Dáil Éireann debate -
Tuesday, 29 May 2001

Vol. 537 No. 2

Motor Vehicle (Duties and Licences) Bill, 2001: Second Stage.

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

I move: "That the Bill be now read a Second Time."

This Bill is the necessary follow-up to the financial resolution on motor tax rates which was passed by the House on the 8 March 2001. As Deputies are aware, the financial resolution has only limited statutory effect and is required to be replaced by a Bill which provides a permanent legal base. The provisions of the Bill before the House are the same as those contained in the financial resolution with the addition of a provision to vary fees for full driving licences by regulation and also a provision relating to administration of the local government fund. The financial resolution essentially amended the Finance (Excise Duties) (Vehicles) Act, 1952, and the Finance (No. 2) Act, 1992, in relation to rates of motor taxation. In general, with some exceptions, the financial resolution increased motor tax rates by between 4% and 6%.

As I indicated during the debate on the financial resolution, the rebalancing of motor tax which I am proposing will "green" motor tax somewhat. That is not to say that motor tax is, of itself, a green tax. Nevertheless, we can configure the motor tax code to give it a greener bias, which will hopefully have positive environmental effects. On this basis, lesser increases in motor tax will apply to cars with smaller capacity engines which, as a general rule, do not use as much fuel as larger cars and, accordingly, create less harmful environmental side effects, particularly carbon dioxide emissions. The changes in motor tax rates provided in the financial resolution, and again set out in the Bill before the House, are already in place having come into force on 1 April 2001. Not all motor tax rates have been increased and some have been decreased. I will refer to this later.

By way of background, motor tax is collected by local authorities and paid directly by them into the local government fund which was established under the Local Government Act, 1998. As well as the proceeds of motor taxation, the fund is supplemented by an Exchequer contribution which is increased each year at least in line with inflation. It is primarily used to finance non-national road grants and general purpose block grants for local authorities.

Local authorities' current expenditure is met from a range of sources. In 2001, local authority current expenditure, estimated at £2.1 billion, will be financed as follows. Specific State grants, e.g. non-national road grants and higher education grants, will amount to about £559 million or 26.6% of income; local commercial rates will generate about £518 million, which is about 24.7% of total income; local charges and fees for goods and services, which will amount to about £586 million or 27.9%, and, finally, general purpose grants amounting to £436 million or 20.8% of current income. General purpose grants, financed from the local government fund, are an important source of local authorities' funding, representing about a fifth of total local current income. They are discretionary and may be used by authorities for funding whatever day to day operations they consider necessary without any strings attached from my Department.

As the House will be aware, such operations span a wide spectrum covering a multitude of areas such as housing, roads, water and sewerage, planning, the natural environment, recreation and amenities, community development and so on.

Given its range of functions, local government is facing cost increases on a wide range of fronts. If local authorities are to meet the demands being placed on them, clearly they must be adequately resourced. In addition to their usual scale of operations, local authorities have responsibility for delivering on large elements of the national development plan. It is imperative, therefore, that they have sufficient financial resources available to deliver this work. While much of the capital costs of the NDP will be met by the Exchequer, significant downstream costs will arise for authorities in terms of operation and maintenance of the projects and schemes. Additional resources which arise from changes in motor tax rates will help local authorities to meet their commitments in this regard and to provide more and better quality services to the community. The local government fund is also used to finance non-national road grants and additional resources brought about by the increases in motor tax will also allow work to continue on improving the non national road network.

As I mentioned, new motor tax rates apply to tax discs and trade licences taken out for periods beginning on or after 1 April 2001. As regards private cars, three different rates of increase are provided, depending on engine size. There is a 4% increase for cars up to 1100cc. This represents an annual rate increase of between £4 and £6. There is a 5% increase for cars from 1101 cc to 1500cc, which translates into annual increases of between £8 and £10 and a 6% increase for cars of 1501cc and over. These increases will range from £15 per annum at the lower end of this bracket to £51 for cars over 3091cc.

The increases proposed in the Bill cannot be considered excessive. It is interesting to note that almost two thirds of all cars are under 1500cc and will, therefore, be only subject to annual increases of between £4 and £10, or between just 8p and 19p a week. A standard across the board 6% increase is provided for goods vehicles. At the minimum goods vehicle rate, which incidentally is paid by over four fifths of commercial vehicle owners, this represents an annual increase of £10, or less than 20p per week.

A revision of motorcycle tax rates is proposed to reflect the different engine sizes of these vehicles. The single rate of £22 is being replaced by the three tax bands, which existed prior to 1992. The new rates vary between £25 for motorcycles under 75cc to £45 for motorcycles over 200cc.

In motor tax law, there is a motor tax class that includes vehicles constructed specifically for the conveyance of a built-in machine or workshop and this class would include recovery vehicles. In motor tax law parlance, such vehicles are known as contrivances. Outside of recovery vehicles which collect disabled vehicles, this class includes cranes, well-boring machines and fish and chip vans. These vehicles, like goods vehicles, are designed and constructed for the carriage of various items in the course of trade or profession. As such, these vehicles are being brought into line with the goods vehicle class and their rate is increased to the new goods vehicle minimum of £170.

The Bill also makes provision for a 6% increase in respect of agricultural tractors. The rate for non-agricultural or general haulage tractors is being aligned with the minimum goods vehicle rate given the type of use to which such vehicles are put. The Bill also provides for average increases of 12% for trade licences, or trade plates as they are known. These are the green registration plates used by motor traders on vehicles, which are temporarily in their possession, in lieu of taxing such vehicles. While there are strict restrictions on the use of the plates, they are transferable between vehicles.

Two new motor tax classes are being introduced under this Bill. The first of these is a class covering all vehicles, irrespective of whether they are private vehicles or goods vehicles, which are used exclusively on an offshore island to which there is no direct road or bridge access from the mainland. A reduced rate of just £52 per annum is provided for this class. This reduction is in recognition of the limited use of such vehicles and that some owners require a vehicle both on an island and on the mainland. The reduced rate will not apply to vehicles on islands such as Achill or Valentia which are connected to the mainland.

The second new tax class comprises all vehicles which are used exclusively for mountain and cave rescue purposes. This tax class is being established to exempt this class of vehicle from motor tax altogether. Vehicles used exclusively for transporting lifeboats, ambulances, fire brigade vehicles and State owned vehicles are already exempt from motor tax. Exempting this new class of vehicle for motor tax purposes completes a motor tax exemption for all emergency vehicles.

As I mentioned at the outset, one of the primary reasons for rebalancing motor tax rates is to reflect their impact on the environment. As a greening measure, no increases are proposed for public service vehicles such as buses, taxis, hackneys, youth and community buses and school buses, and electric vehicles are also being exempted from any increases in motor tax rates.

While not covered by the Bill, I mentioned during the debate in the House on the financial resolution that as a measure to assist people who may face difficulty in taxing their cars on a full year basis, regulations were being introduced to provide for a reduction in the surcharge which applies to vehicles which are taxed half yearly and quarterly. As with increases in motor tax rates, these regulations came into effect on 1 April 2001.

