completely out of line. There were two different charges in Navan and Trim because they are in two different local authorities. That was one of the reasons I was so strongly opposed to charges.
There is one aspect of the Deputy's point with which I have sympathy, and I have expressed it to the Minister. If local authorities increase car tax, I would prefer if all local authorities increased it rather than having a repeat of the situation that existed heretofore whereby different charges applied in different local authority areas even within the same county. That is a danger, and I expressed that view very strongly to the Minister. I would prefer a system whereby the same level of increase operated in all local authorities. As I read the Bill, it is a matter for the elected representatives to make that decision. I look forward to debating this because it is a question of local democracy and it is a matter for local representatives to make their own decision.
I would have thought this section has the opposite effect to what Deputy Dempsey said in that the Minister could not pressurise the local authorities to raise more money. In effect what he is doing is introducing a cap to ensure they cannot raise more than a certain amount. Given that we have the equalisation fund, it seems unlikely that any local authority will be anxious to establish any great variation. Apart from that, there is a cap on the fund. What we are doing here is giving them the option to increase it within a certain limited variation.
Amendment put and declared carried.
Progress reported; Committee to sit again.