Dáil Éireann debate -
Tuesday, 12 May 1998

Vol. 490 No. 7

Local Government Bill, 1998: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Minister of State at the Department of the Environment and Local Government (Mr. D. Wallace)

I will resume where I finished last Thursday when the time available to me was unfortunately limited. I did, however, manage to give the House a full account of the Government's funding proposals for local Government. I am sure these will be discussed in greater detail later. There are some other aspects to the Bill not related to funding which I will now discuss.

The first aspect provides for the postponement of local elections from June of this year to June 1999. I take this opportunity to explain to Deputies that the Government has decided to hold the local elections on 11 June 1999. This was decided after the Bill was published. The decision to postpone was not lightly taken. Local elections are the principal means by which the political will of the local community is expressed. It is now almost four years since the people spoke at town elections and almost seven in the case of city and county authorities.

Ordinarily, therefore, the case for local elections in June of this year would be strong. However, these are not ordinary times for local government. There are substantial and unique arguments why the elections should be postponed for 12 months. A short breathing space is necessary because a major programme of local Government renewal spanning a number of years is now under way. It is important, therefore, that the general outline of the new local government system should be known before the electorate decides who is best suited to represent them. Few would deny that local government needs to be made more attractive to a wider range of people, particularly women and the young. The prospect of a vibrant and reinvigorated local government system should help provide broader participation. A review of the electoral areas, taking account of the 1996 census results, is needed due to population changes since the last review in 1985.

The Minister, Deputy Dempsey has established committees to review local electoral areas and to report by 1 July next. The establishment of the strategic policy committees system which will strengthen and widen local democracy is now well under way, representing the most radical development in local government for decades. It is important the system is given the chance to operate and become embedded at local level before elections are held. The reasons for this short postponement are, therefore, unique. It will allow the building blocks of the local government renewal programme to be put in place or at least known before the electorate decides who should represent them at this crucial time of change.

The second aspect of the Bill which is unrelated to funding relates to local authority recruitment procedures. There is currently a statutory requirement that every permanent local authority office for which a professional qualification is required must be filled by the local appointments commissioners. The inflexible nature of this requirement has prevented a solution being found to the plight of professionals in general, and engineers in particular, who are being retained in temporary employment on a long-term basis by local authorities. Such is the length of service of many of these people at this stage that they should in equity be made permanent. This has not been possible up to now but this amendment will remove the statutory barrier and provide the flexibility to allow the position of these people to be regularised.

No decisions have yet been made on precisely which posts will in future be designated for filling through the LAC. The intention is, however, that the resources of the LAC will in future be devoted more to the selection and recruitment of the senior tiers of local authority posts. The more junior professional posts will be filled by way of local competition as is the case with the clerical and administrative grades.

I will now deal in more detail with the main provisions of the Bill. The most important provision is the establishment of the local government fund — this is included in section 3. The fund is the central cog around which the new financing system will revolve. The accounts of the fund will be audited by the Comptroller and Auditor General each year. Payments into the fund are dealt with in sections 4 and 5. The Minister will be required to pay £270 million into the fund in 1999 from the Department's Vote towards the general purposes expenditure of local authorities. I have already explained some of the uses to which this money will be put and the in-built mechanism to protect its value for future years and to alter it if circumstances change. Section 5 provides for the payment into the fund of the proceeds of motor tax. This will also include driver licence duties and other miscellaneous fees and duties collected by the licensing authorities.

The purposes for which moneys may be paid out of the local government fund are set out in section 6. These will include contributions towards the expenditure of local authorities on non-national roads and general purposes expenditure. It may also include payments to local authorities in respect of expenses incurred in promoting the delivery of quality and efficient local authority services and in respect of expenses incurred by the Minister in collecting motor tax. This section also provides for the establishment of a committee to advise the Minister on payments to local authorities from the fund.

Section 7 allows local authorities to deduct the expenses incurred by them in collecting motor tax before they pay the balance remaining into the local government fund. A similar provision was contained in the Local Government (Financial Provisions) Act, 1997.

The adjustments to the motor tax rates are provided for in section 8. The increases will be 3 per cent from a date to be appointed by order following the enactment of this legislation, and a further 3 per cent from 1 January 1999.

Sections 9 and 10 provide for the postponement of local elections until 1999. As stated earlier, this is being done to facilitate a review of electoral area boundaries and any structural changes to local government arising out of commitments in An Action Programme for the Millennium in regard to local government renewal. The local elections will, therefore, coincide with the European elections in 1999 and will be held every fifth year thereafter.

Section 11 removes the statutory requirement in the Local Authorities (Officers and Employees) Act, 1926, that every permanent local authority office for which a professional qualification is required must be filled by the Local Appointments Commissioners. The vast bulk of recruitment to local authorities is already carried out locally in any event.

Section 12 repeals various sections of the Local Government (Financial Provisions) Act, 1997, which are necessary to enable the new funding system to be introduced. A number of provisions of this Act, however, remain in place, including those abolishing domestic water and sewerage charges and establishing on a legal basis the local government — value for money — unit and value for money auditing.

It is fitting that we refocus on local government in this its centenary year. It is time we provide it with adequate resources. The funding system this Bill provides for will be buoyant and satisfy the funding needs of local government as we approach the millennium. It is also more broadly based and fairer than that proposed by the previous Government. Without adequate funding we cannot have a meaningful proactive local government system. The House can be assured that all efforts will be made to ensure the funding made available to local government will be used wisely and that the public will be able to recognise this clearly in the years to come.

I am very pleased to move this important legislation on behalf of the Minister, Deputy Dempsey. It will provide the resources necessary to support a local government system of which we can be proud and which will meet the needs of a modern democracy. This Bill is worthy of the support of every Member of the House and I look forward to a constructive debate on it. I confidently commend the Bill to the House.

Mr. Dukes

I do not like to chill the atmosphere of goodwill engendered by the Minister of State, but we will vote against this Bill on Second Stage because it is not the major local government reform and restructuring claimed by the Minister. It is a much more limited Bill and at the end of the day local government will be largely unreformed. Some useful initiatives have been taken, but I wish people would stop coming out with nonsense about all the great things we are going to do as we stand on the threshold of the new millennium. That is a most irrelevant comment and, on a Bill such as this, is a currency that has been debased beyond all measure.

The basic purpose of the Bill is to hand over the proceeds of motor taxation to local authorities and provide for an increase in the level of motor taxation. The Bill is necessary because the Government decided to do this a little differently from the previous Government. The system being provided for in the Bill is more onerous than that put forward by the rainbow coalition Government in December 1996. That decision provided for an optional maximum increase of 6 per cent over a three year period in motor taxation, with a maximum of 3 per cent in any one year. The Bill provides for a mandatory increase of 6 per cent over a period of less than eight months, with the first increase on the enactment of the Bill and the second in January next year. Instead of the option to increase motor tax by up to 6 per cent over a period of three years, the Government will require local authorities to increase motor tax by 6 per cent in a period of less than eight months.

In his speech the Minister of State made the usual points. He pointed out that the rates of motor tax have not been increased since 1992, that we should be happy about that and that the total increase of 6 per cent over this year and next year compares with inflation of almost 15 per cent since the last increase. Ministers should avoid such balderdash. This matter has nothing to do with the general rate of inflation. The Minister could argue that if motor tax had been increased at any time since 1992 the general rate of inflation since then would have been more than 15 per cent.

It is not a virtue to claim that one is doing something which increases a price by less than the general rate of inflation. That is equivalent to saying that if one had the chance one would have increased the general rate of inflation by more than it had actually increased. There is no virtue in increasing a price by less than the rate of inflation and there is no virtue in saying that this increase in motor tax is less than inflation since the last increase because no credit is due to any Minister for that. It is an unrelated matter and is not something for which I will give credit to the Government.

What we will have is an increase of 6 per cent in the rate of motor tax in a period of eight months or less. That will put an unfair burden on motorists, particularly in rural areas. They have no alternative but to use their cars because there is no access to public transport. In urban areas people could make up their minds to do without cars but in rural areas that is not possible. People in rural areas will be obliged to pay the extra 6 per cent in a period of less than eight months.

The Bill requires the local authorities to make that increase irrespective of funding available to them from other sources. This is even more constraining when we recall that shortly after his appointment the Minister, Deputy Dempsey, spoke about his intention to cap the rating ability of local authorities. He intends to limit the local authorities' ability to increase their funding by putting a cap on the extent to which they can increase rates on commercial and other rateable premises. On that score alone the reform element of the Bill is much less than that for which the Minister is seeking credit.

The Minister and the Minister of State try to give the impression that they are giving some autonomy to local authorities. However, they are taking back a big proportion of that autonomy straight away. This is not surprising because the Government has a disorganised and ambivalent approach to the reorganisation of local government.

As a justification for the increase the Minister of State said, ". external expenditure associated with motoring such as air pollution and traffic management cost more each year."

I do not know why the Minister of State included that in his speech because he goes on to say that the revenue which local authorities will get from motor tax and this mandatory increase of 6 per cent in less than eight months will go into non-national roads. It has nothing to do with air pollution and traffic management and it is utterly gratuitous for the Minister of State to state it as a relevant consideration in justification for the Bill.