Traditionally, driving licence fees have been regarded as an excise duty under the Finance (Excise Duties) (Vehicles) Act, 1952, as amended by the Finance Act, 1989. As such they could be varied, as desired, in the annual budgetary process through an amendment of the Finance Act. The Local Government (Financial Provisions) Act, 1997, provided that driver licence duties were to be paid into the Local Government (Equalisation) Fund and the Local Government Act, 1998, provided that such duties would be paid into the local government fund. In the light of these changes, it is considered that it would be more appropriate that driving licence fees be set otherwise than in the Finance Act. The Bill makes provision for the Minister for the Environment and Local Government to set the driving licence fee. It is proposed that the fee can be set by regulation.

My colleague, the Minister of State with responsibility for housing and urban renewal, Deputy Molloy, has on a number of occasions in reply to parliamentary questions indicated that arising from a review of the overall driving licence fee arrangements carried out by my Department, it is proposed to introduce more equitable licence fee arrangements for persons aged more than 70 years. The Minister of State, Deputy Molloy, indicated that amending legislation would be required to implement this change and undertook that such legislation would be implemented as soon as practicable. The current Bill provides the necessary legislative vehicle. Following the enactment of the Bill, it is the intention that the regulatory changes introducing more equitable licence fee arrangements for persons aged more than 70 years will be proceeded with promptly. I am not sure whether I should declare an interest, but both my parents are over 70 years just in case somebody raises it.

Under existing legislation, given that motor tax proceeds are paid into the local government fund for local authority use, costs incurred by my Department in connection with the collection of motor tax are recoupable from the local government fund. A similar provision existed in relation to the operation of the equalisation fund. In addition to motor tax, fees from driver licences and some other minor miscellaneous fees and duties are paid into the fund for distribution to local authorities. Although such fees are paid into the fund, neither the Local Government Act, 1998, nor its predecessor dealing with the equalisation fund, the Local Government (Financial Provisions) Act, 1997, specifically refer to the recoupment from the fund of costs associated with the administration of these fees. As with the costs associated with the collection and administration of motor tax, it is considered that the same provisions should apply in respect of driver licences and section 7 of the Bill provides for this. In any event, in practice in many cases, the same staff are involved in the same work.

With the introduction of the euro notes and coins from 1 January 2002, the Bill provides the euro rates of motor tax. The euro amounts were arrived at by dividing by the euro convertor – 0.787564 – and disregarding any cents. This approach not only ensures that motor tax offices continue their practice of handling whole units of currency but will result in a reduction in motor tax to all customers. Savings vary from under a euro for annual renewals to one euro plus for half year applications and one to three euro for quarterly renewals.

This Bill provides for minimal increases in motor tax rates which are below inflation rates. The income generated by these increases will not only improve the capacity of local authorities to provide a quality service to its consumers but will also contribute to an improvement in the quality of the environment by encouraging the use of smaller capacity cars. Accordingly, I commend the Bill to the House.

Ms O. Mitchell

I recognise the ever increasing cost of providing new roads and maintaining existing ones and, therefore, I have no fundamental objection to paying road tax or to fairly modest increases in road tax. Most people would accept that road users should make a direct contribution to the cost of maintaining roads over and above the contribution they pay through general taxation. Anyone who has anything to do with local authorities recognises the major demands being made on local authorities in all areas but especially in the areas of providing roads, maintaining non-national roads, secondary roads, tertiary roads and footpaths, the control of road openings and the costs associated with that, road sweeping, road safety and other demands being made on local authorities in terms of housing construction programmes under the Planning and Development Act and under those aspects of the national development plan that fall to the local authorities to deliver. Local authorities are literally groaning under the weight of these additional demands. With the increase in population the public are demanding higher standards of services from everybody, including public servants and local authorities.

I want to put to bed the notion that this is a green tax. I am pleased the Minister softened his cough somewhat in that regard. He said this measure will green motor tax somewhat, which is a long way from what he claimed in March when he suggested in a press statement that we should be almost dancing in the streets with delight because such a wonderful green tax would be introduced. As politicians, we should not make such statements as it only increases public cynicism when we try to deceive people.

As the Minister is aware, a green tax is a tax on ownership, but this is a fixed tax which will have the exact opposite effect. It will not reduce usage, as people will feel guilty about the initial outlay and will try to justify the expense by using their cars more often and spread the fixed cost over a greater number of miles. With our onerous vehicle registration taxes, if fixed taxes had any impact on reducing usage, there would not be a single car on our roads and we would not have any traffic problems. This is a good old fashioned revenue raising tax and there is nothing wrong with that as taxes have to be raised, but it should not be dressed up as anything else. We should not pretend it is not part of general taxation and that it has nothing to do with it, given that it has everything to do with it.

During the debate on the resolution in March, the Minister spoke about the importance of boosting the flow of income to the local government fund to help meet the cost of the increased demands on local authorities. If the Minister expected this measure to have an impact on reducing car ownership or car usage, it would be illogical to expect an increase in the flow of income into the local government fund, as one would then be seeking to increase expenditure from a fund that was diminishing.

If the Minister was genuinely concerned about the environment, he would batter down the door of his ministerial colleague, Deputy O'Rourke, and ask that she sanction the provision of more buses for all urban areas. Dublin Bus will not get any new buses this year, yet every Minister, even those who do not represent urban areas, must know that there is a traffic jam stretching from the front and back gates of Leinster House in all directions for up to almost 70 miles every day. The Minister for Public Enterprise is denying licences to private bus companies on the most spurious of grounds and no other Minister is doing anything about that, yet she will not sanction the provision of additional buses to Dublin Bus. Restricted conditions attach to the few licences that have been issued, such that drivers are not allowed to pick up or drop passengers where they want to. It is an awful spectacle in a city that is almost grinding to a halt to see half empty buses passing by people waiting pathetically at bus stops for buses that rarely ever come.

While I am referring to a public transport issue, it is very much related to the Minister's brief. I remember being in Malahide when the Minister launched the strategic planning guidelines for Dublin and he asked that Dublin absorb approximately 20,000 additional houses every year for the next few years. If he wonders why those houses have not been built, that is partly due to the lack of transport. Almost without exception, every objection to planning applications for housing is traffic related. The public, with good reason, have lost confidence that the Minister or any other member of the Government will do anything to promote or provide modes of sustainable public transport. It falls to the Minister, as Minister for the Environment and Local Government, to encourage the Minister for Public Enterprise to get her finger out in terms of issuing licences. If she will not approve the provision of additional buses, she should at least issue licences to allow others to provide buses.

This is not a green tax or a local tax, even though the Minister has often tried to promote it as a local tax. If it were a local tax, it would be spent where it is collected and local authority areas in which there are many cars, such as mine, would be one of the richest counties instead of being one of the poorest. Although this tax is collected locally, it is centrally controlled and distributed according to some formula that nobody has ever mastered or understood. It is an unknown and arcane formula and militates against urban and city councils and thus urban areas. If the Minister genuinely wanted to reduce emissions, he would address the area of public transport.