It may be that we need to take other measures to deal with air pollution and traffic management, although the Government is hell bent on making air pollution and traffic management problems even more intractable in Dublin having adopted the most ill-advised approach to the Luas project. I bet that the overground parts of the Luas will be built but the underground element will not. The Minister and his colleague in the Department of Public Enterprise are doing nothing to deal with the problems of air pollution and traffic management in Dublin. I still await the information I requested from the Minister of State last week on the levels of air pollution in Dublin. I hope he has not forgotten my desire for that information.

When the previous Government dealt with this issue it decided that 85 per cent of the motor tax fund was to be retained by the local authorities which raised it and 15 per cent was to go into an equalisation fund. Detailed discussions had been held with the local authorities on this fund and a broad measure of agreement had been arrived at. However, the Minister will not indicate what equalisation provisions he has in mind. He and the Minister of State have had many opportunities to do so since the Bill was published but they have been silent on the matter. Even during questioning in the House they have been unwilling to commit themselves to a description of how they intend to proceed, the criteria they will use or the mechanism that will be put in place. Once again we see the hand of Government coming into an area in which the Minister claims to be giving a greater degree of autonomy to local authorities. He is not doing anything of the sort.

The Minister of State's speech contained a large section on equalisation. He referred to a pilot study being carried out in Galway County Council, which was discussed in the House some time ago. It appears the Minister of State has decided to ignore the discussions that have taken place, has picked one local authority area for the pilot study and hopes it will produce results capable of being used in the equalisation provisions. He hopes it will clarify the performance of various local authorities and how that might be measured. I submit that is likely to be a snare and a delusion. If the Minister thinks that out of a pilot study of one local authority he will get a detailed prescription for making a workable equalisation fund he will be disappointed. There is nothing in what the Minister of State has said that provides an answer to the concerns discussed with local authorities and which they felt had been largely resolved. He is throwing the lot back into the melting pot and carrying out a pilot study in Galway. There is no justification for hanging the equalisation provision as a whole on that study.

When I reflect on another fact, I do not think the enterprise is worth a candle. Beginning next year, this much vaunted system of reform will mean local authorities will get somewhere in the region of £20 million more than they would have got otherwise. If we divide £20 million between all the local authorities and assume it will be spent on non-national roads, I am sure even the Minister and any of our colleagues in the House could spend the portion got by our respective local authorities before we have breakfast in the morning and would have plenty more work to do. I could spend the portion Kildare County Council will get in the constituency of South Kildare and would not even have to go half way to where Deputy Wall lives before I would have spent all the money on filling in a few potholes. To go to all that trouble for an equalisation fund to try to tell us how we should slice approximately £20 million between all the local authorities which will be clambering for it, is a ludicrous enterprise.

This Bill is not a large reform and is much ado about nothing. When we see this famous local government fund coming into operation, we will see how little all this ado is about. The Minister is hell-bent on doing this fancy pilot study which is supposed to tell him how to scientifically slice £21 million into small amounts for individual road authorities. He does not even believe it will happen soon because after his description of this intellectually elegant looking system with performance indicators, accounting codes of practice, existing forms of accounts and so on, he came to the conclusion that these issues are at an early stage and it will be some time before the extensive changes which will result will be brought about.

The Minister goes on to say the end result will be a buoyant funding system for local authorities. That will not deal with the types of problems staring us in the face each time we turn a corner on the road. All that, for this ringfenced inflation proof system which will mean approximately £20 million more for local authorities in 1999 than in 1998 and a 6 per cent increase in motor taxation thrown in for good measure. That is not an enterprise which is worth all the trouble the Minister is taking and does not justify the type of description he has given it.

I welcome one provision — that local authority elections will be held in 1999 and in every fifth year thereafter. It will mean that every five years local authority and European Parliament elections will be held on the same day. The Minister dithered over this issue for a long time saying behind his hand to members of his party in local authorities that he really wanted to do this but was afraid the Opposition, I in particular, would disagree with him. It was necessary for me to say in the House that I thought it was a good idea before the Minister could screw up his courage to the sticking point and make the one sensible proposal in the Bill. It is a perfectly sensible proposal which will be welcomed by voters, local authority members and potential candidates. I hope this means that in the future Governments will not invent spurious reasons to defer local government elections. In particular, I hope we will witness no more occasions when local government elections are deferred because the Government of the day claims to be planning a major reform of local government. We have heard that before and local government remains largely unreformed.

Imagine my disappointment when I found that, in spite of my hopes, my worst fears were realised. The paragraph in the Minister's speech on the postponement of elections contained four bullet points telling us why a short breathing space between June 1998 and June 1999 was necessary before we hold local elections. The reasons the Minister gave included the major programme of local government renewal and the fact that we wanted a vibrant and reinvigorated local government system and a review of the electoral areas which will be finished in July, although there was no reason it could not have started sooner. The pie ce de résistance of them all was that the strategic policy committee system would be put in place. The Minister solemnly said it is important the system is given the chance to operate and become embedded at local level before elections are held. Those are the reasons for this short breathing space. They have nothing to do with it, as the Minister knows perfectly well.

By the time we hold the local elections, the strategic policy committee system, which I welcome, will not be embedded at local level as it will take a while to get that system fully functioning. Some strange things are going on. In recent days, I learned that Galway County Council, for example, in setting up its strategic policy committee system, is also in the process of disbanding a committee it has had for some years on national monuments and heritage sites. I do not understand why it is obliged to disband this committee simply because it has strategic policy committees coming into place. It is nonsense for the Minister to pretend this system will be up and running and embedded at local level before we hold the local elections.

It makes perfect sense to get to a point where we decide — and make a firm purpose to stick to the decision — to hold local and European Parliament elections in a five year cycle and always in the same year. We do not need any more fancy reasons than that for taking this perfectly sensible measure. The Minister could have saved himself the trouble of going to the lengths of delivering this spurious rubbish in the House as a justification for doing something which is plainly sensible. It was entertaining that the Minister was afraid to say in the House that he wanted to hold the local elections in 1999 because I might disagree.

Mr. D. Wallace

He wanted to keep the Deputy in suspense.

Mr. Dukes

I was trying to find ways of indirectly conveying to the Minister that if he made such a proposal, he would be pleasantly surprised by the response.

Another point to which the Minister of State referred was the provision in section 11 to remove some permanent local authority staff appointments from the ambit of the Local Appointments Commissioners. That proposal will have to be carefully examined. The Minister set out some of the reason for doing this and referred to one problem particularly in relation to professionals, specifically engineers, who are being retained in temporary employment on a long-term basis by local authorities. Undoubtedly, some action needs to be taken in justice to resolve the situation of people who find themselves in that position. However, there is nothing in the Bill or in anything the Minister said which indicates that this measure is ringfenced, to use the Minister's phrase about the system, to deal with that problem. I do not know if it is in that there are other problems where people in professional grades, engineers in particular, find it difficult to gain access to promotion posts in the local authority in which they work.

There is a good deal of discontinuity in the engineering staff of local authorities which, in some cases, can reduce the effectiveness of the way they work. That is not a criticism of the individuals involved, far from it. However, if we keep moving people from one local authority to another, the benefits of continuity will not be available. Will the Minister tell us more about this measure as the Bill is not forthcoming on it? It provides that a section of a previous Act will be deleted. The explanatory memorandum states the effect of this change will be to enable the Minister for the Environment and Local Government, with the concurrence of the commissioners, to determine which professional offices are to be filled by the Local Appointments Commission. The Minister of State said the intention is that in future the resources of the Local Appointments Commission would be devoted more to the selection and recruitment of the senior tiers of local authority posts. More than what? Will they have other functions to perform? Will they continue what they already do on a smaller scale so that they can spend more time looking at the selection and recruitment of the senior tiers of local authority posts?

I refer to the expectation that the effect of the change will enable the Minister, with the concurrence of the commissioners, to determine which professional offices are to be filled by them. What does "concurrence of the commissioners" mean? For example, if the Minister decides certain local authority appointments are to be made by local appointments commissioners only and they disagree, will the Minister not go ahead with the appointments or will the commissioners have no option but to concur with the Minister's decision? If they say "no" will the Minister not proceed with the appointments? If they say "maybe" will he or she say the matter should be discussed? If the Minister says he or she will make the appointment anyway does it matter what the commissioners say? It would be useful to know what this means because all we have to go on is the statement in the explanatory memorandum of what the effect will be.

In practice, a provision is being deleted from existing legislation that gives the local appointments commissioners specific powers in regard to specific posts. Will it be the case that the Minister can decide according to his or her mood or disposition that posts are to be filled in a different way? If that is the case, with what powers will the local appointments commissioners be left? A number of problems have arisen in the way some appointments were made but the Minister would have to agree the local appointments commissioners system has served us well in general. I hesitate to change it without a more explicit and better motivated explanation than the Minister has chosen to provide.

The Minister might be a little more forthcoming on what he intends to do. I will not start imagining scenarios for which there might be no foundation. However, if there is to be a system where posts can be filled in a different way, has the Minister considered what influences might be brought to bear in making decisions on filling them? If he has not, he should. The reason local appointments commissioners were given that job was to remove certain posts in local authorities from the political arena. The Minister now says he will put certain posts back into what might be termed a political arena. Will he consider putting in safeguards?

The Bill refers to ring-fences for money. Are there any ring-fences for the unspecified appointments procedures which the Minister seems to have in mind? If not, the Minister should consider including some. The Minister probably knows better than I, because I have never been a member of a local authority, just what I am talking about.