When a new tax is introduced in a budget by the Minister for Finance, some attempt is made to indicate how much will be collected under it. The Minister did not indicate the revenue that it is expected will be generated by this increase in the tax. This tax generated approximately £370 million last year, which is a great deal of money. Has this increase in the taxation, which was charged from April, been factored into the allocations to local authorities for 2001 or as a result of this increase can they expect higher increases than in previous years in the allocations for tertiary road grants, which are normally announced during the summer? I am not sure if that will be the case, but irrespective of that I plead with the Minister to consider significantly increasing the grant levels to urban local authorities, which even though they may not be designated as urban local authorities are becoming increasingly urban in nature.

The local authority in my area receives no footpath grant whatsoever and pathetically low tertiary road grants, even though 95% of its population live in housing estates and have footpaths and public lighting outside their doors and all the operational and maintenance costs that go with that kind of high density living. The pounding of traffic on a daily basis increases maintenance costs. The same applies in all Dublin local authorities, including local authorities in many other counties where increased urbanisation spills out from town centres into county councils which do not have the same rate base as urban councils and corporations. In many older areas, particularly areas that were built more than 30, 40 or 50 years ago, including estates in my constituency, there has been no road maintenance since before 1987. The roads are subsiding and footpaths are crumbling and it does not make economic sense not to maintain them. Reconstruction work is required. It is very difficult to justify not repairing footpaths for elderly people when we are spending limitless millions of pounds on motorways. If there is to be a bonus for local authorities, I ask the Minister to direct it to where it will make a real difference to people's lives in their local areas.

During the debate on the financial resolution my colleagues and I raised the anomaly surround ing the issue of taxing electronically assisted bicycles. While the Minister promised to deal with the issue, no attempt has been made to deal with it in the Bill. Taxing these bicycles is as ludicrous as taxing a child's pram. Indeed, on occasions I have seen children's prams being used as offensive weapons. This is exactly the kind of transport mode the Minister should encourage. They are emission free and noise free and much safer than conventional mopeds or bicycles because they have a cut off speed. I was speaking to someone recently who said that he would cycle to town on an ordinary bike at 37 m.p.h. while these bikes have a cut off speed of 25 m.p.h. Given that we are spending enormous amounts of money on cycle paths, surely we should encourage people to use them because it is frightening how little they are used.

Given the increasing age range of the population, people should have an option of using cycling as a method of recreation or commuting to work. Older people like myself might even be tempted to use the bike but might need a little help on hills. As these bikes might be a little more interesting than traditional cycles, they might attract younger people who are taking to those ghastly noisy mopeds and, worse, to motorbikes, which could not be a more dangerous mode of transport, apart from the emissions and noise impact on the environment.

In other countries electrically assisted bikes are not subject to motor tax. Their use is encouraged. What worries me is that if these bikes are subject to motor tax, they are also subject to motor insurance and the carrying of number plates. Some countries have abolished import tax on them, while others give a 50% grant to people to buy them because they consider them so desirable. It is daft for us to tax them. I realise that the law is turning a blind eye to such bikes on the road but this puts the Minister and anyone involved in an accident in an invidious position. It is wrong not to match the legislation with the application of the law on the ground. I ask the Minister to consider this aspect because it is a dilemma which will not go away. I will be tabling an amendment but the Minister may be in a better position to deal with the issue by way of an amendment.

I must warn the Minister that I will table an amendment to section 7 on Committee Stage. I may be suspicious by nature but it seems the local government fund was set up and ring-fenced precisely to be a local government fund and to prevent Ministers from dipping into it when the need arises. I may be wrong but I suspect this is an attempt to dip into the fund for something other than that for which it was set up. As far as I am concerned, the fund was set up for a certain purpose. It may be inadequate and nothing other than a ring-fenced fund for the optics that road tax is going to local authorities. However, it is the thin edge of the wedge if the Minister starts to dip into it for other uses. While the Minister says this is to do with the administration of the licens ing system for drivers, the reality is that an awful lot of money needs to be spent on the whole area of ongoing driver education and licensing. However, I am determined that money will not come out of the local government fund. Road safety is a national issue which must be funded by the Exchequer. I am putting the Minister on notice that I will not support anything that puts even a little chink in the armour of that ring-fenced local government fund.

I welcome the measure which will facilitate the Minister of State, Deputy Molloy, in reducing the cost of licence fees for people aged over 70. This was a very onerous aspect in many cases, particularly as it was accompanied by a need to get expensive medical certificates over a certain age. This is a welcome provision in the Bill.

Mr. Gilmore

The Minister has an amazing habit of making the most grandiose claims for what are often very mundane initiatives. He has lived up to that reputation in his presentation of this rather modest Bill. He says his proposals will green motor tax somewhat. I think it is more somewhat than green. He states that as a greening measure no increases are proposed for public service vehicles such as buses, taxis, hackneys, youth and community buses, school buses and electric vehicles. When the Bill is passed, I can see the flock of motorists leaving their cars to take public transport because 4% or 6% will not be applied to taxis, hackneys and buses.

It is a measure of how little the Government has done to green taxes that this modest measure should be offered to the House as a green measure. It is nothing of the kind. It proposes a modest increase in the levels of motor taxation to which I stated the Labour Party had no particular objection when the motion was discussed some time ago. I have some concerns in relation to the Bill. The first was already referred to by Deputy Olivia Mitchell. It relates to section 7 of the Bill in which the Minister proposes to take from the local government fund what are called "expenses incurred by the Minister in connection with the collection of motor vehicle tax". In the two respective subsections of that section he proposes to make this raid on the local government fund retrospective in one case to 1 January 1998 and in another case to 1 January 1997. I will oppose that section on Committee Stage. Deputy Mitchell pointed out that when the local government fund was established it was done on a ring-fenced basis. This is the first assault we have had on the local government fund by the Minister. I do not see any point in it. As he made clear in his own contribution, the local government fund is made up of the revenue collected in motor taxation plus a contribution from the Exchequer. Why there should be an attempt to recoup expenses incurred in relation to the collection of motor taxation and driving licence fees baffles me.

It is interesting that the explanatory memorandum, which normally tells us if there are costs associated with particular legislation, makes no reference at all as to whether there is any cost to the Exchequer in relation to this particular Bill. Since it is silent on the matter it is clear that what is intended here by way of a raid on the local government fund is a revenue raising measure. It is doubly unacceptable because it is the Minister himself who will decide by regulation what the level of the driving licence fee will be. It is also, in the event of any difficulty arising as to what constitutes expenses in connection with the collection of motor tax or the driving licence fee, the Minister who will be the arbiter of any dispute. I intend to return to that on Committee Stage and, as I have indicated, I intend to oppose that section because I see it as a raid by the Minister on the local government fund.

The second reservation that I have in relation to the Bill – I want to echo comments I made when these proposals were in motion form earlier this year – has to do with the way the local government fund is distributed and the lack of accountability for this fund. The vast majority of the people who pay motor tax, who are by definition the contributors to the local government fund, live in housing estates in urban areas where the roads and footpaths are literally falling apart. The worst roads in this country are to be found in the various housing estates in urban areas. Many of those roads were built 20 or 30 years ago by "spec" builders who often paid little attention to the quality of the road they were putting down. These roads are now falling apart. They are in a critical state and the level of financial assistance available to local authorities to do anything with them is quite minuscule.