I wish to return to the general pretence that this is a major reform of local government. The Minster tries to pretend that is the case and for 1999 he defined a quantum of funding that will be made available to local authorities and stated that because it will be index linked and ring fenced there will be a major change in the operation of local government. That will not be so because the fact that a quantum of money will be expedited in that way will remove two elements in the argument that goes on every year between local authorities and the Department of the Environment and Local Government. It does not take a label off any expenditure decided on in the Custom House or put a new label on any expenditure that local authorities decide on, limited though it is.

It does not bring any substantial area of local authority operation, other than the provision for county roads, into an area that might be called "freedom of decision." It does not enable local authorities to take on any functions other than those which they administer currently nor does it reform, or in any way affect, the political, financial or operational balance between local authorities and the Department. This is not a reform of local government; it is simply a different way of putting the same money to broadly the same purposes to which it has been put until now.

After the Bill is passed, no member of a local authority will become a more powerful person politically than he or she is and no group of members will gain a new influence on what happens in their area. No local authority can decide it knows better than the Custom House what the people in its area need in terms of investment programmes or development of community resources. This is not a Bill to reform local government. It brings the entire process of reform even further into disrepute to claim that such a limited Bill, which imposes a 6 per cent increase in motor tax over a period of less than eight months, is anything more than that. This is not reform.

Mr. Wall

I welcome the opportunity to speak on the Local Government Bill, 1998. It is an inadequate and backward measure in response to the needs of local government. It removes from local authorities the autonomy granted to them under the Local Government (Financial Provisions) Act, 1997. The Labour Party regards this as conservative and retrograde legislation that does not serve the interests of local democracy. It is necessary to put the issue of local government funding in context to fully explain our objections to the Bill and the system of funding it seeks to impose on local authorities.

Local government and local democracy have been the poor relations of our political and administrative system for too long. Local democracy has not worked in Ireland and has never been given the opportunity to do so. Failing to institute an independent and accountable system of local government funding has been the cornerstone of the problem. Successive Governments failed to tackle this problem in a meaningful way until my colleague, Deputy Howlin, carried out a radical review of the issue when he became Minister for the Environment in l994. By that time our system of local government funding was fractured, unwieldy and in many cases divisive. The roots of the problem date back to l977 when, in one of the most short-sighted and populist moves in recent political history, Fianna Fáil abolished domestic rates and replaced them with the rate support grant. This action plunged local government into 20 years of crisis in terms of funding. It not only undermined the range and quality of services local authorities could provide, it also removed power and accountability from elected local authority members. Meetings in council chambers became increasingly irrelevant to the lives of ordinary people and communities became frustrated at the lack of response, mainly for budgetary reasons, they received from their local politicians and looked to national politicians and budgets to provide an adequate response to the demands of their communities. Apart from commercial rates, local authorities did not have any independent funding after l977. The abolition of domestic rates robbed them of their ability to raise finance and, equally important, removed the onus on them to be accountable to the electorate for the disbursal of that locally raised finance.

Local government depended on central Government for funding. Each year local authorities were obliged to go cap in hand to the incumbent Minister for Finance and eke out a budget. However, as the economy contracted, inflation rose, the state of the nation's finances became a source of major political concern and budgets for local authorities failed to keep pace with inflation. At a time when the demands and local authorities were increasing, the funding available to them decreased each year.

From l985 onwards many councils were obliged to impose service charges on households in an attempt to stave off financial disaster. Those charges were imposed in an ad hoc manner across the country, which led to disparities from council to council and, in many cases, the wrath of the local population since they were viewed as a form of double taxation.

This position pertained in l994 when my colleague, Deputy Howlin, set about the most fundamental review of local democracy and published Better Local Government — A Programme for Change. That crucial document identified a number of weaknesses in local government. It stated that the range of functions carried out by local authorities was narrow and that in many cases local authorities were unable to respond to the needs of local communities which looked to central Government for an adequate response. This state of affairs undermined the public image and effectiveness of local democracy. The document also stated that local finance was characterised by a shortage of resources and an over-dependence on central Government funding through the rate support grant and that pressure to maintain services at their current levels had diverted councillors and staff from developing strategic and long-term goals for their local authority areas, which further undermined their public relevance.

Measures were put in place by the previous Government to address these failings in our system of local government. It was a comprehensive package of reforms designed to reinvigorate local democracy and to devolve power from Government departments and return it to those elected by the people at local level. Local authority financing formed an integral part of the reform package introduced by Deputy Howlin. For the first time in two decades, local authorities would have a dedicated revenue base.

The funding reforms and the subsequent Local Government (Financial Provisions) Act enabled local authorities to shake off the yoke of central Government. Local government was granted control over one of the most buoyant and important sources of finance, motor taxation. Local authorities were empowered to retain 80 per cent of the proceeds of motor taxation raised in their areas, with the remainder being invested in an equalisation fund to ensure equitable disbursement of motor tax revenue across the country.

The most important aspect of this system was that local authorities had their own legally constituted tax base, which was buoyant and already collected locally. It returned to local authorities control over a substantial part of their budgets. This was also important for the vibrancy of local democracy because not only would councils have the power to make their financial decisions, they would also have to be accountable to the electorate for the manner in which this finance was invested in the community. Councillors would also have to make an argument for any increase in motor taxation and outline to their electorate the projects and services which would come on stream as a result of such an increase.

This system of financing sought to reinvigorate local government. Its cornerstone was a dedicated, untouchable tax base, controlled by the local authority. It is this system that the current Bill seeks to remove and that is a retrograde step by the Minister, Deputy Dempsey. In Opposition, he was quick to criticise Deputy Howlin's proposals, in words that I am sure many Members will remind him of during this debate. He was adamant that "the system of local government should not be towed behind the family car". Those words ring hollow now as we debate the Bill. The Minister has proposed a system whereby motor taxation will fund local government. The changes introduced by him will serve only to halt the process of devolution initiated by his predecessor. It is a conservative Bill that lacks imagination or vision. It will ensure local government finance is firmly under central control. It will retard the development of local democracy and fail to bring local government closer to the electorate.

One has only to examine section 3 to see the degree of centralised control the Minister is foisting on local government. That section states that the Minister shall manage and control the fund, which shall consist of such accounts as the Minister may determine and the said accounts shall be in such form and be prepared in such manner as the Minister may determine. Section 4 goes on to concentrate control of the fund within the Minister's office. Subsection (3) relates to future investment in the fund by the Oireachtas. There is no forward thinking or effort to move control from the political machinations of the day. There is only a minimal clause that holds the figure at the initial sum of £270 million and protects it from being outstripped by inflation. Apart from that, public investment in the fund is at the arbitrary decision of the Minister, with the consent of the Minister for Finance. Subsection (3) requires the Minister only to have regard to the matters specified in subsection 4. There is no obligation on him to increase the funding to enable local authorities to expand or enhance their services. The purse strings of local government remain firmly in the Minister's control.

One of the most debilitating aspects of this stranglehold is that local authorities must go cap in hand each year to the Department before they are sure of their budgets. They cannot plan, with any degree of certainty, the delivery of services over a three year period. The enhanced policy and strategic structures established for councillors under Deputy Howlin's original proposals will be fundamentally undermined by this ministerial stranglehold. The Minister has chosen to abolish an independent funding system for local government and replace it with a stifling centralised regime. Local authorities must now join the queue with every other Department and organisation that relies on central funding. Funding for local authorities will depend on the budgetary whim of the Ministers for Finance and the Environment and Local Goverment.

In addition, the Minister is capping commercial rates in his new package for local government. This is an extremely condescending attitude for him to take. On 3 February last he stated in the House that no local authority had allowed rampant increases in commercial rates in the past number of years. Despite this record of prudent fiscal management, the Minister is now set to abolish the last vestige of local control over financial matters and cap the commercial rate levied by local authorities. With the Minister's local government fund proposals, the Bill gives him a veto over the development of local democracy.

We must question if this is the best way to finance local government. At the outset I detailed the weaknesses of our local government system identified in Better Local Government — A Programme for Change. Centralised funding procedures were the source of many of these failings. A new and progressive solution to this ongoing problem was devised, extensively debated and passed by the Oireachtas. The system had just begun to operate, but the Minister's first action was to abolish it in its infancy. This was a vindictive and short-sighted action by the Minister. He is now trying to replace that system with a retrograde and conservative measure that will fail local government and local democracy. The Labour Party rejects the fundamental thrust of this Bill and disagrees with its ideology and intention, because it will reverse the changes introduced to local government over the past number of years.

However, beyond the main body of the Bill, I welcome the moves to bring an environmentally friendly analysis to our system of motor taxation. This will benefit not only public transport vehicles but many voluntary and community groups which use coaches and minibuses to cater for their members. The Minister sees this as an initial "greening" of motor taxation rates which will be assessed in the future. The EU is also examining policy in this area and may soon produce proposals which will reward energy efficient commercial vehicles. I hope the Minister will prove amenable to these initiatives.

I also welcome his proposal to provide for five-yearly elections to local authorities after the 1999 elections. This reform is long overdue and I regret that it has been appended to a Bill which in every other respect will undermine rather than enhance local government. The five-year term will allow local authority members to approach business in a strategic manner and will do away with the Minister's ability to postpone local authority elections.