In fairness to the Minister when he made the road grant allocations for this year he referred to these urban roads. In a section of his press release on 5 February 2001 he said that urban roads must not be neglected either and that the users of urban roads also deserve good quality roads. That is true although the use of language in his statement is a giveaway. It seems to me that urban roads, the roads in housing estates, are treated very much as the also-rans when it comes to the allocation of moneys for the upgrading and maintenance of roads.

In the 2001 allocation, for example, only £19.1 million has been allocated to urban authorities for their non-national roads and that is out of a total allocation of £319 million, in other words, just 6% was allocated to urban authorities for the upgrading and maintenance of non-national roads. Let us look at the major urban centres. For example, in Dublin city the allocation to Dublin Corporation is less than £17 million out of a total allocation of £319 million, about 5% of the total allocation. If we take the entire greater Dublin area, the four authorities of Dublin City, Fingal, South Dublin and Dún Laoghaire/Rathdown, the total allocation is £40 million out of the total of £319 million. In other words, a little over 12% of the total allocation of roads money is going to the area which has about 30% of motor car registrations.

I said before when this was in motion form that I accept that the allocation of moneys for roads and the general allocation of moneys to local authorities from the local government fund cannot be exclusively on a per capita basis but I do not accept a regime where it appears to be virtually exclusively on a per kilometre basis, irrespective of whether it is a little used road in some part of the country or a highly used road in an urban area. The day is approaching when the people who pay motor tax will look at the roads in their immediate area and they will wonder what they pay their motor tax for. It is essential that there is some rebalancing of the way the local government fund is distributed and how the non-national roads allocation, which comes from the local government fund, is distributed in order to provide a reasonably decent quality of road for people who pay the road tax for the roads in the areas in which they live.

This would not be an issue, and none of us would complain very much about the proportionate distribution of road grants and the local government fund, if it were not for the fact that the roads concerned are in an appalling state. Deputy Olivia Mitchell referred earlier to the quality and standards of the footpaths and I agree with her. They now cost local authorities large amounts of money, not for repair and maintenance but for claims from people, particularly elderly people, who fall and injure themselves on broken footpaths. It is a problem that must be addressed urgently.

I referred before to the disproportionate way in which the local government fund itself is allocated. A look at the distribution of the local government fund shows that, per capita, those in south Dublin receive £54.75, those in Galway city £76, Waterford city £79 and Dublin city £80. At the other end of the spectrum, County Leitrim receives £228.76 per capita, County Longford £199.23 and County Roscommon £172.98.

We have to discuss seriously the basis on which the local government fund is allocated, a demand I made in a meeting of the Select Committee on the Environment and Local Government. The local government fund comprises the proceeds of motor taxation and a contribution from the Exchequer. This House should be given the fund's annual account, including details of what goes in and out of the fund and how allocations from it are made. We need to discuss the criteria used to distribute the local government fund. I am aware that a study of needs and resources was carried out on behalf of the Department by Galway County Council. The study reflects the priorities of that county council, which I understand.

The means of allocation of the local government fund remain unsatisfactory. There must be public discussion in this House of how the fund is divided among local authorities so that we know the criteria that are used. I have looked at the study of needs and resources but I cannot find a list of criteria. Issues that should be included in such a list include the social problems within the area covered by the local authority. Attention must be paid to the State management of the kind of problems that have to be dealt with by local authorities managing large housing estates in urban areas as such problems are not taken into account when moneys are being distributed from the local government fund. The need to provide and maintain community and recreational facilities in large urban areas is not taken into account as allocations are made.

This Bill proposes relatively modest increases in motor taxation and the resultant money will find its way into the local government fund. This House needs to address what is happening to the local government fund, how it is being accounted for, what happens to the motor taxation income that goes into it, how the fund is allocated among the various local authorities and how roads in different parts of the country are treated. I do not doubt that many motorists who will have to pay 4% or 6% extra for motor taxation, depending on the size of vehicle driven, are getting bad value. This applies especially in areas where most of the those who pay motor taxation live because the roads, footpaths and motor infrastructure in such areas are not properly maintained, they are rundown and substandard. Value for money paid by way of motor taxation is not being received.

As I have indicated, there are a number of areas in this Bill to which I intend to return on Committee Stage tomorrow. I do not object to the proposed increases in motor taxation but I have strong objections to the way the local government fund is being managed and the moneys from it allocated. It is something we have to return to in this House at a later stage.

Ms Clune

In March, we discussed the tax that was proposed in the budget on 6 December 2000. The Minister, Deputy Dempsey, has told us that this motor tax is not a budgetary issue and is not part of taxation policy generally. Such comments ring hollow with motorists who have to pay a tax which we are told is not a tax. The Minister attempted to hide the tax involved by announcing it in the shadow of the budget last December. He attempted to slip it in after newspapers had gone to print that night and after the budget had been accepted and applauded by those involved in motoring, including the Automobile Association of Ireland. The tax has been described as a green tax in an effort to make people feel that they will benefit the environment by paying it. As Deputy Olivia Mitchell said, it is misleading to contend that this is a green tax as it is merely a method of collecting further revenue. I notice that the Minister's speech today did not confidently promote it as a green tax.

In my view it is not a green tax as it will be based on the energy capacity of the car. A car manufactured today can be up to 20 times cleaner in terms of its emissions. I know the Minister referred to carbon dioxide emissions from smaller cars, but a ten year old car may use more fuel than a newer, more environmentally friendly car that has been built to a higher standard. In the last ten or 15 years, the development of new technology like electronic injection systems, catalytic converters and multi-valve engines has contributed to the manufacture of low emission passenger cars. Light duty vehicle engines have enabled significant improvements in air quality in other European countries. Future developments will further enhance air quality.

The EPA's Ireland's Environment: A Millennium Report noted that the quality of our air is continuing to deteriorate and blamed this on increases in traffic and transportation. A four litre diesel fuelled car has lower emissions than a ten year old small car, but this is not reflected in the Minister's proposals which focus on engine size. Nothing has been done to advance and promote newer, more environmentally friendly technologies. Motorists are not given incentives to purchase new cars and when buying new cars there is no focus on the environmental impact of engines. Certain engines will reduce emissions and thereby benefit air quality, but this has not been reflected with green taxation measures.

I have received many representations from those in the motor industry on the importation of second hand cars from outside the EU. It is claimed that cars imported from such places have higher emission levels than cars with a similar engine capacity manufactured within the EU. We should be concerned about this and I would like to see it addressed. We have no idea what types of cars are being imported, what types of engines they have or what contribution they make to the already deteriorating air quality here.

In regard to the additional moneys to be collected under this measure, while I support the notion of a motor tax going directly to support a fund to be reinvested in infrastructure for motorists, I would prefer to see more equity in the allocation of the local government fund. There are questions as to how this funding is allocated. I have here a copy of correspondence in that regard from the Cork county manager to the Department of the Environment and Local Government. In it the county manager outlines that Cork County Council has carried out detailed analyses of the condition of the non-national road network in County Cork and of the non-national road grant allocations, which show that 53% of the network is substandard and would require £230 million at current prices to bring it up to standard – we are all aware of the rate of inflation that applies to road construction and road maintenance costs. He says that at the current rate of grant allocation, it will take from 14 to 22 years to bring these roads up to standard, assuming they do not deteriorate in the meantime.

He goes on to say that the increases in allocation in recent years have covered cost increases only and that longer lengths of restoration are not being achieved. He refers to the fact that the council has spent its own resources in 1998, 1999, 2000 and 2001 to fund over-expenditure on the restoration programme rather than cut back on the length of restorations and that such expenditure was in addition to the present annual spend of £15.5 million of its own resources on the maintenance of the non-national road network. He further states that this assessment, taken in conjunction with the council's analysis of the published list of countrywide allocations, shows that Cork County Council is not receiving an equitable proportion of the national allocation and that at the current rate of allocations it will take approximately 19 years before the non-national road network in County Cork will be brought up to standard, assuming they do not deteriorate, but that the increase in traffic in county areas, many of which are large urban areas similar to developments outside Dublin, and the extreme weather we have experienced over recent winters have caused roads to deteriorate at an alarming rate. All the county council can do is patch them up in an effort to repair the damage. It can do nothing in terms of improving the quality of the road network. In those circumstances, 19 years is an optimistic estimate.

The road network in Cork is the longest in the country. However, in terms of the allocation of non-national road grants, in 2000 it ranked 26th and in 2001 it ranked 24th. Sligo and Roscommon were behind Cork this year in terms of investment per kilometre of road. That is the extent to which our non-national road network has been allowed to deteriorate. It is ironic that a Fianna Fáil Government is proposing an increase in motor taxation, having abolished it in 1977. It is obvious that the reasons for the condition of the roads go back a long time.

Mr. Dempsey

I am surprised the Deputy remembers that.

Ms Clune

I remember it well. I hear about it regularly at local authority meetings. Engineers point to it all the time.

I spoke to the Minister before about the funding of county boroughs and urban corporations which have not received a fair share of funding for roads in their areas. This question was also raised by Deputy Gilmore. Such funding is meant to cover footpaths as well, but the condition of footpaths in many areas continues to deteriorate. Cork Corporation has found that its hands have been tied in terms of upgrading footpaths and it is leading to huge increases in costs in terms of public liability because of accidents, because of elderly people turning on their ankles and falling in these areas. The Minister is well aware of that. There was a report on this recently in my local authority area. County boroughs and corporations cannot get on top of the situation because many roads are deteriorating, public liability accounts for a large chunk of their budgets every year and costs seem to be continually escalating. Many roads in housing estates have not been resurfaced since they were constructed in the 1970s and none of us is sure what the quality of construction was at that time. In the Cork area the situation is exacerbated by the fact that roads were built on marshland which tends to sink, and this affects the road surface.

This is to be a local government fund, and everybody is concerned about how such a fund is allocated. I hope section 7, which empowers the Minister to use the moneys obtained from driving licence fees, will be clarified. The local government fund should be ring-fenced and the Minister should not be able to dip into it for the purpose of administering the licensing system. That money should be kept specifically for the local government fund as outlined. That is what it is intended for. Such funding is in short enough supply at present without taking further from it.

This is an additional tax on the motorist. However, the more money people invest in keeping their cars on the road the more likely they are to try to get value for money and use them rather than using public transport. Investment in public transport is lacking. I questioned the Minister for Public Enterprise about investment in new buses in Cork. We are only replacing old, deteriorating quality buses, not increasing capacity. There has been no advance on park and ride facilities. The Minister for Finance included proposals in previous budgets to develop park and ride facilities but few of them have been taken up.

Last week there was a picture of the Minister for Public Enterprise, Deputy O'Rourke, boarding the Luas bus in London. Where is the Luas? It will be two or three years before it is available. We are still looking at the construction holes in the road but there is no sign of Luas. There is no sign of anything to alleviate the problems experienced by commuters. There is talk of the metro and Luas but they are not built. What is to be done today and tomorrow to benefit the commuter? Where are the additional buses, bus corridors and park and ride facilities to encourage people to leave their cars at home and use public transport?

Bus lanes are restricted to taxis and buses. Why not ask the Minister for Public Enterprise or the Dublin Transportation Authority to encourage a car pooling system whereby cars carrying two or three passengers can use a bus lane? People would be extremely interested in such a proposal. They would go out of their way to participate in such a system if they could use the bus lane. It works well in the United States. I always travel by bus in Dublin and when one stands at the bus stop all one can see is car after car carrying just one occupant. It would be a simple measure to open the bus lanes to car pools, particularly the bus lanes which caused controversy by taking over a car lane and squeezing motorists into just one lane. Car pooling is a simple measure that could be implemented immediately. It works satisfactorily in other countries and should be considered here. I believe it would be extremely popular.

My main objection to the Bill is that it is being promoted as an environment tax. It is not that but merely another method of collecting funds which, I hope, will be spent in a more open and equitable fashion.

Mr. Naughten

I am delighted to address the House on this Bill. The Bill offers us the opportunity to tease out a number of issues. First, however, I will refer to two points I raised on 8 March when the House debated the financial resolutions. The first is the exemptions in section 3 of the Bill. At that time I proposed that the Minister consider exempting sub aqua clubs which provide an emergency service on inland waterways. They are part of the rescue services and should be given the same recognition as the other emergency services which are exempted.

Sub aqua clubs do valuable work and are involved in search and rescue activities when there are drowning incidents, mainly on our inland waterways and lakes. They provide an excellent service. However, the vast majority of such clubs are run on local voluntary contributions. Members of the teams give voluntarily of their time to carry out searches. Many of the clubs are run on a shoestring. It has been suggested that the cost for an individual involved in a search is approximately £60 per day. If an extensive search is required, it can involve significant costs for both the local sub aqua club and the members of the club involved in the search and rescue operation.

It is not possible in many cases for the Garda sub aqua team to be called in, due to the many demands placed on it. The fact that some members of the sub aqua team are now based with the Garda water unit in Athlone will further tie up the team. As a consequence, sub aqua clubs are usually the first port of call for local gardaí when a search and rescue operation is required. The members of these clubs are called out at short notice to carry out these operations. Their vehicles are not used on a full-time basis for emergency purposes but they provide an important service in many parts of the country.

Clubs are also requested from time to time to cover safety events in water. This is an important service and the Minister will be aware of that. There is no inland water rescue service unlike on the coasts where there is the RNLI and the coastguard service. Sub aqua club vehicles are also used to transport equipment for non-emergency purposes and for social outings for diving. However, in many cases this is part of the ongoing training which takes place in sub aqua clubs.

The Dolphin sub aqua club in Roscommon has made a submission on this issue to the Minister. The emergency telephone numbers of the club are printed on the side of the club's van should people believe there is a need to call its members out during an emergency. The Garda, the Civil Defence and the fire service in Roscommon have the numbers to contact the sub aqua club in such emergencies.