In responding to this debate, perhaps the Minister could indicate whether, in devising this section, he considered reform of the system of replacement councillors being drafted on to local authorities. Did he, for instance, consider drafting regulations to introduce a degree of transparency? The current ad hoc system is neither transparent nor accountable and detracts from the public image of local authorities. I ask the Minister to give his views on the matter and to say whether he considered a substitute list system similar to the one operating in European Parliament elections.

On section 11, the Minister said no decisions had been made on which posts would be designated to be filled through the Local Appointments Commission but it was intended that in future the LAC's resources would be devoted towards the selection and recruitment of the senior tiers of local authority posts. The unions and professional representative bodies have major concerns about this section and in his Second Stage reply the Minister should be far more specific about the positions to be filled by the LAC.

The purposes for which moneys would be paid out under the local government fund are set out in section 6. These include contributions towards the expenditure of local authorities on non-national roads and general purpose expenditure; they may also include payments to local authorities in respect of expenses incurred in promoting the delivery of quality, efficient local authority services. In south Kildare we have had problems with water and sewerage schemes in Castledermot, Prosperous, Brownstown, Ticknevin, Osberstown and Kilcullen. Can we presume all these schemes will receive funding on this section or will the Minister still control the purse strings? Those schemes are essential for the development of south Kildare. I compliment the Minister for his prompt action to rectify the major water problems in Castledermot, which was greatly appreciated in that town.

The Labour Party rejects the core proposals of the Bill. It undermines the progress made in local government in recent years and will keep local authorities under the thumb of the Department of the Environment and Local Government and the Department of Finance. It dismantles a more open and democratic system of funding which was never given an opportunity to thrive at local level. While some minor aspects of the Bill are to be welcomed, these are of little consolation given its essential import. This destructive legislation will not serve local government, local democracy or our citizens.

Proinsias De Rossa

One hundred years on from the establishment under British legislation of our system of county councils, local government is in a sorry state. A combination of the systematic financial starvation of local authorities and the repeated postponement of local elections have demoralised councillors and council officials alike and rendered the local government system increasingly irrelevant to people's lives. This Bill will not stop the rot and the decision yet again to postpone the local elections will worsen matters.

In many respects the Bill represents one of the more barefaced U-turns in our recent political history. In Opposition, Deputy Dempsey railed against the Rainbow Government's decision to abolish water charges and allocate motor tax to the local authorities. The same Deputy who told the Dáil on 7 May 1997 that the system of local government should not be towed behind the family car now tells us, one year and five days later, that it is a good idea to allocate motor tax to local authorities. There is nothing wrong with changing one's mind but on the evidence to date it is not simply a question of that. I am certain that when he was in Opposition the Minister recognised the value of what we were doing but in the tradition of Fianna Fáil, opposition for opposition's sake is more important.

I regard the decision to abolish water charges as one of the more significant achievements of Democratic Left in Government. The charges were unfair, ill-considered and had met continued resistance since they were introduced in 1983. During the negotiations leading to the formation of the Rainbow Government in 1994, we suggested allocating revenue from motor tax to local authorities as a means of replacing water charges. It was not possible to secure agreement on the proposal at that time but important reforms were introduced, such as establishing a tax allowance for those who paid water charges and greatly limiting the circumstances in which households could be disconnected for non-payment. We ensured the matter remained on the agenda and were pleased that before it left office the Government was able to introduce legislation abolishing water charges and providing for the retention of car tax by local authorities. In Opposition, the Progressive Democrats promised they would reintroduce water charges but they have not yet had the courage of their convictions.

Unfortunately, any welcome for the Minister's conversion to the system of local government funding which we advocated is tempered by the knowledge that he has made significant changes for the worse to the legislation introduced by the last Government. The most important and regrettable change is the decision to abolish the local government equalisation fund and the local government equalisation council. The council was to have included representatives of the local authorities and to have had responsibility for ensuring an equitable disbursement of funds among the authorities. This was an acknowledgement that local authorities have different population levels and different potentials to raise revenue, and face different problems — it was an attempt to level the playing pitch. Not only has the local government equalisation council disappeared from the Bill, the principle of equalisation has also gone.

The provision in section 6 of the Bill for some sort of advisory committee is so vague regarding its membership and remit as to be virtually useless except, of course, that it concentrates decision-making in regard to funding in his own hands. Also missing is the provision that would have allowed local authorities, within certain defined limits, to set the level of motor tax for their own areas; in other words to give local councillors some real decision-making power for once. Astonishingly, the Minister has also decided to drop one of the more innovative proposals from the rainbow legislation — the proposal to establish a local government value for money unit in the Department. The unit would have been required to improve the manner in which local authorities are managed and secure the provision of local authority services in a more economical, efficient and effective manner. Does the Minister believe there is no inefficiency in the local government system? Does he believe there is no need for improvement in the way local authority services are managed or does he think he can do it all on his own?

Not contained in the Bill, but a crucial part of the package nevertheless, is the proposal to cap commercial rates at their current level. The commercial rate was about the only remaining area where a local authority had discretion in raising revenue. Last year some £338 million was raised in this way. It is not surprising that a Government which surrendered to the business lobby on Luas, contrary to the interests of public transport users, should also cave in to pressure from the same quarter to cap commercial rates.

The decision to allocate £270 million to local authorities from central government is welcome but it may not be as generous as it seems. The Minister acknowledges that the combined motor tax proceeds and Exchequer funding amounts to an increase of £125 million. Given the extent to which local government services have been allowed to fall into decay since the abolition of domestic rates in 1977, the money may be sufficient to prevent further deterioration but it is unlikely to be sufficient to restore services to an acceptable standard. What is most unacceptable about the entire direction of the Minister's proposals is that it removes all remaining vestiges of discretion to enable councillors to make decisions locally about how they might raise revenue. Virtually every report on local government in the past 20 years has emphasised that local councils should not only have greater discretion to determine their overall spending levels but should also have an independent source of revenue. This is a move towards greater centralisation and away from decentralisation. The real financial power will remain with the Department and the Minister.

The Bill provides the Minister with enormous powers. No criteria are specified in the Bill as to how the local government fund will be allocated. There is no commitment to a fair system or any independent examination of the competing cases of local authorities for funds. Payments will be made as the Minister considers appropriate. It is not difficult to envisage a situation in future where an unscrupulous Minister might use the enormous powers he is being given under this Bill to reward local authorities of a similar political disposition or to punish local authorities which refuse to toe the Government's line on some policy issue or other.

We are opposed to this Bill for a number of reasons, not least the decision to postpone, yet again, local government elections. When the local elections were last postponed we were told the date for holding future elections would be enshrined in legislation and that there would be no more postponements. The decision means there will be at least nine years — almost a decade — between local elections. It is now almost 20 years since local elections were last held on schedule and on the last occasion on which they were deferred there was also a Fianna Fáil-Progressive Democrats Government.

Since 1980 there have been just two local government elections. In the same 17 years there have been seven general elections. The combination of repeated postponement of elections and the withholding of adequate financial resources is bringing the whole system of local government into disrepute. In the seven years since the local government elections were last held there has been a considerable change in the personnel of many councils as a result of resignations and co-options and many councillors have never faced the electorate. Population changes in the past eight years mean that many electoral areas have changed dramatically. The people are entitled to have an election to pass judgment on the performance of councillors on such issues as rezoning.

There is no excuse for the postponement of these elections and I suspect it is being done largely at the behest of the Progressive Democrats. Regardless of when the elections are held there is an absolute necessity for a total review of all electoral areas to deal with the huge disparity in the ratio of electors to councillors between urban and rural areas.

Recent figures show that while there is one councillor per 1,139 of the population in County Leitrim, the figure for Dublin Corporation is one councillor per 9,226 of the population. Leitrim, with its population of 25,057, elects 22 councillors while the Finglas ward in my constituency, with a population of 32,779, elects just four councillors to Dublin Corporation. Even allowing for the scattered population in rural areas and in parts of rural Ireland, the disparity is unjustifiable. The population of Dublin is doubly discriminated against because county councillors and borough councillors also comprise the vast majority of the Seanad electorate; in other words there is one Seanad vote per 1,139 of the population in County Leitrim whereas for parts of Dublin there is one per 11,770. This may well explain the relative under representation of urban areas in the Seanad.

Unfortunately, the boundary review committee announced by the Minister, Deputy Dempsey, will not be able to deal with the problem as it is restricted by its terms of reference to reviewing any disparity between electoral areas within each local authority. I call on the Minister to establish a full review of all local electoral areas to ensure that electors, urban and rural, enjoy a fair and equitable level of representation.

Mr. D. Wallace

On a point of clarification, the Bill does not abolish the value for money unit.

Proinsias De Rossa

Will the Minister of State reinsert everything else in the Bill as well?

Mr. Dennehy

I am pleased to have the opportunity to contribute to the debate. I compliment the Minister, Deputy Dempsey, and remind the House that few Members are more knowledgeable than the Minister about local government as he has served as secretary of the Local Authority Members' Association, in which he had a great interest. In response to previous contributions I had to ask my colleague who was in the House at the time — in case my memory was failing — if Deputy De Rossa had been a member or a Minister of the previous Government which took the first decision to defer the local elections which should have been held three years ago. He confirmed that he was in fact a senior Minister at that time. Yet he is critical of the Minister, Deputy Dempsey. Where was the justification for deferring local elections three years ago? Did he make his voice heard at the Cabinet table and complain about that decision?