I am aware of the problem that the sub aqua club members are not involved full time in these activities and that the system could be abused as a result. It must be feasible, however, for the local garda superintendent to certify that a sub aqua club is providing a much needed emergency service on inland waterways in the community and that the exemption is not being abused. We are not talking about a huge amount of money but an exemption which would give recognition to the work and commitment of these clubs in providing an emergency and search and rescue service all year round, especially given the number of people who use the inland waterways.

I urge the Minister to review this matter and to discuss it with the Garda authorities. They could certify that the clubs provide this service and thereby give them an exemption from motor tax. It would be small but important recognition. I hope the Minister will bring forward an amendment on Committee Stage to provide for this exemption.

I also raised, in the context of the section 3 exemptions, the use of rapeseed oil. We should encourage the use of biofuels through a reduction in excise duties and motor tax on these vehicles. We will not meet our requirements under Kyoto in relation to emissions unless we encourage the use of biofuels and especially rapeseed oil, which could provide a cash crop for many farming communities. At present, farming is going through a difficult time, a subject to which I will return. This country is also subject to the volatility of the oil markets. We have the potential to develop rapeseed oil as a cash crop. The climate is suitable and the technology has been developed. Maxol has put significant investment into this technology.

Ireland could be a leading nation and could lead by example in the development of biofuels. However, unless we are prepared to give this some form of encouragement through reductions in excise duties and motor taxes, that will not happen. It is a huge pity that we do not seize this opportunity now.

One of last Sunday's newspapers reviewed the new biofuel Ford Focus which allows drivers to choose between petrol or LPG as a fuel source. It is currently being tested in the Irish market but to the best of my knowledge it is not recognised in the Bill or in the current motor tax regulations. LPG is an environmentally efficient fuel, with 80% less noxious emissions than other fuels, and meets with many of the criteria set down for emissions. The engine starts on petrol and then the LPG kicks in automatically, but again it is not given recognition in relation to taxation policy here. This is a measure that should be reviewed. The British Association of Biofuels and Oils has promoted biodiesel as a fuel of the future. Biodiesel engines are more costly to maintain and that additional cost should be taken into consideration on excise duties and motor tax.

The British Government reduced the cost of biodiesel by 20p per litre in its recent budget and Volvo recommends the use of low sulphur diesel, including a mix of rapeseed oil of 5%, yet we are not giving recognition to the use of biofuels when we have the potential to develop them as an economic industry to support agriculture and our environment. We have ignored the issue again today and it is a pity the Minister did not take note of this when it was proposed some weeks ago during the debate on financial resolutions regarding excise duty, which followed this year's budget.

Regarding agriculture, the Minister said the Bill provides for a 6% increase in respect of agricultural tractors and that the rate for agricultural tractors or general haulage tractors is to be aligned with the minimum goods vehicle rate, given the type of use of such vehicles. The Minister for Agriculture, Food and Rural Development has told the House about the need for the general public to support agriculture given the foot and mouth crisis. The Minister for Social, Community and Family Affairs has told the House that we need to put support provisions in place and that he will review the farm assist scheme because of the huge financial pressure being put on farmers, yet the Minister for the Environment and Local Government is putting an extra 6% on the cost of motor tax for tractors. While that is not a huge amount of money, the principle is what we are talking about. We are talking about a Government that has pitied the farmers, saying they need support and that we have a farming crisis, yet today the same Government wants to increase motor tax on tractors. I cannot understand why one Department is saying one thing and another Department is doing the exact opposite, penalising the agricultural sector when it is under severe financial pressure. The Minister should review this section and reduce motor tax on tractors rather than increasing it. It is a contradiction in policy terms for the Government to increase agricultural costs at a time when that sector is going through such difficulties.

Section 5 deals with licences. The Minister is talking about changing the mechanisms by which the fees are charged for licences. Regarding the new licensing mechanisms which were put in place over the past few weeks, we have now decided, ten years after the decision was made in the EU, to introduce a theory test. Will the Minister explain why he did not consider the introduction of a theory test for the 345,000 provisional drivers on our roads? There is no consideration for them regarding a theory test and this is a missed opportunity as the Minister could have gone to the insurance industry and said that he was introducing this on a voluntary basis for those 345,0000 provisional licence holders and that if they completed the theory test they would get a reduction in the cost of their insurance. That would be recognition for doing the theory test.

The Minister could have reviewed the situation and decided that this could not be imposed on those currently on a provisional licence but when that provisional licence was renewed, be it for one's second or fifth provisional licence, the theory test could be introduced at that point. The introduction of the theory test was discussed for the past ten years and a golden opportunity was missed to tie the insurance industry into it and give recognition to those who completed it by giving them a reduction in the cost of car insurance. Again, the Government has ignored the issue of car insurance, particularly for young drivers.

Yesterday's newspapers stated that rogue drivers are adding £57 to the cost of each insurance premium. I had hoped the Minister would deal with this issue when he brought in this legislation as it is important that motor tax and car insurance are tied together. We should have a proper national database of those drivers who have not paid their motor tax or insurance and are costing those who pay their insurance £95 million per annum. It is disappointing the Minister did not address this. He did not give us the up-to-date situation on the introduction of the national vehicle file, which is fundamental to tackling this problem. One can be sure that if £95 million is going towards motor insurance claims every year, many more people are avoiding motor tax every year as we do not have the systems in place to ensure that abuse is tackled.

The Minister mentioned reducing the cost of licences for older drivers and I had hoped he would consider introducing some training mechanism for older drivers. We suggested that eight months ago and I hope the Minister reviews the situation.

Mr. Sheehan

I propose to share my time with Deputy Bradford.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Mr. Sheehan

How can the Minister in conscience increase road tax on cars, vans, lorries and tractors when the county road network throughout the country is deteriorating at a rate that will eventually lead to its complete disintegration? I need not remind the Minister of State, who comes from my own city by the Lee, of the serious consequences that may arise because of the road infrastructure in County Cork.

There are roads in my constituency which have not had maintenance for the past 30 years, not a shovel of chips or a litre of tar. They have been left in abeyance and are deteriorating at such a rate that they will soon be extinct altogether. It is a shocking state of affairs that it is over 30 years since some county roads in Cork saw a shovel of chips or a litre of tar. That is ridiculous.

Cork County Council covers an area which is one eighth of the entire area of the State, yet County Cork has a lower rate per kilometre of county road funding than any other county council in the country. The Minister boasted that he gave £24 million for such roads to Cork County Council but the county manager and county engineers state that Cork would need £240 million to meet county road demands.

The Minister is not sincere when he states that this is a green tax. It has no trace of green in its substance, not even one of the 40 shades of green. It only digs deeper into the pockets of the already hard-pressed motorists. Surely it is clearly evident to the Minister that, unlike what he said at the outset, this is not a green Bill? If this is a green tax, do I take it from the Minister's speech that he will insist that the Taoiseach and all his Cabinet colleagues, including himself, will do away with their Mercedes and replace them with cars such as the Fiesta, Punto or Ka? Perhaps he has in mind insisting that the Dublin members of the Cabinet use Honda motorcycles on their way to Dáil Éireann, but he has not given any thought to my constituency colleague, the Minister for Agriculture, Food and Rural Development, Deputy Walsh, who must travel 240 miles to Dublin. Will the general trend be that all Ministers will be reduced to using small cars?