Proinsias De Rossa

I did of course. At least——

Mr. Dennehy

The Minister has inserted a provision in the legislation, where it should be, which will ensure that Deputy De Rossa or any of his colleagues will not have an opportunity for deferrals. Local elections will no longer be deferred following the enactment of this legislation. I welcome that development. On the question of local government being starved of funding, this is hard to take from a person who has just left Government. I mentioned this last week in the context of health care. We are being told local government is starved of funding and so on. Who starved it? Successive Governments have starved local government of adequate funding. On the issue of abolishing water charges the direct complaint was linking it to motor tax. It was suggested, as a means towards buying a few seats in Dublin, which were not bought at the end of the day, that the motorist would have to pay for service charges. While I was outside the House at the time I thought that was a total contradiction of the policy being implemented by the European Union of the "polluter pays" principle. The motorist was to pay service charges for the person next door.

Proinsias De Rossa

Is the Deputy opposed to this Bill?

Mr. Dennehy

The issue of water charges was faced up to in different ways by different people. Cork Corporation's service charge collection rate for the last full year was 96.4 per cent. Those people are capable of fighting any cause that has to be fought. That record shows that the vast majority of the people are willing to pay. They realise we get nothing for nothing in this day and age. The Deputy was trying to buy a few seats in Dublin, one of which he lost to a backbencher.

Proinsias De Rossa

Why will the Minister not reintroduce them in the Bill?

Mr. Dennehy

In the same way Deputy Wall——

Proinsias De Rossa

On a point of order, why is this Bill coming in now?

An Ceann Comhairle

That is not a point of order.

Proinsias De Rossa

Reintroducing a method of local funding which——

An Ceann Comhairle

That is not really a point of order.

Mr. Dennehy

I am not as experienced as Deputy De Rossa.

Proinsias De Rossa

If the Deputy thinks it is so good why is he not introducing water charges?

An Leas-Cheann Comhairle

Deputies should address their remarks through the Chair.

Mr. Dennehy

I accept this legislation because those who complain that they do not want their vehicle taxes to be used for the payment of service charges will now see them being spent on the repair, strengthening and provision of roads, which they see as a priority. This direct link between roads and vehicle taxes is the correct principle. Members of the public have made their voices heard and the Minister agrees with them. It is a practical way to ensure roads are repaired.

Deputy Wall pointed out that following the decision by Fianna Fáil in Government to abolish domestic rates in 1977, local authorities had to impose service charges. He failed to mention that when the Labour Party was in Government the then Minister for the Environment, Deputy Spring, introduced legislation on service charges. I initially disagreed with them, but I could not find an alternative, despite the arguments in this House, in the Fianna Fáil Party and elsewhere. I have accepted them for more than seven years or longer.

Proinsias De Rossa

Since 1983.

Mr. Dennehy

I twice sought election having voted for them and headed the poll on both occasions. It proved there was widespread acceptance of the principle that people should pay directly for services. The Minister has incorporated this in the legislation.

It is important that there are changes in local government. Funding is the most critical issue and this is the first Government to have faced up to it. The question of funding was excluded from almost all attempts by Governments of the past 20 years to examine the functioning of local government. However, the Minister has decided to bite the bullet on this issue. First, the proposal to ring-fence the revenue raised from vehicle taxation will mean that it can be used only in specific circumstances, which will prevent its use in all aspects of local government. Second, the proposal to establish a specific fund is the first of its kind. A similar principle was established in 1977. It lasted up to 1979 when very high interest rates led to huge demands on central Government which it could not meet.

In this case the Minister has allocated a specific sum of money. It will be index linked, which is critically important, and there will be provision for special circumstances and for year on year increases. That is what local government funding should be about. There should be specific figures, targets and uses.

Further changes are required. The Houses of the Oireachtas have had a stranglehold on financial and legislative provisioning for local government. Legislation can create difficulties for local authorities. They are hampered in their ability to act on issues and to react quickly to needs that arise without having to seek ministerial orders or legislative change.

I have said publicly in Cork that if we obtained three times the funding for road surfacing and repairs from the Minister and the Minister of State at the Department of the Environment and Local Government, Deputy Dan Wallace, 50 per cent of the same roads would be dug up again because the legislation permits service providers to do as they wish with them, despite the fact that roads and footpaths represent the costliest element of local government.

A compensation culture has arisen in response to the damage done to our roads. It costs local authorities approximately £5 million per annum. Every Tom, Dick and Harry is allowed to cut up roads, regardless of whether they are old or new. Some have been in place for less than six months. For example, in my parish in Togher, within six months of the provision of a new bridge and road the road was dug up by the ESB and Bord Gáis. Local governments need the power to prohibit people from digging up road surfaces and footpaths unless it is essential. It wastes millions of pounds per annum.

Whereas this House often takes too long to implement measures, local authorities could respond speedily to needs as they arise. I could detail numerous instances in Cork where roads are more like patchwork quilts following the work of service providers, such as gas, television and so on. It will cost approximately £70 million to complete the necessary changes and we will lose another £5 million this year on compensation claims. This legislation is one way to address this problem. The money will be ring-fenced for use in this area. A certain amount of wear and tear on roads is inevitable, but it is not a major problem.

A national policy on signposting is required. In many instances, signposts create confusion and are a possible danger. Local authorities should be able to rectify this problem. The question of help for public transport is meaningfully addressed in the legislation. Proposed reductions in the tax rates for vehicles, which I welcome, will help in this regard. There has been an extensive debate on Luas. Looking at the situation in Dublin from the perspective of the rebel county — I drive through the city on Tuesdays and Thursdays — I appreciate some of the difficulties involved. However, I agree with the principle that Luas must be implemented properly. There was an almost identical reaction to the postponement of the River Lee tunnel by the then Minister for the Environment, Pádraig Flynn. While people alleged it was a delaying tactic the then proposal was for the construction of a two lane tunnel. He said bluntly that he was not going to create a bottleneck in Cork. The cost of the project has increased by 47 per cent and the tunnel will open in the next five to six months. It was the correct decision. On Luas, the Minister for Public Enterprise, Deputy O'Rourke, has adopted the correct approach, as has the Minister for the Environment and Local Government, Deputy Dempsey, in the case of local government. It takes courage to make decisions such as these. In celebrating 100 years of local government I hope the Minister, Deputy Dempsey, will devolve further powers to local level. In this context funding is critical. People will have to pay for services provided locally. The question of equalisation will have to be addressed.

On non-national roads, there is a specific problem in urban areas about which I have spoken to the Minister. Approximately £100 million was provided last year. In the light of the new car tax proposals much can be done to relieve the problem.

There is wastage of funds. On the local loans fund, in the past plans produced by local architects had to be forwarded to Dublin for approval. This amounted to duplication. Changes have been made since but much more could be done.

The capping of commercial rates has been mentioned. Two years ago the inflation rate in Cork doubled following a huge increase in commercial rates. This was accepted by the Cork Chamber of Commerce, among others, on the basis that there would be a spending programme to revitalise the city centre. The commercial rate-payer should not be seen, however, as an easy target, particularly by those who resent anybody who is successful, who works hard and is rewarded for it. They should be given a fair crack of the whip to prevent businesses being destroyed. That is what the Government intends to do in this Bill.

Deputy Wall used the emotive phrase "shaking off the yoke of central Government". As a former councillor, I agree that this needs to be done. The first step in that process is the provision of adequate funding. That will happen for the first time under this Bill, which should be welcomed by all those with a dual mandate.

There will be a statutory requirement to hold elections every five years. This is a move in the right direction. Elections will not be held at the whim of a Minister, be they a member of Fianna Fáil, Fine Gael, the Labour Party or Democratic Left.

Ms O. Mitchell

I welcome the opportunity to discuss the issue of local government. In celebrating 100 years of local government it is appropriate that we should discuss the vexed question of local government financing. Local government has served the country well, often unrecognised. It has made significant changes in the lives of people and, possibly, a bigger contribution than improvements in the health service, particularly to public health through the provision of clean potable water, sewage disposal facilities, improved housing stock and safe waste disposal facilities.

The principle underlying local authorities is that a community elects from among its number a number of its own to provide the services it considers are best provided communally. Local government is based on the notion of community participation, co-operation and contribution but somewhere along the way we have forgotten what it is all about, is supposed to do and represent. Perhaps society has become too complex, populations have become too large and too many services are provided but somehow the sense that a county council is owned by the people has been lost. People now, understandably, feel remote from organisations which they should believe belong to them. The final nail in the coffin in this trend was the abolition of rates. This has produced an attitude, particularly in Dublin, of us and them which will be hard to shift.

Because of the cutbacks in the 1980s and more recently the rapidly increasing costs of services now required and the higher standards demanded with the growth in functions of local authorities and the rising expectations of the population and the demands it makes of local authorities, local authorities are groaning under the strain. This is a great tragedy for the elected members and the public.

In an age when all kinds of forces are operating to fragment communities, break up families and disconnect people from one another, the local council is the one agency which is ideally poised to counteract this trend and give people a sense of pride and ownership of their area. Because they lack funding and because of their inability to respond to the changing demands of society and fulfil their statutory duties and functions adequately, the public, particularly in Dublin, feel totally alienated from their councils which are supposed to represent them. Their good work is completely discounted and their best intentions are regarded with suspicion. They are regarded, at best, as irrelevant and, at worst, despised. They have lost all their potential to be dynamic local development agencies and to replace the bonds of family, church and community which previously held society together. They have lost their potential to be leaders in bringing about sustainable communities through the local Agenda 21 processes. However, there are signs of hope, for example, the additional funding under the Bill, although I have reservations about its source. There is also hope in the introduction of the strategic policy committees. Without adequate funding and the discretion it gives to local authorities, they will always be deficient in terms of what they do and wish to do.