Mr. D. Wallace

The Deputy drives a Mercedes.

Mr. Sheehan

Yes, I drive an eight year old Mercedes because I do not have the price of a new one. I would probably be dead on the road from west Cork long ago only for the fact that I have been driving such a heavy car. The Minister must realise that the people are not driving Mercedes cars or good quality high-powered cars out of a sense of grandeur but out of necessity. All the road fatalities at present are caused by small cars involved in accidents which disintegrate like coke cans. Does the Minister want us to go back to using cars with the quality of coke cans? They do not have any idea about what is needed in Ireland nowadays.

The Luas system was supposed to be launched in Dublin recently. Where is there evidence of the availability of that system in the city? Luas spelt backwards is Saul, and the Minister knows what happened Saul on the road to Damascus. If the Government is to get the Luas project off the ground, it will need a miracle like that which occurred on the road to Damascus.

The Minister does not seem to be au fait with the situation. County Cork receives grants of £23 million per year for the county roads network. The county manager and the county engineer stated that we would need £230 million a year for the next ten years to bring our roads up to standard. My constituency does not have one mile of national primary roads, one mile of rail track or an airstrip. South-west Cork has no proper transport infrastructure, yet it is bigger than nine of the counties in Ireland. We have been completely neglected since our rail system was taken up 55 years ago and sold to a Third World country where, according to reports I received this morning, it has run perfectly since. Surely the constituency of Cork South-West deserves recognition?

It is clearly evident that there are many anomalies in this legislation. The Minister stated that there is a 4% increase for cars up to 1100cc, a 5% increase for cars from 1101cc to 1500cc and a 6% increase for cars of 1501cc and over. It seems he wants to reduce us to the use of mopeds or Mini Minors.

Mr. Dempsey

It would be good for the environment.

Mr. Sheehan

Does the Minister intend to apply this to the cars of Ministers? If so, he will certainly have a hard time trying to impress on them to change their big cars. He also stated that State cars are exempt from this increase in tax. Do I take it that ministerial cars will be included in this exemption? I am not sure whether road tax is chargeable on ministerial cars in any event. I have not had the pleasure of using one yet, but one never knows what may happen in the future.

Mr. Dempsey

The Deputy has a Mercedes of his own. He does not need one.

Mr. Sheehan

That is only a second-hand banger. It is an eight year old Mercedes. I cannot afford to buy a new one.

Mr. Dempsey

The roads must not be too bad if the Deputy is able to drive around in an eight year old car.

Mr. Sheehan

Any other type of car would not survive the potholes. There are people in my constituency who bought new cars and within six weeks had to replace the suspension due to the condition of the county roads in my area. The roads are completely disintegrating. I invite the Minister to take a trip around my constituency during the summer recess and I will show him some of the roads in question.

Mr. Bradford

The Minister was near his constituency yesterday.

Mr. Sheehan

The increase of 6% on tractors comes at a time when the farming community is in dire straits due to controls regarding the foot and mouth crisis and BSE. Having hardly earned a penny since new year's day, the Minister has saddled them with a 6% increase. At the same time the Minister has failed to provide decent laneways into farmers' yards and in County Cork there is a ten-year backlog in the local improvement scheme.

This is the biggest legislative cover-up I have ever seen. Either the Minister for Finance was afraid to introduce it in his budget speech or he deliberately refrained from doing so, but the Minister came into the Dáil the following morning, after making an announcement after midnight the night before that the Government was increasing these taxes, and got it through harmoniously with the aid of the four Independent Deputies. I want the Minister to realise that he will no longer cod the public in this respect. The lives of the people are in his hands. He will be responsible for reducing the standard of cars in use in the future to that of coke cans.

Mr. Bradford

It is difficult to follow Deputy Sheehan who covered all the ground thoroughly. As a representative of the same region, I concur with what he said about the condition of our county road network. Perhaps it is not the most pertinent point of this legislation, but in dealing with any motor tax matter our constituents would think it remiss of us if we did not bring to the Minister's attention once again in the strongest way possible, as Deputy Sheehan did, the appalling condition of the roads in County Cork and throughout the country. This evening my colleague, Deputy Creed, will raise in the Adjournment debate the lack of road grants available to County Cork.

A recent detailed study conducted by the county manager of Cork County Council paints a clear picture of a road network which needs substantial investment over the coming years to maintain them in their current condition. I hope when the Minister responds to Deputy Creed he will have some good news. At a time when the Celtic tiger economy still seems to be roaring strongly, according to this afternoon's welcome unemployment figures and the strong economic trends, our rural constituents find it extremely difficult to accept the appalling condition of the roads which they must use to drive to work or school every day.

We could go back in history to 1977 when the decision was taken to abolish rates and motor tax. Since then the condition of the roads has gone from bad to worse. I hope the Minister will give serious attention, between now and the next budget, if he is still Minister for the Environment and Local Government or if the Government is still in place at that time, to putting a meaningful financial package together which will make a difference to the county roads network.

The Minister proposes to "green" the motor tax system. If we were speaking about green taxes five or six years ago, most of our constituents would have had little interest in the subject. Fortunately, people have now become more aware and seriously concerned about the state of our environment, be it air or water quality, and they will listen. The huge environmental problems caused by car emissions can be seen daily in our cities and towns. A meaningful response from the Minister would be met with acceptance by the public. This proposal by the Minister is a very small step and it will make no difference.

The last budget was a missed opportunity. A carrot and stick approach is necessary when it comes to environmental matters. There should be a certain level of penalty coupled with tax incentives and allowances so that people are helped to choose a more environmentally-friendly option. LPG was a relatively common motor fuel in the late 1970s and early 1980s, but it no longer seems to be a choice for a significant number of motorists. It is very clear that the use of LPG would be helpful for the environment. The Minister should avail of the opportunity which this Bill provides, or that provided by the budget, to give preference to fuels such as LPG which are less damaging to the environment. We need an urgent debate to examine what the Minister can do to improve the environment. The public is willing to respond and we need much greater action from the Minister.

An Leas-Cheann Comhairle

The Minister is conceding four minutes speaking time to the Deputy.

Mr. Deenihan

I welcome this Bill. A few years ago, during a debate on VRT, I suggested that there should be a concession on VRT for cars with a certain level of emissions, and this proposal is another way of doing that. Anything that helps the environment must be welcomed.

The Minister is aware that I come from the premier tourism county in the country. The Minister was there yesterday and would have seen for himself the dependence of Kerry on tourism. I say without fear of contradiction that we must have the worst county road network in the country. That could once have been said about Cavan-Monaghan but it is now the case for Kerry. From the point of view of the Minister and his party's electoral strategy, it is vital that the problem of county roads in Kerry is addressed. The only solution is a substantial increase in funding.

The Minister's Department has asked the county engineer to up-date the five-year programme. This programme was initiated in 1995 and has been very successful. County councils are now able to review resources and implement proper plans for roads restoration work. This work needs to be accelerated and the next plan will require funding. I ask the Minister, when it comes to the allocation of extra funding, to respond generously to the needs of Kerry. We have a greater amount in miles of county roads than any other county in the country. Some of these roads have not been attended to in the past 25 or 30 years. I have travelled these roads and they are on the point of collapse. Unless the funding is provided, the problem will get worse. The contributions of motor tax from the county of Kerry puts it fifth or sixth in the list. An enormous amount of money is being taken from County Kerry in the form of motor tax and it is only right that the Minister should reciprocate by returning the contributions to Kerry motorists and by supplying additional funding.

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

I thank the Deputies opposite who have contributed to this debate. No Minister likes to introduce new taxes or to raise existing ones, but any decision taken to raise taxes is obviously not taken very lightly by any Government. I assure Deputies that the decision was not taken lightly in this case either.

A number of Deputies asked whether this Bill is intended as a device to raise revenue or to "green" motor tax. The Bill will address both of these issues. It will not totally "green" the motor taxation system, we never said that it would, but we are biasing increases in favour of smaller cars. We did that initially in the first increases in motor tax in 1998, when in relation to VRT, there was a significant shift from higher engine size cars to lower engine size cars and we wish to continue that trend.

Everyone has accepted the need for local authorities to have sufficient funds to meet their many obligations, and this provides one source of funding. The Exchequer grant to the local government fund is another method and I am pleased to announce that this year the total local government fund amounts to about £723.5 million, which is a substantial increase on the amount that was available in 1997.

To reply to a question raised by Deputy Mitchell, in a full year the changes will provide £20 million. It is estimated that from April this year it will generate about £15 million. I am disappointed to note that Deputies opposite tried to convey the impression that this was sneaked in on the evening of the budget. I had occasion to take them to task about that previously. If members of Fine Gael are asleep or are not aware of what is happening at 6 p.m., perhaps that explains how they are faring in the polls.

Mr. Sheehan

Fine Gael is wide awake.

Mr. Dempsey

The press release came out at 6 p.m. and was available if people wished to look at it. The issue of the policy on motor tax was raised. It does not form part of taxation policy generally. Motor tax, unlike all other taxes, is not paid into the Exchequer because under the Local Government Act, 1998, it has to be paid directly into the local government fund. It is interesting that some people charge us with trying to sneak it in. The first time this change was made was in 1997 when the previous Government, under the local government equalisation fund, allowed for an increase. The legislation promulgated by that Government was completely outside the budget or the Finance Act agenda. This is a continuation of that procedure. The local government fund followed the equalisation fund and the same practices are applied. The proceeds of motor tax no longer go to the Exchequer and the practice is for changes in the motor tax regime to be dealt with outside the budget or the Finance Bill.

Much has been said about the effect of motor cars on the environment and whether this is a green motor tax. Deputy Clune said diesel cars are more environmentally friendly than petrol cars, but that is not so. While diesel cars are more fuel efficient, they emit far more local pollutants such as fine particles and hydrocarbons into the atmosphere. That should be noted.

During the debate on the financial resolutions the question of taxing sub aqua vehicles used for emergency purposes was raised by Deputy Naughten. He repeated that request during this debate. He subsequently wrote to me and we exchanged correspondence. I indicated my willingness, subject to certain precautions, to introduce a change to facilitate that. The Irish Underwater Council, which is the national governing body of underwater sports in Ireland and represents over 80 clubs and 3,500 divers throughout the entire island, has written to me and drawn attention to a number of scuba diving clubs that have purchased vehicles to be used exclusively for the transport of search and recovery equipment. It requested an exemption from motor tax for vehicles used exclusively for under-water search and recovery purposes. I promised Deputy Naughten previously that once we had considered the matter I would bring forward a relevant amendment and I intend to do so on Committee Stage. Perhaps his colleagues opposite will convey that to him.

A number of Cork Deputies pleaded their case in relation to the amount of money Cork County Council is receiving. Given that the matter is being raised on the Adjournment this evening, I do not want to pre-empt what may be said except to say that recently a sum of £27 million was allocated to Cork County Council for 2001. That is the highest allocation countrywide for non-national roads. The Cork Deputies will be interested to learn that since 1997 the allocations to Cork have increased by 80% from a base of £15.8 million.

Mr. Sheehan

We still have the worst roads in the country.

Mr. Dempsey

In addition, Cork County Council is providing money from its own resources which means that about £40 million is being spent on roads. The Minister of State, Deputy Wallace, will give a fuller answer later.

Mr. Sheehan

It took 30 years to get the programme.

An Leas-Cheann Comhairle

The Minister, without interruption.

Mr. Dempsey

The local government allocation for Kerry between 1997 and 2001 increased by 103.2%. That is a huge increase. Its non-national roads allocation is up by 52% in the same period. Both Cork and Kerry are getting more than their fair share of the funds available.

Mr. Sheehan

No wonder we are at the bottom of the barrel.

Mr. Dempsey

I am surprised to hear members of the local authority who have responsibility for the money received from the Department of the Environment and Local Government complain about the standard of the roads and the standard of the work. The best place in which to raise that issue is in the council chamber where they have responsibility.

Mr. Sheehan

The Minister is the person with the purchasing power.

Mr. Dempsey

The question of electrically propelled vehicles was raised by a number of Deputies. In my approach to this Bill I recognised the case for mechanically propelled vehicles and I have not applied any motor tax increase to them, contrary to what may be thought. Apart altogether from the motor tax code, under Irish road traffic law electrically propelled vehicles are regarded as mechanically powered vehicles and are subject to legal requirements relating to the use of all mechanically propelled vehicles. Such vehicles must have proper brakes, lights and number plates and must be covered by third party motor insurance. The rider must have appropriate driver's licences and so on. All aspects of this type of vehicle are being evaluated in my Department with a view to introducing a less prescriptive regime under road traffic law. It will be appreciated that account will have to be taken of the road safety aspects involved.

The case for reducing tax on electrically propelled vehicles is not an open and shut case by any means. While such vehicles do not give rise to CO2 emissions of themselves one has to bear in mind that due to inefficiencies in the generation process it may well be that on a life cycle basis such vehicles could conceivably have potentially higher CO2 emissions associated with them in terms of the use of fossil fuels in the generation of electricity. Nevertheless, Deputy Mitchell said she would table an amendment on Committee Stage. I look forward to discussing the matter in more detail at that stage. The Deputy indicated that in other countries there is no motor tax for these vehicles, but that is not so. In the UK, for example, there is a motor tax of £15 per annum.

I wish to make a general comment on matters raised about the local government fund. There is a needs and resources model and money is allocated on the basis of that model. I indicated to Deputies previously that if my Department received an invitation to attend the committee to explain the needs and resources model, I would make officials available to do so. It is important that everyone has a full understanding of how equitable and fair the system is. The invitation still remains. I commend the Bill to the House.

Question put and declared carried.