I hope the new fund will mean more money and offer more flexibility. There is a long history of Ministers giving with one hand and taking away with the other and using announcements of additional funding to tighten the hand of central Government. Members of local authorities could be forgiven for being suspicious and I hope they will not find a sting in the tail regarding the new fund.

The strategic policy committees are an opportunity to bring the public and their councils together and to give them a sense of identification with each other. Elected members recognise the potential of the committees and view them as a challenge. They also view them as an opportunity to rescue local government from complete alienation. However, whether the partnership approach will be accepted by the public, and particularly those involved in various community development organisations, is another matter. Many people have already engaged productively with their county councils, but others regard and treat their councils with utter disdain. This is not a good basis for partnership and it must change if the strategic policy committees are to function as intended.

I welcome the additional funding and the guarantee that funding each year will at least match inflation and be related to the functions and cost base of local authorities. As members of local authorities are aware, for too long functions have been thrown at local authorities. This is not only demoralising for the members and their staff but it repeatedly reinforces the public view of the ineptitude of local councils when they fail, as they must inevitably, to fulfil the functions adequately.

I have serious reservations about the source of the new fund from motor taxation receipts and its method of allocation to local authorities. It is fundamentally wrong to choose growing car ownership with all its environmental disadvantages as a buoyant tax base to fund bodies whose duty is to protect the environment. From a traffic reduction point of view, it is not even an efficient tax. Car ownership already has extremely high associated fixed costs but that has not had the slightest impact on the demand for cars. I agree with the view that high fixed costs associated with car ownership encourages the use of cars. People who have already spent so much on their cars are reluctant to leave them sitting outside their doors while they take public transport. If one wants to reduce travel, the charge must be related to the actual use of the car. Unlike this measure, such a charge could be legitimately regarded as an eco tax.

The second aspect about which I have reservations is the Minister's statement that he has ring-fenced this source of funding for local government. However, that is not the case. He has ringfenced the source of funding for the Department of the Environment and Local Government. If one believes in local democracy, there is a fundamental difference between funding for central Government, irrespective of Department, and funding for local authorities. The Minister should be congratulated for securing the funding from the "grab all" hands of the Department of Finance. However, it should not be confused with discretion over the funding of local county councils. In choosing this method the Minister has lost an opportunity to reinstate the basic principle of local democracy that funds gathered locally should be spent locally.

It is not clear in the legislation how the money will be disbursed to local authorities. All we know is that it will be related to performance. If that is the case, some form of national indicators of performance must be used, but these can never be sensitive to local conditions and individual needs of local authorities. For example, if a local authority decides one year to spend nothing on roads and to put all its funding into footpaths, it will not come anywhere near an adequate national indicator of performance on roads. If the authority decides to put all its money into introducing a recycling system, does this mean it will lose its funding next year for footpaths and roads? Many aspects are unclear.

The principle of the Department enforcing and policing a value for money regime, which the Minister favours, is fundamentally wrong. It is a reflection of a totally paternalistic approach to local authorities which assumes that the Department is more concerned about value for money than the county councils. There is no reason to believe this because the councils involve grown up people who are all concerned about local authorities and how they function. It is an insult to the members and the people who elect them to assume the Department is more concerned about this area than them.

The principle of accountability in local democracy is that the elected members are accountable to those who elect them and not to the Minister. Real democracy and discretion means giving county councils the freedom to make mistakes in addition to the freedom to make good decisions. Consequently, in common with the Government, they will either suffer or benefit at the hands of the electorate. National performance indicators applied across the board will remove the raison d'e tre for local government by reducing their area of discretion and ability to respond to local conditions. It turns local government into mere cyphers, spending money which is raised by central Government at a level to be decided and chosen by the Government. To add insult to injury, the Minister raised motor taxation by 6 per cent but the ire of the public is focused on local authorities which had no part to play in the decision.

Aside from the undemocratic nature of this method of funding, it is also difficult to understand how local authorities in the coming years can meet their objectives, many of which are set by the Government. How can they achieve sustainable development objectives without some discretionary eco taxes, incentives or penalties? Under the new Energy Bill local authorities are required to show how they will reduce energy needs. Without some mechanisms to encourage certain behaviour and penalise others, short of beating people over the head, I do not understand how we can encourage energy and water conservation, waste reduction, recycling and reduce traffic and other forms of air pollution. These are immediate issues, particularly in Dublin, which is suffering enormous environmental pressures as a result of economic growth. The Minister is aware of these pressures and he should use the Bill to equip local authorities with the mechanisms to carry through and implement their local Agenda 21 processes as quickly as possible.

In the context of environmental measures, I draw the Minister's attention to the need to give local authorities power to charge the statutory undertakers for road openings. The previous speaker mentioned this aspect and I agree with his point. I cannot overstate the importance of this matter. At present they are charged for reinstatements; some do it well but others do not. Some leave the most appalling devastation for the local authority to clean up. This issue is critical in the context of hugely increased traffic levels and, concurrently, the huge increase in investment by the statutory undertakers because of increased demand for their services. It appears that virtually every road in Dublin is opened simultaneously. Unless some system of charging is introduced to reduce the amount of time they work on the road and to force them to co-operate to reduce the charges, I do not know how Dublin will continue to function. It is the same in other urban areas. It is destroying the environment, open spaces, footpaths, roadways and grass verges as well as causing traffic chaos, and local authorities seem powerless to do anything about it. It is especially critical as there are now more statutory operators. It did not matter during a recession when investment in the country was low and there was little traffic but it matters now. The same rights were given to Esat when it was awarded its licence. Another licence is about to be issued which means another operator digging up the roads. Will the Minister allow charging to force operators to organise themselves better and finish their work quickly?

I welcome the provision in the Bill modifying the requirement for professional positions in local authorities to be filled by the Local Appointments Commission. I do not wish to denigrate the work of the commissioners who have served the country well for many years and who have removed the possibility of influence in filling positions, but the system is gummed up and not working properly any more. There are two problems. First, it is taking too long to recruit replacement staff with the result that projects must be put on hold while replacements are awaited. Second and more importantly, a situation is being created where, for example, an engineer appointed in Dublin can be promoted three months later to Donegal. For those who stay longer and who want promotion, a local authority often has no choice but to lose them to another authority, thus losing their expertise and local knowledge which they have built up over the years. While this may have worked in the past, the work in which local authorities are now involved is too complex, important and expensive for that expertise to be lost, for the local authority to be left to cope with the vacuum created and for it to have to wait for the new person recruited to familiarise themselves with the job and with complex and intricate projects. The Minister did not state the reason for this change in the appointment of professionals but I assume someone informed him of the position and that it is the reason. It is a change from which we can all benefit and which will introduce greater efficiency in local government.

Will the Minister examine changes in the development levies local authorities charge to developers? At the moment, they can only levy in respect of certain works, usually sewerage or road works or services directly related to a development. There is a need to grant local authorities greater flexibility in this area to allow for the creation of more sustainable development. An example would be where an open space is not available within a site, something which will become more prevalent as higher density housing is sought. In such cases, developers could be asked to provide spaces in the area which the local authority could purchase and which would serve the local community rather than the specific development. Such flexibility is needed to promote better design and orientation, better use of sites and indigenous materials and other factors in creating more sustainable development. A mechanism is needed to force developers, architects and others involved in developments to formulate more sustainable policies. There should also be an environmental payback to the local authority where the development has a deleterious effect on the environment.

Mr. Haughey

I propose to share my time with Deputy Collins.

An Leas-Cheann Comhairle

Is that agreed?

Agreed.

Mr. Haughey

I welcome the Minister and congratulate him on bringing forward the Bill. Adequate funding is the cornerstone of successful local government and the Bill deals with the funding issue once and for all. The funding of local government has been the subject of intense political debate for the past 20 years. Rates were abolished in 1977 by the Government of the day and this has been the source of considerable debate since. I recall contesting the local elections in 1985 and water charges were the main issue. The electorate, particularly in cities, refuse to pay water charges. The taxes imposed by Governments in the 1980s were perceived by many to be punitive, so the imposition of local charges on top of central taxation was perceived to be unjust and unfair. Local government needs secure and adequate funding to function properly. The Bill will allow local authorities to operate within a guaranteed, sustainable and secured base of funding. A local government fund will be established and the funding will come from the proceeds of motor taxation and an Exchequer contribution amounting to £270 million in 1999. The total fund in the first year will be £590 million. This is a welcome development and I am delighted to hear Opposition spokespersons welcome the figure.

How did local authorities operate in the past?

They were often put in an impossible situation. On occasion they had to pass their estimates without knowing what the allocation from Government would be. Ministers often decided to penalise certain local authorities for one reason or another. That situation was unacceptable and I would go so far as to say it was laughable. I recall as a member of a local authority that we passed estimates in the hope of receiving a certain figure from central Government when it sorted out its Book of Estimates. Thankfully, those days are at an end.

The Government is right to propose the deferment of local elections until 11 June 1999. A much needed and extensive programme of reform is now being implemented by the Minister. The current system is over 100 years old and must change or disintegrate. Population changes mean that electoral areas are in urgent need of revision. I am delighted a commission has been set up to review the boundaries and I await its report which is due in July. The last local elections were held in 1991. The term of office for councillors serving now is eight years. This should never happen again and it will not if and when this Bill is passed. The fact that councillors elected in the expectation of serving five years are now serving eight years brings local democracy into disrepute. Many local authority members today were co-opted to the county or city council. They have not been given a chance to renew their electoral mandate or even obtain one in the first place.

Regarding the system of co-opting, if a councillor must be replaced one could have a situation where a couple of branches or cumainn, perhaps 21 people in all, would decide who a new city councillor should be. That is unacceptable. On a couple of occasions every year we welcome new members to Dublin Corporation, and the time has come for a local election. That will take place next year, when we will have a reformed system of government. People with fresh mandates and policies will be elected and that will breathe new life into our local authorities.

I welcome the development of the strategic policy committees and of the area based committees which Dublin City Council is in the process of setting up. The previous structures were outdated and local government was dying. The new system will ensure that there is adequate planning and a dynamic response to the rapid changes taking place in our towns and cities.

The reforms also mean new roles for the councillors and will enhance their positions. I share the Minister's hope that young, talented people, particularly women, will be attracted to public office and will present themselves for election next year. I hope the reforms encourage people to vote in local authority elections. The system of local government is supposed to be based on the community, and the community's participation is a key element. If we are to empower communities, we need people to come forward for the local elections.

The citizens of London recently voted in a referendum to elect their lord mayor directly, and this idea has also been floated for Dublin. I support this idea because it would ensure that local government in Dublin would become more accountable. The same would apply to other cities if the plan was extended to them. Candidates would have to put forward a vision for their city in a programme that would be voted on. That programme would then have to be implemented over a five-year term. The mayoral election could be held on the same day as the local elections, when the entire city or county council is being elected. Obviously the mayor could not be a Senator or Deputy.

A directly elected lord mayor would have enormous credibility at home and abroad. Because of that democratic mandate such a mayor would be highly respected and would be a powerful force in the promotion of his or her city. It goes without saying that the office of lord mayor would have to be given real power and resources.

Local development agencies are doing very important work in our communities. They will have to be integrated into the reformed local government system in the interests of openness, transparency and accountability. Local authorities must also become more customer friendly, which is happening under the new Dublin City Manager's "Let's Hear It For Dublin" programme. Community activists are invited to seminars in order to bring in partnership in local government, and this is very welcome. I agree with all Deputies on the digging of roads by public utilities. It is a major problem because the roads are not being reinstated properly. Local authorities will have to be given more powers to not just monitor this work but to ensure that roads, footpaths and grass margins are restored to a satisfactory standard.

Mr. Collins

I thank Deputy Haughey for sharing his time. This Bill is part of a major programme for local government renewal. It has been undertaken by the Minister to ensure local government does not become marginalised. I congratulate him on his work in this regard. The Bill's primary purpose is to put in place a new funding system for local authorities which will replace the funding arrangements introduced under the Local Government (Financial Provisions) Act, 1997. It involves the establishment of a local government fund which will be financed by the proceeds of motor taxation and by the Exchequer contributing up to £270 million. The fund will be ring-fenced exclusively for local authorities and the Exchequer contribution will be adjusted annually in the light of changes in the functions of the cost bases of local authorities. The Minister proposes that this new system comes into effect from January 1999.

This Bill also provides for an increase in motor taxation, for the postponement of local elections until June 1999 and for the modification of professional positions in local authorities in order that they be filled by local appointments commissioners. When in Opposition, Fianna Fáil published a policy document entitled "Real Local Government". This stated that when in Government Fianna Fáil would introduce a radical new method of funding local government with the proceeds of motor taxation. Our election manifesto stated that the time had come to give people more control over their affairs at local level. Many people thought promises were being made in Opposition that would not be fulfilled, but we have honoured our commitments.

I heard the Minister speak when he visited our county council. He visited every council in the 26 counties, for which he must be complimented, and explained the policies he would implement if in Government. I do not want to embarrass him, but he is recognised as one of the best Ministers for the Environment we have ever had. He understands the system thoroughly. He came up the hard way and knows what the people and the councillors want.

Our programme for Government confirmed our commitment and stressed the need for proper funding for local government and for local discretion on how it is spent. Section 3 provides for the winding up of the local government equalisation fund and for the establishment of the local government fund. This will provide a more buoyant system of funding and will be ring-fenced for the sole use of local government, coming into effect on 1 January 1999. This fund will amount to £590 million and will be financed from two sources, the proceeds of motor taxation which will be primarily used to fund the restoration programme for non-national roads, creating a clear link between motor taxation and the upkeep of our roads, and an Exchequer contribution of £270 million in the first year, 1999. That figure will be adjusted in line with inflation and to reflect changes in the functions of local authorities. The Bill is praiseworthy because it ensures for the first time revenue from motor taxation will be set aside for its original purpose, the upkeep of non-national roads.

I am sure the majority of complaints the Leas-Cheann Comhairle and other Members receive relate to the deterioration in the condition of non-national roads. During his first year in office the Minister made a substantial increase in the allocation for non-national roads, but there are still problems. I would like to mention a telephone complaint I received from a constituent about certain roads in the eastern part of my constituency. That constituent did not speak kindly to me or about the Minister. However, the Minister has had the guts to grasp the nettle in relation to this matter. I recall a former Minister when addressing my county council not so long ago saying that reform of local government was due but he did not know who was prepared to grasp the nettle in that regard.

Under this legislation motor tax is firmly linked to the upkeep of our road network. This Bill ends the anomaly that prevailed in previous years when the proceeds of motor tax were used for purposes other than for the upkeep of our roads. While this will involve increasing the overall rates of motor tax, that will be done on a phased basis by an increase of 3 per cent on the passage of this legislation and by a further 3 per cent on 1 January 1999. There will be reductions in the rates applying to public service vehicles, a change which the Minister pointed out will benefit many voluntary groups, with limited resources, who run minibuses and coaches.

This Bill ensures local authorities will have an extra £125 million, a 27 per cent increase over the 1997 provision, to meet their day-to-day expenditure. Business will benefit by way of this Bill through the availability of better infrastructure and the enhanced ability of local government to deal with priorities.

The new funding provided by the Minister will enable the Government to introduce a cap on increases in commercial rates in line with the commitment in the programme for Government. That point was adequately covered by previous speakers. We all remember when the commercial rate was increased by 12 per cent at a time when the rate of inflation was only 3 per cent. This new funding base for local government, with the ever increasing successful value for money drive initiated by the Minister, Deputy Dempsey, which includes exploring new ways of working, eliminating outdated bureaucratic practices and making the best use of modern technology, will allow local authorities to play a much more significant role in everyone's daily life by consistently providing quality services for all our citizens.

Sections 9 and 10 provide local elections will be held in June 1999 and every five years thereafter in conjunction with the European elections. The Minister is in the process of putting in place a substantial body of legislation, which is badly needed, to underpin the process of local government reform. It is important the general outline of the new local government system should be known before the electorate is asked to decide who should represent it. This is true democracy. Time is needed to undertake the proper revision of local election constituencies. The Minister set up a commission to report on this matter. Such a revision has not been carried out since 1985, but census results show electoral areas are in serious need of revision due to demographic changes. I congratulate the Minister on the magnificent work he is doing in his ministry.

Mr. Neville

I wish to share my time with Deputies Perry and Joe Higgins.

An Leas-Cheann Comhairle

That is agreed.

Mr. Neville

I also welcome the Bill. It is a small step towards increasing the role and power of local government, but there is nothing radically new in the Bill. A similar proposal was brought forward by the previous Government, but the same discretion with regard to the application of an increase in the motor tax rate is not evident in this Bill. I generally welcome the Bill because for too long local government has become less and less relevant here. Any movement to strengthen it and make it more relevant to the people is to be welcomed. The key to doing that is to ensure local government has a function in collecting taxes. The Minister indicated at a meeting in Limerick that this legislation would be a step towards further development of local government and I urge him to move in that direction because local government is vital to communities, democracy and those of us who have been involved in it for many years know how important it is to localities. Often councillors are not considered to have much power or influence, but are viewed as people to whom to make complaints.

Deputy Collins raised the issue of the condition of our roads, an issue that has plagued us for many years, but I acknowledge the improvements made since 1995. The Government allocation to Limerick County Council for roads decreased every year from 1992 to 1995, but it increased from £2.2 million to £4.1 million in 1995, to £4.8 million in 1996, to £6 million in 1997 and the Minister increased the allocation to £7 million this year. The previous Government and this Government have made an effort to ensure the condition of regional and country roads is improved. However, as the previous speaker said, this is not enough because the condition of our roads was allowed to deteriorate to too great an extent initially and there has been a huge increase in the volume of road traffic. I urge the Minister to ensure the increase in the road allocation to Limerick County Council will continue apace in future years.

I also wish to raise the issue of landfill sites, on which we should have a more coherent policy.

This issue is a problem throughout the country. Members who listen to local radio stations while travelling to the Dáil will often hear a debate on problems surrounding those sites. I attended a meeting in Clare last night at which this issue was raised. We need a national policy on landfill sites. Many problems arise because landfill sites have not been maintained at an environmentally acceptable standard in keeping with the right of people to enjoy the environment in which they live. Many problems have surrounded the landfill site in Gortadromma in the western part of my constituency, but we are overcoming them. I ask the Minister to make the necessary resources available to ensure that it and other landfill sites are maintained at the standard dictated by Europe or above it because this issue is a hot potato at local level. Nobody wants them but everybody produces refuse. There is an urgency in County Limerick because of the closure of the city landfill site. This is a growing crisis.

There are almost 1,000 applicants for housing in the Limerick council area. The Celtic tiger does not appear to be addressing this problem. Even though there is an increase in the standard of living, it has not touched a section of society. The problem is not with housing alone but also with the improvement of housing stock. There are difficulties with repairs and more finance should be given to that.

Shared ownership is becoming more successful and is having more of an impact in resolving the housing crisis. However, some people cannot afford to take out loans and finance must be given to that area. The concept of social housing is a brilliant one but it is totally underutilised. I have raised this at council level and have been paid some lip service. Social housing could play a bigger role in the improvement of houses.

For example, I know of a house which could be improved by the provision of a bathroom and some dry lining. This would be a comfortable house for a couple in their early 50s who could live there for the rest of their lives. The area of planning must also be looked at, to ensure that rural Ireland survives and does not become a barren area.

Mr. Perry

I compliment the Minister on the Bill, the primary purpose of which is to put in place a new funding system for local authorities. This is an excellent concept which could lead to regional authorities providing the statistics for Objective One. The devolution policy is also a great start. The fund will be ring-fenced exclusively for local authority purposes. It is important that this is enforced. I have great respect for local authorities, county managers and those doing fantastic work in counties. It is good that they will have a source of funding with which they can identify.

Rates is another form of funding for local authorities. The business community are the only property dwellers taxed indirectly, although some of it is tax allowable. The rates system is dated and needs upgrading. If the Minister could look at this, it would be appreciated by the business community. Having spoken to numerous business people, I know that regardless of their profitability they must pay rates.

Sligo avails of INTERREG road funding which is incorporated in the EU co-financed allocation. This should be additional. With the huge growth in tourism, additional funding should be a top-up, particularly in Sligo. The consultant's report, issued by the Department of the Environment and Local Government, established Sligo as one of the counties with the worst road conditions in the country. This is one of the reasons INTERREG funding should be additional to the EU co-financed funding.

Seventy per cent of local primary roads in Sligo require reconstruction or surface restoration. Only 17 per cent of the local primary road system is considered adequate. At current funding levels, the council will be unable to deal with accumulated deficiencies and keep pace with the ongoing deterioration in the ten year programme. The ten year investment in the restoration is clear evidence of the lack of follow-up maintenance.

Perhaps the Minister can look at the conditions attached to the restoration grants, which are extremely restrictive. They preclude routine maintenance, which is important. Analysis of the council's investment in non-national roads has shown a decrease from £1 million in 1986 to £369,000 in 1997. This will result in the reapportioning of funding to non-national roads restoration and an increase will be necessary.

It has been estimated, based on this study, that Sligo should receive a 16 per cent increase in existing funds to achieve its appropriate share. This Bill is a major step forward, but I ask the Minister to look at the problem of INTERREG funding. I discussed this matter with the county manager. The council is being penalised, which should not be the case.

Ongoing maintenance, such as drainage and pothole repair must take place if the investment is to be protected and value for money achieved. The council's contribution must be increased to a realistic level and there must be a relaxation in grant conditions to allow a portion of funding to be applied to routine maintenance.

We welcome the huge investment in the motorway from Carraroe to Sligo. However, it is disappointing for the large number of people who travel on local and non-national roads to see the lack of maintenance funding for pothole repair. I appeal to the Minister to look at the additionality of INTERREG funding. If this could be achieved, it would bring substantial funding to Sligo.

Mr. Higgins

(Dublin West): Gabhaim buíochas do Theachta Perry agus do Theachta Neville. The funding of local authorities has been considerably and scandalously neglected for a decade and a half. Local authorities were systematically starved, dating back to 1983 at least, when the link was broken between the rates support grant and the amount domestic rates, as existed until 1978, would have brought into local authorities. This had devastating consequences for the services of local authorities and the population dependent upon them.

Staff levels were devastatingly cut in local authorities throughout the country. Dublin County Council, which was a massively expanding area, suffered hundreds of job losses. This had huge consequences on services. Communities in local authority housing areas were disgracefully neglected and allowed to become rundown in the most shameful fashion. They had expanding populations, virtually no facilities and were built on greenfield sites where people were left in the wilderness. Undoubtedly, in the suburbs of Dublin in particular that was a contributory factor to the heroin crisis that bedevils communities.

The crisis in housing generally results from lack of investment. There is a particular crisis in local authority housing. Fingal County Council receives funding for 90 new homes per year while there are 1,500 families on the housing list. South Dublin County Council receives funding for 105 new houses per year while there are more than 2,000 people on the housing lists. Unfortunately, this Bill does not provide for those on the housing list. The Minister should recognise that this is an emergency.

Because of the shortage of funding for public housing and the consequent pressure, profiteering by house builders and developers on the one hand and opportunism by speculators on the other is rampant. It was revealed in the High Court yesterday that one firm of builders dashed the hopes of young house buyers by pushing up the price of the house on which they had paid a deposit by a massive £36,000 from the original price agreed a few months earlier. Surely that is legalised racketeering on a scale that would be scarcely found in the black economy of a war zone let alone in what is supposed to be a civilised State.

The increase in house prices is not due to an increase in the price of materials and it is certainly not due to massively increased wages for building workers, it is due to sheer naked greed. Successive Governments have sat on their hands and watched this new breed of carpet-bagger take hold in the housing market with devastating consequences and suffering for ordinary working class people. The Minister should address this matter.

The proposals brought forward in the context of the Bacon report will not address the problem. I ask the Minister to make emergency funding available to end local authority housing lists by extending the shared ownership scheme. Workers on the average industrial wage are incapable of buying the cheapest new home in Dublin because the price is way outside their range. The measures introduced by the Minister may slow the rate of increase in house prices but they will not bring them down to the level of the ordinary working person. The shared ownership scheme is paralysed for workers on the average industrial wage because they cannot make repayments according to the standards laid down by local authorities. These are burning questions which I ask the Minister to address in the context of this discussion.

While local authority funding was being run down, hundreds of millions of pounds were handed back to privileged sectors in society. That money could have been used to develop local services and housing. The 1987 Fianna Fáil Government and the 1994 Fianna Fáil-Labour Government handed back up to £1,000 million in the two tax amnesties awarded to the super rich, while at the same time local authorities were starved of funding. Those Governments had no hesitation in soaking the PAYE worker to make up the difference, particularly in the form of water, sewerage and refuse charges, a parallel system of local taxation to make the ordinary person fill the hole left by the dereliction of the wealthy and the loopholes availed of by big business, financial institutions and the super rich in avoiding taxes.

Water charges were a hated double taxation. The PAYE taxpayers, the compliant, decent taxpayers, found expression for their just anger and opposition to these charges, not only in Dublin but throughout the country in organisations such as the Cork Householders Against Service Charges, the Tipperary Unemployed and Workers' Group and the Federation of Dublin Anti-Water Charges Campaign.

Justice is not served by the fact that decent householders are still dragged before the courts for arrears of water charges. Just as an amnesty was offered to the super rich a few years ago, the Minister should send a signal to local authorities to stop this persecution. That would be justice for those who have funded and still fund the bulk of this system. County managers should be asked to call off the persecution of decent taxpayers who are being dragged into court on a monthly basis for arrears of a discredited and now abolished tax.

Minister for the Environment and Local Government (Mr. Dempsey)

I thank Deputies who contributed to the debate. It is remarkable that in this debate and on many issues relating to local government funding there is frequently much agreement and a unity of purpose among Deputies. Obviously we will not agree on everything, but the spirit of the contributions by Deputies on all sides of the House indicates the need for reform of and provision of funding for local government.

This Bill was introduced primarily to deliver on promises made when we were in Opposition. It meets the overall commitment set out in An Action Programme for the Millennium to put local government funding on a better footing. In doing so we will protect the future of local government and ensure local authorities not only survive but become modern, efficient, responsive organisations. Everybody in the House agrees such a Bill was necessary. Local authority finances had reached the stage in the past 20 years where, if something was not done, local government would have been in a serious position. As I said at several local authority meetings, if we were not prepared to tackle this issue we should abandon the whole system of local government and concentrate on a properly centralised system, although that is not my preference.

The major bone of contention among local authority members with the current funding system is that the amount of money for current expenditure purposes is insufficient and that no mechanism is in place to ensure buoyancy in motor tax is not eaten up by increases in the cost base of local authorities or by the conferral of additional functions on them. They are the two main problems I had with the system introduced by the previous Government. I have no difficulty acknowledging that my predecessor made efforts to rectify the position of local government financing, but there were shortcomings in that regard. The two drawbacks to which I referred would have meant that in the coming years the financial position of local authorities would have become steadily worse and they would be back to the position in which they were some time ago.

The estimated provision under the new funding system will be £590 million. That will be made up of an Exchequer contribution of £270 million as well as receipts from motor tax, estimated at about £320 million. Despite Deputy Dukes's calculations that the new funding system would deliver only £20 million, I am pleased that an extra £125 million will be available to local government from the beginning of January 1999.

I wish to indicate to the House that on Committee Stage I intend to introduce a gratuity system for members of local authorities who are to retire.

Debate adjourned.